Big names, big challenges for satellite

Nice paid piece by the NAB professor. Nothing new, just the rehashed propaganda of the NAB (who feel threatened by the satellite companies)
Satellite is growing and will continue to grow. Why? Content, completely commercial-free music, choice no matter where you live and freedom of expression. How long did it take for satellite TV and Cable to make money? Sirius and XM will make it with or without merger. Terrestrial radio and the NAB would be better off getting their own problems solved rather than spending their time and money bashing the best thing that's happened to radio since FM.

I would have agreed with everything said in this very negative article, but then I was given sat. radio as a gift and couldn't believe I lived without it. Once you take the leap into sat. radio, believe me, you will never be able to listen to regular radio again. Its that good.

The Professor is very correct. You satrad fans may not wish to accept the truth, but if satrad was healthy, the stocks wouldn't have tanked 50-65% would they.

Right on Professor.
Did you stick Marianne or Ginger ?

Well, its pretty obvious this guy not only has never actually listened to SatRad, but has neglected to do any research beyond reading bi-lines.. I especially liked the line "Most music formats and talkers are available via free radio". What does he listen to? SatRad makes it obvious that MOST formats are NOT available on terrestrial radio. Where are these punk radio stations, 40s era stations, rave/techno stations, blues stations, reggae stations, or hell, even Classical? Really, name them... This guy not only doesn't listen to SatRad, he doesn't listen to terrestrial radio either(not for music anyway). This is really shoddy research. Nothing in it is an original idea and everything topic is only covered superficially.
F for lack of effort.. get off your duff and do some research.

You sir, are an idiot.

Welcome to the wrath of the Orbitcast reader!

PWN3D!!

Having subscribed to XM since December 2001, I find your article missing the mark in several ways.

1. Local content -- Local content is still available to me, as I did not lose my AM/FM radio in the car. If I choose to listen to terrestrial radio, I can. However, there has been no need for me to do so in 5 years. The local content argument is the only argument the NAB can come up with.

2. Retail Sales -- Yes, retail sales are down, but that is expected as more and more automakers make XM and Sirius available in their cars. No need to buy an add-on sat radio if the car has it already integrated. Most buying at retail are either buying the few portables available or buying units for cars without integrated sat radio.

3. FCC Compliance -- Yes, some of the radios had FM mods that were too strong and that has been fixed. While certainly a misstep, it was only for a few months and likely did not have a huge impact on the industry, just one or two quarters. Most of this happened mid-year and there was not a shortage of radios during the holiday season.

4. Sat radio as a gift -- Yes, when you give a gift that requires the recipient to subscribe, you have to question whether it's a good gift. However, when giving any gift, the giver usually has some knowledge of whether the item is something that the recipient wants. The same could be said of an iPod or other MP3 player -- you are "forcing" the recipient to buy music to put on the unit.

I worked for Sirius as a producer for 3 years. It was a great company to work for in the beginning because stock options were tossed out like candy and there was still a lot of confidence regarding future profit. Then talk around the office started to focus on budgets. The reason there is concern is because of the unproven profitability of the retail sector, a point the professor mentions. Satellite radio is awesome, for sure, but Karmazin would not even ENTERTAIN the notion of a merger if Sirius was in the clear. The company owes a LOT of money (clearly some of the previous respondents know very little about business economics) and only time will tell if TRUE profit (not just more subscribers) will arise.

LOL - Some hardcore Sirius fans on here - are some of you major stockholders? It's ok - I did work for them (moved because I got tired of Manhattan and getting up a 4am) and they are a sexy company no doubt, but don't attack the facts - whenever a MERGER is mentioned it means there is stress in the industry!:)

Sounds like another one of those representatives from the National Association of Broadcasters... Sirius doesn't need a merger.. their growth is unbelievable... and that is one of many facts you somehow forgot to mention... if their growth continues at it's current average rate, XM will be put out of business and there will only be one satellite provider regardless of whether they merge or not! Traditional radio is doomed to the fate it cast upon itself... and why can't the two satellite companies just merge their programming and stay as two separate service providers like the cable companies do? And one more thing... I've stopped listening to regular radio since WAAAY before satellite even existed... it's just ridiculous anymore... Just like those short drives you mentioned that would doom satellite TV for cars, my drives are too short to sit through the commercials plaguing traditional radio... and one more thing, Satellite TV already exists for cars- and it did great... it's called "direct tv" and it has many more applications that just the backseat of cars for kids... one example, it's also used for RV and motor home tv systems... You're obviously bias.

