NPR, PRI make satellite deals with CD Radio

Originally published in Current, June 21, 1999

By Jacqueline Conciatore

NPR and PRI have announced distribution deals with satellite-to-car broadcaster CD Radio. The networks' separate announcements in early June quickly prompted a system-wide debate about the future relevance of local stations and whether NPR was wisely responding to technological change, or--as one manager put it--selling out its member stations.

NPR's exclusive deal with CD Radio gives it two channels initially, two later on, and also backup music service in case NPR's broadcast satellite goes haywire, as it did in 1998. One channel, "NPR Nationwide," would offer news and information--but not Morning Edition or All Things Considered, a caveat the NPR Board specified in a 1998 strategic "framework" directing NPR to pursue new distribution opportunities. The other channel would offer spoken word and cultural programs. Both would feature programs developed specifically for the service, along with existing public radio shows.

In a "white paper" NPR sent to stations in the spring, the network listed many of its acquired programs as possibilities for the new service. A sampling: Only a Game, National Press Club, Rewind, Living on Earth, On the Media, Sounds like Science, Talk of the Nation and Diane Rehm. NPR has solicited recommendations for station-produced programs to include on the new channels.

PRI announced an agreement to develop for CD Radio a channel of news, information and entertainment programming. Other program channels are under discussion.

Stations immediately wondered if PRI would offer feeds of Prairie Home Companion in competition with their own live broadcasts of the Saturday night program. PRI spokesperson Dan Jensen says PRI will develop the channel "in cooperation" with stations but that "no decision has been made as far as either including or excluding any programs."

NPR President Kevin Klose said NPR chose CD Radio over competitor XM Radio after "careful scrutiny of their business plan and their programming vision. ... They worked with us to develop a bona fide noncommercial arrangement that should serve NPR and stations well."

PRI President Steve Salyer said CD Radio's "programming vision and proprietary technology are at the cutting edge of this exciting new medium."

Neither NPR nor PRI would disclose details of their financial arrangements, but the satellite channels may yield at least some revenues; both PRI and NPR's channels would carry underwriting.

Hindi and more

In a 1997 FCC auction, CD Radio and competing satellite broadcaster XM Satellite Radio each paid more than $80 million for licenses to provide the digital services coast-to-coast. CD Radio is scheduled to launch at the end of 2000 and XM in early 2001. Each plans to offer up to 100 channels.

CD Radio's signal would be relayed from three high-power satellites to receivers installed in vehicles. One of the receivers it's developing is a "plug and play" adapter that fits in tape decks. There's also a three-band radio to replace existing car radios, and new units that car manufacturers would install in the factory. CD Radio just announced a deal with Ford; XM announced a deal with GM, a part-owner.

Both services plan to charge subscribers less than $10 per month. XM will carry six minutes of ads per hour on most channels.

CD Radio would offer 50 channels of news and information and 50 of commercial-free music--everything from a symphonic channel to oldies channels for each recent decade, to New Age, Latin jazz, boleros, reggae, contemporary Christian and seven permutations of rock. XM's 100 channels will come from the likes of One-On-One Sports, BET, USA Today, Heftel, Bloomberg and C-SPAN. Its AsiaOne will offer a channel of Mandarin and Cantonese news, talk and music and a channel carrying the Taj Radio Network in Hindi.

Estimates have placed digital satellite's potential audience in excess of 20 million listeners within five years, NPR says.

"They're focusing now"

NPR member stations knew a satellite deal was coming. At the 1998 Public Radio Conference, they had discussed a proposed strategic framework that directed NPR to pursue new distribution opportunities. Station managers strongly objected to the prospect of a competing satellite-to-listener feed of Morning Edition and ATC. Consequently, the NPR Board approved a framework directing NPR to do nothing that would damage stations' market positions. Almost a year later, NPR put out a "white paper" saying it was evaluating proposals from XM and CD Radio, in addition to exploring ancillary technologies including direct TV, cable audio, sky radio on airlines, audio demand services and telecommunications providers.

Despite that preparation, some managers were outraged at news of the NPR-CD Radio deal. "It takes a lot for folks to focus," explains WAMC Executive Director Alan Chartock, an outspoken opponent of the deal. "They're focusing now, and a lot of them don't like what they see."

