Cruise Control

It is possible to connect the failure of Howard Stern’s marriage on Long Island and the launch of a satellite two weeks ago from Kazakhstan, and, my mother would add, the end of “Rambling With Gambling” the other day, after 75 years on WOR-AM in New York.

Radio is the lowest order of the media business. It is local, primitive, and penny-ante. Even with his vast success, Stern still represents the small-time heart of radio; he’s just a next-generation Gambling. He is localness writ large. Radio is a barter business, a salesman’s game, a redoubt of questionable, if ritualized, business practices. You need to know the secret handshakes. And even though radio has been consolidated into a mighty cash cow (Howard is the udder of this cow), and is the instrument by which Mel Karmazin took over CBS (largely on the strength of Howard’s cash flow), and has now pretty much taken over Viacom, if you’re not in the radio business, you’ll never get it. And radio guys tend to like it that way.

But Stern’s marital breakup has blown his cover as a normal suburban guy and is, I’d surmise, a prime culprit in the hemorrhage taking place in his show’s ratings – as much as 20 percent off in some markets. And a Stern ratings drop affects the radio industry about the same way a similar drop in the Dow would affect the overall economy. As for the cancellation of “Rambling With Gambling” – started by John B. Gambling in 1925, at the dawn of radio, taken over by his son, John A., and continued to its end by his grandson John R. – it is, my mother complains, just another step in the demise of local radio and, she says, perhaps melodramatically, the end of a way of life. The quaint, the amateurish, the familiar give way to the packaged, the professional, the branded – duh. Obviously, such a paradigm shift attracts the paradigm-shift specialists.

Indeed, the satellite, launched on September 5 from Baikonur Cosmodrome in Kazakhstan, which, in all fairness, was in the planning long before Stern’s marriage went publicly on the rocks or the Gamblings got canceled, is the instrument in a plan to take over drive time – where Stern is the suddenly vulnerable king of the hill and where the Gamblings, at least in New York, used to be reigning princes – and turn the car into a much more powerful media environment by inventing a brave new world of national radio, which, we can be sure, will not target my mother.

It is old media as new media.

“We own this spectrum,” Margolese says, possibly believing that he has solved the problem that has always bedeviled the media business: competition.

I caught up with the satellite – so far, two of three have been launched into highly inclined elliptical orbits that will be able to reach into every car on American roads – from a tracking-and-control room some 30 floors over midtown. Silent technicians tended the clean, well-lit room (I don’t think satellites require much human interaction) of digital consoles and celestial maps. Guided on my tour by aloof engineers, I was shown the other part of the $1.5 billion infrastructure, the terrestrial network (this is just one node in the 56-city system of earth-mounted repeaters), a series of norad-like megadishes, visible only by helicopter – or if you climb out, as I did, into the sun and hot wind way up over Sixth Avenue.

I got to thinking of the Bond movies.

When a Bond film gets to the set piece that takes place in the control room of the technologically enhanced hideout – under the ocean or dug into a crater or hidden under a faux mountain – that serves as headquarters for this or that plan of world domination, I’m always struck by how orderly the staff is, all the security-badged technicians and programmers and security people. I find this to be the most improbable part of this fantasy world, that people engaged in furthering someone else’s vast ambition would be quiet and well-behaved and, indeed, appear to know what they’re doing. (In fact, disorganization is always the major element in a start-up.) But here in the tracking station, in the 150,000 square feet of office space (emphasis on space) of Sirius Satellite Radio, just as in the Bond films, there is the most remarkable sense of precision and order and quiet that I think I’ve ever encountered in Manhattan. Nothing disturbs it. Not the steady traffic of celebrities. Not the powerful digital sound systems. Not the big dreams. Not even the anxieties surely generated by all the money that has been spent. Indeed, if you’ve spent $1.5 billion before earning a penny (making the Internet look like a pretty solid business), you might get sort of Zen.

You wouldn’t mistake David Margolese, the 42-year-old founder, chairman, and CEO of Sirius Satellite Radio, an eighties cellular-phone wunderkind who started Canada’s largest wireless company (from Vancouver; he lives on the Upper West Side now), in blue button-down oxford shirt, sitting in a perfectly clean, clutter-free, blond-wood office across from a giant map of the satellites and their positions, for a man in the media or entertainment business. There is nothing show-businessy or show-offy about him.

He’s an unreconstructed stiff. A kind of benign Dr. No.

Indeed, if you work for David Margolese (and it may come to that for Howard), you cannot swear when you are on the job or disparage anyone else who works for his company on pain of immediate dismissal – which makes for a very quiet atmosphere.

If there is a Howard Stern cult, then the Sirius cult (which comprises no more than 150 employees and a growing number of celebrity hosts) might be its antithesis.

