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.

Evolution of the Medium
Companies first petitioned the FCC to issue satellite Digital Audio Radio Service licenses in 1990. After the FCC divided the satellite bandwidth, or the S band, the agency auctioned two eight-year licenses for satellite broadcasting in 1997. Four companies -- American Mobile Satellite Corp., CD Radio, Digital Satellite Broadcasting and Primosphere -- submitted bids for the two licenses. CD Radio, now called Sirius Satellite Radio, bought one of the licenses for $83.3 million, and American Mobile Radio Corp., now XM Radio, won the other for $89.9 million.

In the ensuing years, the U.S. satellite radio companies formed corporate partnerships to build and distribute radio receivers, develop talk, news, music, and sports programming, and market the new product to America. After launching their satellites between 2000 and 2001, XM went on the air in late 2001, and Sirius followed in early 2002.

The companies spend roughly $250 million to launch a single satellite, leading to massive overhead costs for satellite radio firms.
More than 5 million people subscribed to satellite radio as of early 2005. That number is expected to jump to 8 million by the end of 2005, according to media analysts, making satellite radio one of the fastest-growing technologies in history.

The top two broadcast radio companies in the United States in terms of station ownership are Clear Channel and Cumulus.

Clear Channel Broadcasting
Founded in 1972, San Antonio, Texas-based Clear Channel owns nearly 1,200 U.S. radio stations, many in major U.S. markets. The company ranks as the top broadcast radio company in terms of station ownership, reaching more than 185 markets.

In addition to radio, the company owns a major live entertainment promotion and production subsidiary and an outdoor advertising subsidiary that ranks as one of the largest in the world. In 2004, the company's radio division brought in revenues of $3.8 billion.

Cumulus Media Inc.
Headquartered in Atlanta, Ga., Cumulus Broadcasting owns and operates some 300 stations, reaching about 60 mid-size and smaller U.S. Markets

Cumulus ranks as the second-largest radio company in terms of ownership, though still far behind the radio giant Clear Channel. The company in 2004 claimed $320 million in revenues.

XM Satellite Radio
XM Satellite Radio Holdings Inc., formerly American Mobile Radio Corp., was founded in 1992 as a digital broadcast radio network and went live via satellite radio on Nov. 12, 2001. The company, headquartered in Washington, D.C., broadcasts more than 150 radio stations, offering commercial-free music channels, a variety of talk programs and news and entertainment channels -- including a morning program hosted by radio personality Bob Edwards, formerly of NPR's Morning Edition -- as well as 21 regional traffic and weather channels. XM also has an exclusive deal with Major League Baseball to broadcast games live.

XM has several partnerships with electronic companies, such as Sony, Pioneer and Alpine, to make its satellite radio receivers and with car manufacturers, including General Motors, Honda and Nissan, to directly install XM equipment into their new vehicles. Both GM and Honda own substantial shares of XM.

XM reported some 3.77 million subscribers in early 2005, posted 2004 revenues of $244.4 million and a net loss of $642.4 million.

Sirius Satellite Radio
Sirius, formerly CD Radio, was founded in 1990. Headquartered in New York City, Sirius offers more than 120 channels of music, news, sports and talk programs - including domestic guru Martha Stewart and Howard Stern, a popular "shock jock" talk show host who decided to switch to the largely regulation-free satellite network in 2006 after coming under fire by the FCC for making indecent comments on his syndicated broadcast radio show.

Sirius' centerpiece programming is its exclusive sports broadcast deals with the National Football League, the National Hockey League and NASCAR. Sirius also has exclusive deals with automakers -- including DaimlerChrysler, Ford, Mitsubishi and BMW -- to directly install Sirius radio into certain car models.

For the 2004 fiscal year, the company reported over 1.2 million subscribers, sales of $66.9 million and roughly $450 million in losses.

The government has played a critical role in the history of broadcast radio since its inception. After the sinking of the luxury cruiseliner Titanic in 1912, Congress passed the Radio Act that required all ships to be in radio contact and gave regulatory and enforcement responsibilities to the Commerce Department's Bureau of Navigation.

In 1927, Congress took a major step toward regulating broadcasting by amending the Radio Act to create a Federal Radio Commission. The new commission issued licenses for radio stations around the country, regulated broadcast in "the public interest, convenience or necessity" and for any obscenity, and ensured radio stations gave equal air time to politicians.

A sweeping reform came with the Communications Act of 1934, when Congress created the Federal Communications Commission, charged with government oversight of the media and telecommunications industries.

The FCC has five commissioners, including a chairman. The commissioners are appointed by the president and confirmed by the Senate. The FCC's Media Bureau creates and enforces regulation for radio and television stations across the country. The FCC cannot censor the content of any broadcast due to First Amendment free speech protections, but the group's jurisdiction includes station licensing, restricting obscene and indecent content, regulating balanced political comment and ensuring that businesses adhere to ownership rules, among other tasks.

The FCC's rulemaking process requires public commentary on all matters, since it is the group's responsibility to regulate all broadcast media to best serve the public interest.

The FCC does not regulate the content of satellite radio or other fee-based media. But, amid recent complaints over indecent content on the radio and television, Congress and the FCC are discussing ways to expand the agency's authority to subscription-based media, such as cable television and satellite radio.

The FCC is authorized to allocate bandwidth for Satellite Digital Audio Radio Service as it did in 1992, and to issue broadcast and satellite licenses. The U.S. government must also coordinate the satellites owned by Sirius and XM through the International Telecommunication Union, which works to oversee global communication networks. In 1997, the FCC divided that bandwidth evenly for two satellite radio licenses, which were purchased by the highest bidders -- Sirius and XM Radio. Each satellite radio license has an eight-year term and can be renewed. The FCC can levy fines and revoke the license if either company interferes with other broadcast signals or violates other rules of its license.

Commercial broadcast radio largely relies on advertising and corporate sponsorships to finance its operations. Other radio organizations, such as National Public Radio, rely on funding from the U.S. Government in addition to grants from foundations or businesses and individual listener donations.

XM and Sirius Satellite Radio primarily rely on subscriptions as a main source of revenues, as opposed to commercial radio's ad-based revenue model. As of April 2005, the satellite radio companies offer a basic subscription rate of roughly $12.95 per month, plus the additional expense of purchasing the requisite equipment, such as a radio receiver for the home or car, and additional fees for premium channels. XM also derives some revenues from advertising and intends to expand its ad sales.

Terrestrial radio stations broadcast through analog signals, which are received by a conventional antenna and receiver. In the last few years, however, traditional radio has begun experimenting with newer methods of broadcasting, including digital transmission, streaming programs over the Internet and offering downloading services for radio programs, such as podcasts.

Both XM and Sirius market their own satellite radio receivers, which represent their primary distribution method, and both offer online radio services. Both companies have exclusive deals with specific auto manufacturers, car rental companies and airlines to reach a wider audience. Additionally, Sirius in early May announced it would begin a daily four-hour show featuring highlights from various podcasts. The new program, set to begin on May 13, will be produced and hosted by Adam Curry, a former MTV personality and co-developer of the podcasting technology.

-- Compiled for the Online NewsHour by Kristina Tabor