Many different opinions on here. The OP has some points. Like it or not, Sirius and XM have paid some very hefty prices for content and subscriber acquision fees to attract listeners, and it has come at a price.

Stern is a great example. He has brought trememdous recognition to the industry, and even tons of subscribers, but at a pricetag of over $750 MILLION dollars. Sure, content brings over the subs, but you can't just spend money at any price to gain subscribers. These guys are here to make a profit, and no amount of sub additions will offset your costs if you can't get content and sub acquisitions at a reasonable price. Both companies have FAILED to do this, and it shows in the declining stock prices. Love Stern or hate him, Sirius overpaid to get him, and the profit they generate from him will be bare minimum. This is a perfect example of a great idea (grabbing Stern), but poor execution (overpaying).

All this being said, comparing Satellite Radio to terrestrial is a sick joke that the NAB can't even hope to compete on. Where else do you get such *AMAZING* music channels, all commercial free, as well as hear any professional sports league games. Whether you're an NFL or MLB fan, you're covered on Satellite. I haven't listened to terrestrial radio in nearly 10 years, and Satellite Radio is the savior for music and other content. It is, without a doubt, worth the $13 a month fee.

I have Sirius and I love it. I no longer listen to traditional radio at all. I think it will survive. Can you remember back when cable TV was struggling in much the same way with individuals proclaiming its failure? Cable and satellite TV are now HUGE. It will take time, but it will continue to grow and twenty years from now many will not remember the struggles.

Jeff,

I can understand your confusion with the XM & Sirius business model. Shame on you for publishing when you really have not done your homework.

But ... here is why I am sending this note. You should never review a company when you don't understand their product line.
I can always tell when someone does NOT own a sat radio. They totally miss the point.

Here's your mistake. You FORGOT to buy a sat radio !!!

The baby boomers want their music commercial-free and they will PAY for it. As will all generations that can swing $130/year. In 1-2 more years IPODers will be totally sick of spending 4 hours a week managing MP3 files. I don't need that aggravation.

Sat radio is not JUST cool. It is the best thing that has happened to radio and to the automobile in 50 years. My suggestion for you is run out and buy a SAT radio for yourself for Christmas and really listen to it. Then tell us how local radio is superior.

WHAT here is not obvious? Satrad as a whole would not have the subscribers of today without the "Stern Effect" SIrius from 660K to 3.4 mm then over 6 million. Same time Xm had 2.5 mm "Stern news" and goes to 7.1. XM heavy on "OEM" - Sirius Heavy "retail" Retail wins kids! OEM high "churn"!
Panero invests in debt with "WRSP" as Sirius dillutes with "content"...... XM "cold shoulders Stern" as Sirius understands a "hands on investment" XM partners with what is the true defined "enemy" of Satrad with CC ( Clear Channel) as well promotes music channels with commercials. As Sirius stands behind "Commercial Free Music".. Sirius/Mel finds a workable deal with the RIAA as XM/Panero decides to completely ignore the possible retroactive amount of money should some
J-O judge find in favor of the "100yr" copyright laws on record. Xm in fact could find charges for ruling above Sterns contract and "sub" count bonuses. What more is needed to be said?

