U.S. Broadcast Industry

Evolution of the Medium
On Christmas Eve 1906, Canadian inventor Reginald Fessenden conducted the first radio broadcast in history, sending a recording of Handel's Largo, Christian hymns and a "Merry Christmas" to United Fruit Co. boats in the Atlantic Ocean. The boats were in a suitable location and had the right equipment to receive the transmission.

By 1912, there was enough radio activity in the United States to prompt the government to require licenses for all radio operators. The early broadcasters primarily used the amplitude modulation or AM band -- radio frequencies in the middle range between 530 and 1710 kilohertz (kHz). While the AM band can travel long distances, it is easily interrupted by city skyscrapers or mountainous terrain.

In the 1930s, Edwin Howard Armstrong, known as the inventor of FM radio, developed the method of varying the frequency of a radio wave to create sound, rather than changing the amplitude. What resulted was a clearer sound, and by 1945, the number of radio stations using the FM band doubled. And by 1950, there were 90 million radio sets in U.S. homes.

Programming also evolved over time. During World War I, the U.S. government largely took over the radio industry and suspended all civilian activities to focus communications on military efforts. At the end of the war, the government returned control of the radio industry to the public sector.

In 1919, General Electric formed the Radio Corporation of America (RCA) for the specific purpose of acquiring the wireless radio assets of American Marconi, a subsidiary of a British-owned company. Shortly thereafter, AT&T and Westinghouse became joint owners in RCA, which became a controlling group of radio patents and equipment.

In 1926, RCA -- then headed by David Sarnoff, a pioneer of the radio entertainment business --formed the National Broadcasting Company (NBC) to run its growing, nationwide network of radio stations. The new NBC Radio operated two networks, named NBC Red and Blue, and came to dominate the radio industry.

A year later, Columbia Records and talent agent Arthur Judson jointly founded the Columbia Broadcasting System, CBS, posing a direct challenge to NBC's market dominance through CBS' 47 radio stations and popular programs, such as the Bing Crosby Show.

Concerned over a monopolization of radio, the FCC in 1941 released the "Report on Chain Broadcasting," criticizing the rise of broadcast networks and recommended that NBC divest itself of one of its two networks. The FCC also set limits on how many radio stations a company can own in local markets.

Two years later, Edward Noble, owner of Lifesaver candy, purchased NBC's Blue network and later renamed it the American Broadcasting Company, or ABC.

These three networks remain the dominating major broadcast media outlets today, though the companies' television and other entertainment media divisions have eclipsed their radio format.

Toward the end of the 20th century, the landscape of radio dramatically changed with the Telecommunications Act of 1996. The FCC deregulated the rules for radio ownership, allowing companies to own more than eight radio stations in larger markets. From that point on, corporations, such as Clear Channel Communications, could own up to eight radio stations in larger markets and streamline station programming in order to boost corporate profits.

At the end of 2004, the FCC reported a total of 13,525 licensed radio stations in the country.

-- Compiled by Kristina Tabor for the Online NewsHour