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More outrage at Forbes from broadcasters

We're continuing to hear from radio broadcasters who are boiling mad over the cover story in Forbes magazine that depicts broadcasters as "bullies" who've used their Capitol Hill clout to erect unfair barriers to hold back competition from satellite radio operators. Quite the contrary, says Whitney Radio President Bill O'Shaughnessy, who says it's XM Satellite Radio that has "run rings" around the NAB in Washington.

In a letter to publisher Steve Forbes, O'Shaughnessy said Forbes magazine had been duped into running what amounted to a free ad for XM.

"[XM CEO] Hugh Panero, a master media manipulator, has struck again.

This time at my beloved Forbes (Fortune did a similarly breathless and decidedly one-sided piece some months ago).

Scott Woolley's cover / top story of 9/6/04 was grossly unfair to the thousands of hometown- community broadcasters who provide invaluable service to local listeners all over the nation.

Driven by their relentless ambition XM has been fooling government regulators, Wall Street, the Congress, their investors ... and the American people.

The company waged a stealth 'star wars' campaign to overcome their flawed technology with thousands of terrestrial / S-DARS repeaters which have been strategically placed by innocuous sounding 'fronts' designed to confuse local planning and zoning boards.

Here in suburban Westchester XM's agents told local zoning authorities they were operating with 'permanent' FCC authority and, in several instances, even represented themselves as a 'public utility'!

It's like the Carnival of Venice: XM presents a different face to everyone and every entity with which it deals. One to regulators at the Commission where it is trying to take advantage of a 'turf war' between the International Bureau (satellites) and the Mass Media Bureau (radio and television).

And their disclaimers and protestations about having no interest in local programming were exposed by NAB's engineers who last year discovered a patent to do exactly that ... held by XM!

Incidentally, traditional broadcasters are not the only ones concerned about XM's ultimate goals and objectives. The wireless carriers (AT&T, BellSouth, Verizon, et al) are even more exercised about these high-powered 'repeaters'.

The thrust of Scott Woolley's article was that 'poor' XM deserves a 'level playing field' against the big, bad established broadcasters.

But the sad truth is that Panero has run rings around NAB, our national lobby.

At any rate, I believe the whole satellite thing comes with a lot of speculative hocus-pocus designed to cover up widespread concerns about the financial viability and long range potential of this scheme. And I understand there is a real story here about the high rate of 'churn' among subscribers who don't renew. (Do we know anybody who renewed On-Star either?)

Forgive me for rattling on, Steve. But I have too much regard for you and yours to not at least try to set the record straight.

There is no question that our tribe is populated these days by a lot of speculators and absentee owners.

And I will grant you that many stations are run by 'market managers' operating out of airport lounges and beholden to corporate masters a whole continent away.

But there are still some wonderful, dedicated community broadcasters left who believe that Radio achieves its highest calling when it resembles a platform or forum from which many different voices are heard in the land.

And, my marketing colleagues won't like me telling you this ... but Radio, because it's free and 'over the air', is still the medium of the poor, the hurting, the lonely, the disenfranchised, the misunderstood in our society. Therein, I think, lies its potential.

And despite the problems brought by Consolidation, Radio is still like the biblical Lazarus. TV couldn't kill it. The internet couldn't do it in. Nor will XM.

But its time for Panero to show his cards.

And that story wasn't told in the Forbes article," O'Shaughnessy wrote.

RBR observation:

If you haven't read the Forbes story, here are a couple of examples of the more questionable claims in the article. The first isn't just questionable, it's downright false. The article accuses broadcasters of fighting against the licensing of satellite radio companies, then getting regulators to impose restraints to protect terrestrial radio. "The FCC's license forbade free, advertiser-supported satellite stations, instead requiring firms to sign up paying subscribers," the article states. It's hard to blame the NAB for such a provision, since it doesn't exist. Both satellite radio companies have chosen subscription-based business models, but nothing requires them to do so. At another point, author Scott Woolley states that, "In 1995 lawmakers slapped down digital newcomers by passing a law backed by the NAB and the Recording Industry Association of America" - - referring to the law that required performance royalty payments by satellite, Internet and other new digital media, while exempting terrestrial broadcasters. That makes it sound like the NAB and RIAA were in cahoots in drafting the law. In fact, broadcasters vehemently opposed the RIAA proposal, but the NAB withdrew its objections after winning the exemption for its members, taking no position on whether other media should have to pay royalties that broadcasters had fought against for decades.