NDKFTDIX wrote:

WHAT here is not obvious? Satrad as a whole would not have the subscribers of today without the "Stern Effect" SIrius from 660K to 3.4 mm then over 6 million. Same time Xm had 2.5 mm "Stern news" and goes to 7.1. XM heavy on "OEM" - Sirius Heavy "retail" Retail wins kids! OEM high "churn"!
Panero invests in debt with "WRSP" as Sirius dillutes with "content"...... XM "cold shoulders Stern" as Sirius understands a "hands on investment" XM partners with what is the true defined "enemy" of Satrad with CC ( Clear Channel) as well promotes music channels with commercials. As Sirius stands behind "Commercial Free Music".. Sirius/Mel finds a workable deal with the RIAA as XM/Panero decides to completely ignore the possible retroactive amount of money should some
J-O judge find in favor of the "100yr" copyright laws on record. Xm in fact could find charges for ruling above Sterns contract and "sub" count bonuses. What more is needed to be said?

You're all over the place here. XM didn't spend $650MM (more than Stern's contract) on MLB (aka CONTENT)? XM is teh sound with falsifying subcounts (i.e. "parking lot" subs?)? I think you mean the class action suit claiming high SAC costs (which lasted 3 mos. BTW). Finally, the XM "ruling" over copyright was not decided, they simply lost their move to dismiss--nothing is even close to decided, only that it gets its day in court.

Please, read up before posting garbage.

NDKFTDIX wrote:

WHAT here is not obvious? Satrad as a whole would not have the subscribers of today without the "Stern Effect" SIrius from 660K to 3.4 mm then over 6 million. Same time Xm had 2.5 mm "Stern news" and goes to 7.1. XM heavy on "OEM" - Sirius Heavy "retail" Retail wins kids! OEM high "churn"!
Panero invests in debt with "WRSP" as Sirius dillutes with "content"...... XM "cold shoulders Stern" as Sirius understands a "hands on investment" XM partners with what is the true defined "enemy" of Satrad with CC ( Clear Channel) as well promotes music channels with commercials. As Sirius stands behind "Commercial Free Music".. Sirius/Mel finds a workable deal with the RIAA as XM/Panero decides to completely ignore the possible retroactive amount of money should some
J-O judge find in favor of the "100yr" copyright laws on record. Xm in fact could find charges for ruling above Sterns contract and "sub" count bonuses. What more is needed to be said?

Things aren't all that cheery on the Sirius side either there fanboy. The Stern deal is still up in the air. Again, it brought in the subs, but look what it COST them to do it. Rising SAC, vastly delayed profits and the stock tumbling as much as XM's. Let's not forget the advertising revenue will not be anywhere near what Mel had hoped (but it isn't Mel's fault).
The take rate on OEM is near 50%. That is unheard of in the industry (meaning a good unheard of). OEM is THE future, not retail. Tried to hook up a new store bought satellite radio lately? You can't rely on that built-in FM modulator anymore. Nope, you gotta buy extra stuff to get it to work! People no longer want the hassle. Also, let's not forget Sirius' churn is masked due to the longer trial period on the OEM's. And those "parking lot subs". Whether they're paid for or not, is a borderline shady business practice at the very least. A customer should be behind the wheel, not a dealer lot.
XM's "deal" with CC was before they went live. They didn't just pick them because they loved them. CC gave them the backing without much interference, until they stirred the pot when XM wanted to pull out early.
Mel had nothing to do with the "deal" Sirius made with the RIAA. In fact, Sirius chicken-shitted out a lawsuit by agreeing to discontinue the S50 (the portable that got them in trouble, like XM's INNO)and pay a royalty for each of the remaining units on the market. Hardly a bold move. Also, let's not forget that Sirius purposely delayed "fixing" their FM modulators in the older units until the new units (that were FCC compliant) came out, and they flat out lied about their incomplacency. Hardly a brilliant move either.

Joe wrote:

You raise valid points about why there will never be a merger between Sirius and XM, but it seems like some of the Sirius investors do not know what antitrust law is or why we have them in place to protect consumers. A merger between the only two satellite radio providers is bad for the consumer, because a sole provider who has unregulated control over subscriber fees could really stick it to the man.
Joe

I guess it is safe to say that you are not a Cable TV subscriber. If you are than you obviously forgot that Cable is a Monopoly and can charge what ever they want. When I bought high speed internet I had no choice but to sign up with my Cable TV subscriber and I am still 6 months away from having a chance to get FIOS. And before you say that it is my choice to have high speed internet and cable.... So is SatRadio.

