From the Corner Office
This
Month's Topic:
The Digital Future of the United States: The Future of Radio
Hello Everyone,
This month rather than do my traditional column, I
thought I would share with you my recent testimony before the House of
Representatives Committee on Energy and Commerce,
Subcommittee on Telecommunications and the Internet on the future of radio in
the United States. I was asked to testify by the NAB on behalf of local radio
broadcasters across the nation. I hope I represented us all well. Below you will
find my opening statement of my testimony.
Please feel free to e-mail me by clicking on the "Ask Peter" icon posted below. I would love to hear your feedback or answer any questions you may have.
Best regards,
Peter
Statement of Peter H. Smyth
President and Chief Executive Officer
Greater Media, Inc.
On behalf of the National Association of Broadcasters
Hearing before the House of Representatives Committee on Energy and Commerce
Subcommittee on Telecommunications and the Internet
March 7, 2007
Good afternoon Chairman Markey, Ranking Member Upton and Subcommittee Members. My name is Peter Smyth. I am the President and CEO of Greater Media, Inc., which owns and operates 20 local AM and FM radio stations in Boston, Detroit, Philadelphia and New Jersey, and 13 community newspapers in Central New Jersey. I am testifying today on behalf of Greater Media and the National Association of Broadcasters.
I am here to voice NAB's opposition to the proposed merger of this country's only two satellite radio companies, XM and Sirius. But I first want to make several important points about the future of local radio.
As the CEO of Greater Media, a company that just celebrated its 50th anniversary in radio, I'm optimistic about our future. I've learned from working for a family-owned company that radio licenses are not a right, but a great privilege and we need to treat them accordingly, respecting listeners and delivering quality content to serve their needs.
As part of this obligation, we are transitioning to digital technology - HD Radio -- to provide the quality sound and additional data that digital services offer. We are also focusing on providing compelling LOCAL content that creates an emotional bond between listeners and their communities.
My colleagues understand that localism is our franchise,
and ours alone, and that we must retain that unique connection to listeners that
no other medium provides.
Which brings me to satellite radio, and the proposed XM/Sirius merger. As I see
it, there are multiple reasons for government to reject this monopoly.
FIRST: Satellite radio is a national radio service that provides very similar programming to each listener across the country. There are only two such services, and they compete ferociously against each other in the marketplace. The undeniable fact is that Mr. Parsons and Mr. Karmazin want government permission to take two highly competitive companies and turn them into one.
SECOND: XM and Sirius are two companies with a track record of misrepresenting their intentions, not following the rules that have been established, and failing to correct their past transgressions.
For example, XM and Sirius for years have operated
terrestrial repeaters in blatant violation of FCC rules. XM operated more than
142 repeaters at unauthorized locations. Not to be outdone, Sirius constructed
at least 11 repeaters at locations different from what they told the the FCC,
including one in Michigan built 67 miles from its authorized location.
Morever, both XM and Sirius promised the FCC nearly a decade ago to have an
interoperable receiver, yet no such device exists in the market today.
And now we have learned that both XM and Sirius have
violated FCC rules governing the power levels of equipment sold to the public.
As a result, many local radio listeners have complained to the FCC that
explicit, X-rated programming from satellite radio "bleeds through" to their
local stations without warning.
Breaking rules just seems to be part of the DNA of XM and Sirius. Viewed against
this type of behavior, why would government trust these two companies as a
monopoly?
THIRD: If this government-sanctioned monopoly is
approved, consumers will be the losers. Subscription prices will rise, because
there will be no competition to restrain monopoly rates. Jobs will be
eliminated. Innovation will suffer. Neither listeners nor advertisers will
benefit. Put simply - private corporate interests will benefit, but the public
will suffer.
FOUR: XM and Sirius, by their own admission, are not failing companies. Their current highly leveraged position is due to extraordinary fees paid for marketing and on-air talent, including the $83 million in stock that Sirius awarded to Howard Stern last month, on top of his initial bonus of $220 million. But even with these costs, XM and Sirius have made clear they can succeed without a merger.
Let's remember that when the FCC allocated spectrum to Sirius and XM in 1997, it specifically ruled against a single monopoly provider. This decision was based on claims made by Sirius itself. Sirius argued that multiple providers were necessary to assure intra-service competition and guarantee diverse program offerings.
I've heard these companies claim that this monopoly should be granted because local radio competes against XM and Sirius. Let's be clear: My local radio stations do not compete against satellite radio in their national market. Local broadcasters' signals are not nationwide, and are not subscription. We are not a substitute for satellite radio service. XM and Sirius compete with each other - and no one else - in the national satellite radio market.
Five years ago, the only two nationwide TV satellite
licensees - Echo Star and DirecTV -- tried to blaze a remarkably similar trail
when they proposed to merge. They failed. Indeed, the FCC decided unanimously
that the merger was not in the public interest.
For these reasons and others, I respectfully ask that this government-sanctioned
monopoly be rejected.
Thank you, and I look forward to any questions you may have.