NPR is using WAMC's $500,000 in annual fees effectively to undermine the station's performance, he says. "They tell us, 'All right, we are going to take your money and reach people in their cars. ... They have a choice to listen to us or you, and for that you should give us money.' I find that to be reprehensible."

He and a couple of other users of the Pubradio online discussion group argued that the move was especially galling given NPR's recent increase in program fees.

NPR says it will use no member dues or programming fees to pay for the new channels or support the new services. Minimal revenues are expected the first five to 10 years, but any funds generated would be shared with stations and producers participating in the project, NPR says.

Car Talk Executive Producer Doug Berman made a suggestion on Pubradio that rapidly gained adherents: NPR should agree upfront that a percentage of all net income from new-media programming be applied as a credit to station dues. "The stations and networks should agree right now to enter the fray, in earnest, as partners," he said.

Working as partners will help public radio avoid the mistake public television made in failing to develop cable TV channels, he said. Discovery and other PBS look-alike channels quickly ate into public TV's audience, leaving it a strong hold on only the most "difficult" programming--Nova and Frontline. "Can this happen to public radio?," he asked. "Absolutely. While it would be difficult to copy All Things Considered and Morning Edition, a decent alternative is not inconceivable. Could someone walk off with our classical music audience, our jazz audience, our other music audience? In a heartbeat. Could a competitive satellite based network--once it develops a significant audience--offer competitive bids for our acquired programs like Car Talk, Prairie Home Companion and This American Life?? Why not? While these new distribution systems would not kill public radio, they have the potential to marginalize it, and chew off large parts of its audience. So it's important we be there in the new media arena."

Strategic threat?

The news of the NPR and PRI deals quickly prompted speculation about the future relevance of stations. "[It's obvious] the paradigm is going to shift, and local stations will no longer be needed to broadcast national programming," said Mary Bokuniewicz, development director of KUNM, Albuquerque. "We simply have to face the reality that new technology is going to radically change the whole business of program delivery, and we are going to have to be able to redefine our role and find a new niche, or start thinking about a career change."

The immediately apparent solution would be for stations to emphasize localism. One manager imagined stations becoming "community cafes" with consistent and compelling local sound and feel.

But audience research shows that listeners typically prefer national programming to local, so stations would have to put far more resources into local content. "The majority of local programming is a simple deejay program or some poorly produced public affairs program that the news director has to put together in-between his/her other duties," wrote Norm Beeker, director of membership and financial development at WVXU, Cincinnati. "Unless we carry programming that attracts an audience, regardless of where it's produced, we risk becoming nothing more than a cable access channel."

Or perhaps digital radio services don't represent much of a threat to public radio. Tom Livingston, a consultant and former manager of Washington's WETA-FM, sees the new services as a "marginal financial opportunity for producers (NPR) while not being a strategic threat to broadcast radio." He points to the scare years ago over cable radio. How many people will be willing to pay for a service they can get only in their cars, he asks, and how viable is a service lacking the effortless access of today's radio? "Something I learned about radio from building stations is that if you can't get the station easily on the cheap clock radio in your bedroom, it doesn't exist." Radio listening in cars accounts for less than half of all listening, he says.

It's possible the services might actually draw new listeners to public radio. "If you think this is a zero-sum game, gloom and doom may be appropriate," said Scott Hanley, g.m. of WDUQ in Pittsburgh. "But if you think we have more potential for serving more listeners better, the CD Radio deal becomes another stone in a big foundation for public media. That stone may crumble, or it may be strong. But if it is in our wall, it is less likely to be thrown against us."

Public radio should be everywhere it can be, argues Berman. The current plan to keep Morning Edition and ATC off the new satellite service is counterproductive, he argued. "Stations have said to NPR, 'go ahead and put some stuff on the Internet, but don't put our crown jewels on there, because we don't want the competition.' In other words, go ahead and use the new means of distribution, just don't put anything 'good' on there. The result is that public radio ... establishes a weak presence in satellite and Internet broadcasting, opening the door to competitors. Instead, we should be establishing a beachhead in new media and building a fortress there."


To Current's home page

Earlier news: NPR Board adopts strategic framework, permitting the network to pursue new distribution channels in new media, 1998.

Earlier news: Both networks say they'll develop satellite channels.

Outside link: CD Radio's web site.



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