XM's first quarter numbers are out, and what do you know?  Its losses widened to nearly 6 percent, even though revenue is up.  For the quarter, XM hemorrhaged $129 million, and their customer acquisition costs rose to $73 a subscriber (up from $65 last year).

And this is a business that deserves to be rescued by the DOJ and FCC?  Is it just competition from other media or has XM (and Sirius) proved perhaps that over-spending on the programming side just isn't good business?  Or does it cost so much to "acquire" (or subsidize) new customers that this business model just doesn't make sense.

To make matters more surreal consider Silicon Alley Insider's Peter Kafka's statement that “XM Satellite and Sirius, stymied by regulators for more than a year in their attempt to merge, are doing their best to press their case.  XM’s latest move: Turn in yet another lousy quarter, which proves that it can’t survive as a standalone company.”

Now there's an interesting business strategy - keep losing mass quantities of money, and the government will be more encouraged to bail you out.

Or maybe consumers just don't want to pay for radio.

In recent months, the broadcast industry has experienced one of the most active periods of regulatory activity in recent memory. Since November, the FCC has adopted enhanced disclosure obligations concerning the public interest programming of television broadcasters and requirements for an on-line public inspection file; rejected most calls for increased deregulation of broadcast ownership (allowing only the cross-ownership of broadcast stations and newspapers in the largest markets); established specific prohibitions against advertising practices that involved “no Spanish, no urban dictates”; placed mandatory disclosure obligations on television broadcasters in connection with promotion of the DTV transition; proposed rules that could favor low power FM stations over improvements in full-power broadcast services and existing FM translator licensees; and proposed sweeping regulation of broadcasters which could potentially require specific amounts of nonentertainment programming by all stations, restrict the flexibility of broadcasters' location of their main studios, require 24-7 live staffing for all stations that operate on that basis, and perhaps even evaluate the music selection process of radio operators. Rumored to be in the offing are proposals to regulate embedded advertising, to adopt enhanced rules on sponsorship identification in connection with video news releases and payola-like practices, and perhaps even expand EEO reporting requirements (as the FCC recently asked for public comment on the employee-classification information for its long-suspended requirements for the filing of FCC Form 395 – the Annual Employment Report in which stations categorize all their employees by their employment duties, race and gender). And Congress has not been idle, with proposals introduced for the adoption of a performance royalty on over-the-air radio for the use of sound recordings, hearings about potential restrictions on prescription drug advertising, and a proposal to roll back the limited ownership reform adopted by the Commission in December.

With all this activity in a six month period under a Republican administration with a Republican majority on the FCC, during a time of great turmoil in the broadcast industry itself, as television prepares for the digital transition and broadcast revenue growth is slow or nonexistent (based on a variety of factors including general economic conditions and competition from the plethora of new media choices), many broadcasters are wondering what’s going on? And some fear even more changes could come about in any new administration that may come to Washington after the November elections, no matter what the result of that election. The one candidate with the most experience in the regulation of broadcasting, Senator McCain who has chaired the Senate Commerce Committee which regulates the broadcast industry, has by no means been a captive of the broadcast industry – leading efforts to enhance the use of LPFM and at one point pushing a spectrum tax proposal for television broadcasters for the use of the digital spectrum.

So what is going on? There was an interesting article in the Wall Street Journal several weeks ago discussing the cyclical nature of government regulation. While the article focused on the financial industry and the calls for re-regulation in light of the subprime mortgage problems, the thesis of the story is equally applicable to the broadcast industry. After almost 25 years of gradual deregulation by the FCC under both Republican and Democratic administrations, where the general consensus was that the less government regulation was better and more reliance on marketplace forces would insure service to the public, the regulatory pendulum has swung back with a vengeance in broadcasting, paralleling moves in almost every industry toward a more aggressive role of the Federal government. Proposals for regulation of broadcasting are simply falling into line with proposals for greater regulation of financial institutions and mortgage companies, airlines, consumer product safety matters, and environmental regulation, just to name a few.