I do not like it when academics talk down to others outside the ivory towers. The prof says that music formats on satellite radio are freely available and I don't have to pay for them. Gee, where was he when I was looking into satellite radio? Doesn't he think I assessed that very thing before spending the money? Pinhead academic... Please, professor, stick to the classroom. Wandering around in the real world with real consumers doesn't suit you. Facts: satellite radio gives me access to so much more music than terrestrial radio does, and the local flavor of terrestrial radio that you value is so muted these days as to be nonexistent in many markets (especially if you live outside of a major city). Finally, many subscribers to satellite radio are there for two reasons - we can't stand the excessive numbers of commercials on terrestrial radio, nor do we find DJs in love with the sounds of their own voices appealing. Long live satellite radio! Like another listener said, I NEVER listen to terrestrial radio these days unless I am forced to. And that won't change, in spite of the learned professor's attempts to show me where I am wrong.

Regarding your comments on satellite radio, which amount to no more than a rehash of current and past issues the industry will have to work through,(as industries often do,) I would expect more insight from a professor of communications.(Then again, given what I've seen of the culture of academia, perhaps not.) Your article sheds no new insight on the medium. Let me help you here.

I live in the New York Metropolitan area. The terrestrial bandwidth is so jam-packed with stations and choices, I can't even find a "blank" FM station to use a modulator on, forcing me to hardwire my satellite player into my car radio. You would think I would be satisfied with all of the options I have here. I'm not. Like most self appointed critics of the medium, you left out the number one reason why people subscribe. It's not Howard, it's not Oprah (it is hardly a revelation that she is not on the station that bears her name-Oprah is a brand) it's not any of the "personalities." It's the music, and that is what most satellite listeners are tuned into most of the time. The luxury of having dozens of commercial free music stations, each one geared to a certain taste, or even time period and genre is what makes the medium spin.

Here, you parrot the NAB line:

Radio's success over the years has been its local identity. Satellite-delivered programs have no localism. While the large majority of Americans still listen to radio, the question is whether it is important enough in their lifestyles to pay for a receiver and an ongoing monthly fee. Cost is the major factor for nonsubscribers, particularly among young people. Most music formats and talkers are available via free radio.

This trumpeting of "localism," (if such a word in the English language exists,) is utter rubbish. In fact, terrestrial radio's heavy reliance on national syndication from the likes Rush Limbaugh and perhaps a dozen like minded imitators, other personalities like Don Imus and G. Gordon Liddy, programming like that presented on ESPN, which has hundreds of affiliates across the nation, and standardized hourly news outlets like CNN radio, make this "localism" gambit a complete red herring. Why observers think this is a factor is beyond logic. In fact, the ability to listen to the same station from coast to coast is considered an asset for satellite radio.

Suffice to say that people pay for satellite radio much as people pay for cable TV- wider variety, fewer or no commercials, and programming geared to a more discerning audience instead of the lowest common denominator. It is obvious you have never subscribed. My recommendation to you is to get a trial subscription and learn about the medium you're criticizing.

Oh, and by the way: 13,000,000 listeners (and growing with each car that rolls off an assembly line) does constitute an audience.

Depauw University ???? Never heard of it....thought it was a misprint of Depaul University.

Does Depauw have a basketball team....or is Depauw kinda like Sally Struther's TV & VCR Night School.

Funny how some quote "intellectuals" gotta bash success. SATRAD is here to stay, almost 15M listeners in 5 years.....have 3 subs never listen to terrestrial anymore....its old school.

McCall do you still have rabbit ears on your black & white?

LMAO

DePauw has a "Faculty Governance" department listed on their website.
It is obvious to me this so-called "Professor" has been paid to write this swill.

I'm reporting him. Academic standards should not be polluted by corporations and trade protection groups. The "locality" reference can be found in a speech the head of the NAB made months ago at the National Press Club. The rest has been poached from NAB talking points.

It's time for the professor to 'fess up.