Satellite Radio Makes Waves for Industry

(Note: For a complete list of the region’s top radio stations, click here.)

For the first time since the 1970s, when FM radio’s popularity rocketed past AM, radio is experiencing a paradigm shift.

Satellite or XM radio has made waves across the nation and in Northwest Arkansas since its November debut. The Fayetteville stores of at least two national retail chains say XM receivers have leapt off the shelves even after the Christmas crunch.

Dennis Jones, market manager for Cumulus Broadcasting Inc.’s 11 area stations, said radio executives don’t believe XM radio will have an immediate impact on their advertising revenue. XM radio is for now focused on national sales and subscription fees. But about 10 percent of Cumulus’ local revenue comes from national sponsors, so Jones is keeping a watchful eye.

“The armchair pundits on CNBC are hyping the XM stocks as though they’re going to be very successful,” Jones said. “But radio is concerned about satellite radio no more so than it’s concerned about direct mail, cable TV, broadcast TV, outdoor billboards and newspapers.”

Satellite radio offers 100-150 digital channels of various music, news and entertainment from coast-to-coast for a monthly fee. It is to radio what cable television is to TV.

A one-time 30-second spot on one of XM’s ad-supported channels costs $25. But most XM channels are underwritten by corporations for a six-figure sum and have only brief underwriter “ID” breaks.

Two companies traded publicly on NASDAQ — XM Satellite Radio Inc. and Sirius Satellite Radio — are licensed for satellite radio broadcasting. XM Satellite got the jump by starting national broadcasts in time for Christmas. Through early January it has sold about 30,000 subscriptions at $10 each, and consumer electronics stores have sold about the same number of XM receivers which start at $300 each, according to a recent article in The New York Times. Installation is about $80.

Sirius, which plans to charge $13 for its service, will launch in select markets during February and go national by the third quarter.

Brad Roberts, general manager of Best Buy in Fayetteville, said the XM radio sales goal for his Mobile Electronics Department was 4 percent for any given month. It hit 6 percent for December, good enough to land the Fayetteville location among the top 10 XM product movers in the chain’s 450 stores nationwide.

Best Buy, which carries two Pioneer units and one Sony model, has so far sold about 70 XM radios locally. Competitor Circuit City in Fayetteville carries the same models and saw XM sales reach 9.8 percent of its Road Department sales in December.

“The trucking industry is one area that we’re targeting,” Roberts said. “But we’re also interested in the business traveler, and there’s a lot of those in this market.”

State Sen. David Malone, D-Fayetteville, bought an XM radio in December that includes an FM modulator, so that he can still pick up the local AM and FM radio channels. As a state senator, he travels often to Little Rock.

“I’m a news hound, and there are eight to 10 news channels like CNN Financial and Bloomberg that I like to listen to,” Malone said.

“I also like the oldies, and they have a different oldies channels for every decade. Then, when I want local news, I can get that, too.”

One additional piece of equipment makes the Sony model detachable and portable for use outside the car. Pioneer makes an N-Dedicated tuner, CD player and car deck combination XM radio, but both Sony and Pioneer make the FM-modulated variety.

Satellite radio firms are having to purchase terrestrial repeaters to fill in dead spots the satellites miss. But Jones said the real test is XM’s staying power when consumers tire of the monthly fee.