Soon after I graduated law school and started representing broadcasters in 1980, the FCC began the deregulatory progression. Many of the issues that I dealt with in the first few years of my legal practice disappeared – ascertainment, quantitative program obligations, the regulatory “underbrush” (regulations governing many very specific advertising and operational practices of broadcast stations – from restrictions on horse racing ads to FCC enforcement of fraudulent billing practices of some radio stations and even the regulation of whether a station used accurate coverage maps in its promotional materials). At that point in my career, a senior lawyer told me that this was all part of a regulatory cycle that swung from more regulation to less than back again. While I was skeptical at that time, it appears that these statements are now, some 25 years later, being borne out. So, for what little comfort this may provide, the cycle will no doubt at some point run its course and the pendulum will begin to swing back in a more deregulatory direction at some point in the future. Let’s hope that this point is not too far in the future and, during this more regulatory phase, the regulators take the reality of the business into account, and don’t take actions that could, during this time of increasing turmoil in the business, jeopardize the robust over-the-air broadcast business that we have enjoyed for so long .

The new Arbitron/Edison study tells us that the more things change, the more they stay the same.  It reports that online listening at-work continues to grow.

Correspondingly, listening on-the-job on a standard terrestrial radio has slipped.

Of course, Jacobs Media has been proponents of streaming from the beginning - in spite of the corporate excuses that "we won't give our station away on the Internet" or that "it costs too much" or that "we can't sell it, so why do it?"

Why stream?  Well, in 2008, it's a no-brainer, isn't it?  As new devices allow consumers to stream audio on their phones and (soon) in their cars, streaming is an essential.  And not just any stream, but a product with a strong player, great quality, and reliability.

But it goes beyond that.  The at-work component continues to play a large role in radio's overall place in the media hierarchy.  As one of the few entertainment/information sources that can co-exist with many on-the-job activities, radio remains the great companion - whether the source is a clock radio, a boom box, or an online stream.

Way back in '97, Arbitron and Edison partnered for their first groundbreaking study about at-work listening, and our consultancy was transformed in the process.  That research showed that Rockers are big consumers of the radio while they work.  As a result, we created, mobilized, and championed many promotions and contests - think Workforce - that were designed to capitalize on the opportunity.  Most of our clients are still very much engaged in at-work contesting today because it works.

And now, the wisdom of that strategy, combined with this new Arbitron/Edison study, point to continued success in PPM.  Inside their new methodology, Arbitron has clearly uncovered a listening edge for stations that have cultivated a gainfully employed audience.  Unlike the diary system, those who work - and make a nice living in the process - spend more time listening in the metered world.

Streaming and at-work - two more ingredients in radio's "secret sauce."

You think it's tough out there in radio?  Imagine the vibe at the recent leadership conference held by the American Association of Advertising Agencies (or the Four A's).  From a fun convention that used to include golf and tennis tournaments to the no-nonsense "reality bites" theme that this year's get-together featured, the tone was serious and concerned.

There was a recent New York Times article full of great sound bites that should probably be echoed at newspaper conventions, music industry conventions, and this year's NAB in Austin.

Consider these pithy quotes:

Tom Carroll, president and chief executive officer of TBWA Worldwide: "It's like driving in the fog.  You're not sure what's ahead of you, but you have to keep driving."

Ben Silverman, co-chairman at the NBC Entertainment and Universal Media Studios:  He suggested that better deals and sponsorships could happen if agencies would stop asking "Am I buying media?" and ask instead "Am I buying culture?"

And finally, Lee Clow, chairman and chief creative executive at TBWA, who exhorted the crowd to "Stop whining."  He reminded convention-goers that the new realities of the advertising world "shouldn't be scary" and should instead provide "a huge opportunity for us" to become more useful to clients as they look for new ways to sell their wares.  And then finally, this:  "If you want to participate, you've got to start hiring young people.  And don't tell them what to do -ask them what to do."

Stop Whining!

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Scenes from coming attractions, to be sure.