High-Tech Radio Isn’t Static-Free

If you still haven’t gotten over the untimely demise of the lamented WQEW-AM, or, for that matter, the equally tragic departure of WNEW-AM, the following two words should give you heart: satellite radio. It’s the future of that hardy throwback to the days of low-tech.

Satellite radio will be the FM of the new millennium, the first technological change in radio, in fact, since FM made its appearance more than a half-century ago. Signals will be dispatched throughout the known world from outer space, and will offer sound quality worthy of a compact disk. You’ll be able to lock in a station as you set off for your week on Cape Cod and never have to fiddle with a fading signal. Within three or four years, satellite radio will be offered as an option when you visit your local car dealers.

Two companies won licenses to operate the new technology in an auction run by the Federal Communications Commission. They are moving ahead with plans to deploy their satellites and develop what might be called mass-market niche programming-a classical channel, a hard-rock channel, etc. Vickie Stern, an executive with the Washington, D.C.-based XM Satellite Radio Inc., said plans are in the works for yet another revival of the old WNEW-AM formula of American popular standards, which were so nobly featured on WQEW-AM until Radio Disney converted it from the station of Frank Sinatra to the station of Winnie the Pooh. “We’ll have a whole channel devoted to [music of] the 40′s,” she said. “You know, we’ve been saying that these days there’s no place in New York City where you can hear Frank Sinatra sing ‘New York, New York.’”

Perhaps, then, we have not heard the last of the old WNEW-WQEW crowd.

Clifford Burnstein, a partner in Q-Prime Inc., a Manhattan-based entertainment company that manages Madonna, Metallica and other pop stars, once had hopes of developing this sort of classic programming. With a $68 million bid for a license that he originally thought might cost a good deal less, he figured that another company of his, Primosphere L.P., was a cinch to win one of the two licenses the F.C.C. was auctioning off. “The idea was that everything we’d offer would be pure-pure jazz, pure rock-no crossover,” he said. Mr. Burnstein also had big plans for channels devoted to public service, à la C-Span, but when the F.C.C. raised the stakes in the auction process, “that went out the window.”

For Mr. Burnstein, whose company already owns several conventional radio stations out West, the bid marked the end of a drawn-out struggle with competitors and the F.C.C. He was in for a surprise. When the F.C.C. announced the results, a competitor, American Mobile Radio Corporation, had come up with $90 million, topping Primosphere. (Another company, as expected, bid a little lower, so Primosphere finished third in a race with only two winners.)

Now the Queens resident and his partner, Peter Mensch, are crying foul and asking the F.C.C. to reopen the licensing process. They are questioning the relationship between XM Satellite Radio’s parent company, American Mobile Satellite Company, and Worldspace Inc., which owns 20 percent of XM Satellite Radio and has petitioned the F.C.C. to increase its share to 80 percent. Worldspace, it turned out, bought into American Mobile Satellite just two weeks before the F.C.C. auction-and long after the cutoff date to apply for a license. Lawyers for Primosphere assert that it would be a violation of Federal communications regulations if de facto control of the company now known as XM Satellite passed from American Mobile to Worldspace without the F.C.C.’s consent. In an application to the F.C.C., Primosphere’s attorneys say that Worldspace essentially bought a place at the F.C.C. auction table by giving American Mobile Radio a much-needed infusion of cash just when bids were due.

To make the story all the more intriguing, one of the investors in Worldspace was Sudanese business Salah Idris, whose pharmaceutical factory in his native country was, in the words of one of Primosphere’s lawyers, the object of “unwanted attention of U.S. cruise missiles” several months ago. After Primosphere began raising objections to the F.C.C. process, Mr. Idris apparently was bought out. Worldspace’s chief executive officer, Noah Samara, told industry sources earlier this year that Mr. Idris “is no longer a shareholder.” But two of the company’s key financial backers are a pair of Saudi businessmen, which, Primosphere’s lawyers argue, raises the question of foreign ownership of an F.C.C.-licensed broadcast outlet. Mr. Samara, however, has asserted that such complaints seek to “exploit racial prejudices.” When Australian national Rupert Murdoch started getting into the American broadcasting business, he became a citizen in order to comply with F.C.C. regulation. The question here is whether or not such 20th-century rules should apply in the 21st-century world of satellite broadcasting.

Mr. Burnstein insists that his company played by the rules, but was done in by some fancy financial footwork. Which, if true, suggests that the new world of high technology may not be so different after all.