While Margolese is not an obvious high-glam media hound, he is definitely not a low-road radio guy either. You can’t see him making little local ad-buy deals (buy a twenty-spot schedule and we’ll give you five spots to trade with your friends).

But Margolese, like Howard and Mel, and unlike most other media people, who can’t see the trees for the glamour, apparently can see the obvious. In radio you have a captive audience (in the car), with almost no competition (books on tape and recorded music hold only a sliver of the market). It’s a single message in an enclosed space. And, save for Howard and a few other premium brands, it’s cheap to produce. Given the reach and penetration and fixed habits of radio, it’s obviously a drive-time, rather than a prime-time, world.

What’s more, Howard Stern, in spite of his localness, has turned radio into a big-time business (or back into a big-time business). Stern has given radio what visionaries in the technology business call scalability. That is, your audience just gets bigger and bigger (without your having to spend more or work more).

What doesn’t make sense is having to depend on Howard. You have to depend on Howard’s weirdness to piece together a national audience – not to mention that network syndication is a throwback to another technology era. It’s such a kludgy approach (what with the marriage and the ratings drop, you can see the fragility in depending on Howard).

What you need is a new way to reach America. Not station by station but all at once, via a channel that, well, you can control – and even own.

You need a technology solution.

In November, Margolese will begin his effort to achieve scale and bypass the existing radio industry by beaming from his three satellites (his third satellite will launch next month) 100 stations – 50 of commercial-free music and 50 of talk – into some portion (theoretically an ever-growing portion) of the 17 million light cars and trucks that roll off the assembly line every year.

The talk stations include two NPR channels (created just for Sirius) and a variety of cable brand crossovers – CNBC, C-span, Bloomberg, and BBC World Service. The 50 music channels represent all known formats and an expanding list of headliners. Indeed, at any given moment you might find hard at work in a well-appointed Sirius studio Sinéad, Björk, Travis, Sting, Sandra Bernhard, Emmylou Harris, Kenny Loggins, or Grandmaster Flash.

“We own this spectrum,” Margolese says, possibly believing that he has solved the problem that has always bedeviled the media business, which is competition.

The goal for all technology is, of course, monopoly. Margolese has come close, garnering for himself a duopoly. There is one other company, XM, that the FCC has granted the right to use this spectrum. The battle now is to sign up car manufacturers, who are just beginning to wake up to the fact that they have, for all these years, given up the benefits of the car as media platform and gotten stuck with the shredding tires. So far, Margolese has nailed down DaimlerChrysler and Ford; XM has General Motors.

Of course, there are other ideas competing for media time in the car. There are mapping systems. There’s Web access (which various wireless companies are trying to bring to the dashboard). There are cell phones. And there is the television for the kids in the back of the mini-van. Which all could make Margolese’s satellite enterprise sound a lot like Iridium, the billion-dollar worldwide cell-phone-satellite enterprise that failed to find almost any interested users.

But for Margolese, the research is incontrovertible: In a car, people listen to the radio. This is America. Radio is what we do when we drive. It is behavior that no one is going to disrupt (anytime soon).

The behavior can stay the same. It’s just the universe in which it occurs that Margolese believes he can re-create – and own.

Nowhere will you find radio studios like you will find at the Sirius offices. A real radio studio is a dive. It’s old. It’s broken. It smells bad. Here at Sirius, it’s cool. It’s sleek. It’s environmentally controlled. There is the constant (and oddly reassuring) presence of the satellites following their celestial paths on the huge diorama in the office. Here are the most incredible sound studios. And in and out, all day long, through the muted, orderly environment, there are the stars that are now part of this new high-quality digital universe. This is radio at the forefront of technology, at the center of the world, with anyone who is anyone eager to be on. Just as radio must have been 50 years ago.

Something draws technology guys to media. Gates and Paul Allen and Steve Jobs have all taken a crack. Steve Case bought himself Time Warner. Partly this desire is because technology-business guys see the media as a business wherein they know about the important stuff – the pipes and optics and cells. The media, for them, is about overcoming technological hurdles. Jerry Levin, in his new role of media-technology-telecommunications CEO, is talking more and more like this, too.

They are right, of course, that the pipes are the thing. If you can’t talk pipes or satellites, then you have no business in show business. The smart media-business plan of the future will be about reaching an audience by building a new system, an amazingly complex and costly system (which, among other things, creates what’s called a high barrier to entry) that will be better than the existing system it bypasses.

It’s probably natural, too, if the geeky guy gets a little starstruck and begins to think of himself as the producer – Dr. No as D.J. to the world.

As for long-term trends, Andrew John and Bradley John, the twin Gambling great-grandsons now in college, should definitely be looking for another line of business.


Cruise Control