Implications of Stern Moving to Satellite Radio

[James Fee]

<div class='os_post_top_link'><a href='http://news.com.com/Will+Stern+turn+satellite+radio+into+a+star/2100-1025_3-5400116.html?tag=nefd.lede' target='_blank'>http://news.com.com/Will+Stern+turn+satellite+radio+into+a+star/2100-1025_3-5400116.html?tag=nefd.lede</a><br /><br /></div>"<i>After protracted tussles with the Federal Communications Commission and media giant Viacom, Stern announced Wednesday he will move his show to striver Sirius Satellite Radio in 2006 after his contract with Viacom expires. Industry analysts hailed the move as a major turning point for Sirius and for satellite radio in general, which has struggled to attract subscribers and stay ahead of mounting debts. "We're going to mark today as a moment of sea change," said Jeff Jarvis, a media executive and author of the BuzzMachine blog. "This is going to be the breakthrough for satellite radio to become large enough to be a viable business...Satellite and the Internet will become the delivery mechanisms for audio programming, and broadcast is just going to become duller and duller.</i>"<br /><br /> <img src="http://www.digitalmediathoughts.com/images/stern.jpg" /> <br /><br />Good news for all consumers, whether they enjoy Howard or NPR. FM radio is dead and has been over the past 4-5 years. Stations change format and most of the are run by a computer in either LA or NYC. I would expect more and more personalities to move their shows from OTA to satellite as the subscription numbers go up. If OTA radio wants to continue to be an important medium, they should look at what cable did to the OTA networks and start listening to the consumer.

[Neil Enns]

most of the are run by a computer in either LA or NYC

To be fair though the same is true of satellite radio, and they actually advertise this as a benefit. XM has a few DJs, but they're hardly worth mentioning, and spews its feeds across the whole country from D.C. Sirius broadcasts everything from NYC. Neither have ANY local content.

In some ways, it's what FM is trying to become *grin*.

Neil

[James Fee]

To be fair though the same is true of satellite radio, and they actually advertise this as a benefit. Well you are right. But "local" stations don't say that they do. Or ClearChannel running a contest that is actually all across the country. Sure win 1 million dollars, but have to fight 100 other stations for it. :roll:

[James Fee]

Here is an interesting article (http://www.washingtonpost.com/wp-dyn/articles/A16113-2004Oct7.html) from The Washington Post (free registration required)

A Clear Channel Communications Corp. radio station program director, who declined to be quoted by name because Clear Channel is in a legal dispute with Stern over the company's decision to take his show off of six Clear Channel stations in February, said: "I have never witnessed anything as cataclysmic as this. This is a wake-up call to everyone in [AM and FM] radio."

The change won't happen overnight, but satellite radio needed someone like Stern to show people, you can go somewhere else.

[Doug Johnson]

The question is, can Stern bring enough listeners to Sirius at $12.95 + whatever premium charge they will add for his programming, to justify the half-a-billion dollar price tag he brings with him?

How many of his listeners are loyal enough to pay that much to continue listening to him?

[Neil Enns]

can Stern bring enough listeners to Sirius at $12.95 + whatever premium charge they will add for his programming

Unlike XM, Sirius doesn't have the notion of "premium" stations, and you get the whole whack for $12.95, including Howard (they have this on their website under comparisons of the two networks). But your point is still valid. I doubt a hundred million people will move over, but a fair bit will. My wife was already lamenting that we have XM, not Sirius, when she heard this news.

Neil

[bdegroodt]

Yikes! That's a load of cash. Would this be the largest deal for an entertainer ever? This must be coming from 2 funds at Sirius--personality salaries and marketing. I figure just to break even on the salary alone, Sirius needs about 500K new subscribers, maintained for 60 months to get to even. Seems reasonable to me, but that's a big roll of the dice. Sure hope this is the deal that puts sat-radio on the map in a critical way, and not the deal that breaks one company--leaving no competition and an industry in trouble.

This does raise another interesting issue. I don't have sat-radio, but this makes my interest in a new BMW all the greater, and, as silly as this sounds, my first action after hearing that Howard was going to Sirius was to look up the sat-radio vendor BMW works with (Sirius). Which brings me to my point, is there a market for a consolidator/aggregator of sat-radio content (think cable companies and HBO/Showtime/Start/etc)? You can imagine Howard is the one of many (doesn't one have all the NFL games?) "premium" programming that would make a consumer pick one vendor over another, when what they really want is both.