Don't look now but.......
- Thread starter DesotoCountyDawg
- Start date
Yes, his $100 million a year contract was waaaay too much but he is the main reason the satellite radio industry still exists. He brought over millions of subscribers and, since the merger, about 20 million people listen to Sirius XM and it's growing. But while he brings a lot to the table, they paid Oprah and Martha Stewart about the same amount combined and those channels are two of the lowest rated.
I agree. While 100 million a year is ridiculous money for a radio Dj, without him they wouldnt have near the subscribers that they doDogStuckAtUM said:
When stern was signed on with Sirius they had around 2 million subscribers. Within his first year they had driven that up to 9 million subscribers and over 80% of new subscribers said that they had gotten Sirius for Howard Stern. After the merger with XM that number is now around 20 million customers and makes Sirius the 2nd largest subscription based service in the US, behind Comcast cable which is number one. Sirius/XM problem is not Howard Stern, matter of absolute fact, Sirius would have been long gone without him. Their problem is that they pay Oprah 55 million and stewart 50 million and less than 3% of people that own sirius actually listen to them so they are paying for talent that does not produce or draw customers. Their other problem is that a satellite cost have 50 million to make and send into space. On top of that people are not buying a lot of new cars which was a huge avenue for gaining new subscribers. Bababooey, Bababooey
I logged into XM Radio Online, and there was a notice that the online service would no longer be available with regular subscriptions. But if I renewed my contract for another year, it would remain free until that contract ran out. Seemed like they were trying to generate some quick cash. </p>
Agree w/ weblow. The business model is flawed in that it costs them too much to get an additional subscriber. Also, they'd still be in business had the credit crisis not happened. Normally they'd have no trouble refinancing their debt, but now the interest rate spreads have gotten too wide and they can't afford to refinance their debt at current prices. They'll continue to operate though. Sounds like just a reorg.
I don't know what I am going to do. Ron and Fez is the best show on the radio. Ronnie B is a genius.
When you are on a tractor or combine for 12 hours a day FM and AM radio gets so damn monotonous.
I know those who have Sirius/XM tend to love it, and that's fine, but I believe it's going to always be a hard sell to get people to pay for radio. I know there are some great benefits to it, but especially in today's economy it's an expenditure that just isn't worth it for most people. I've never wanted it mainly because there are are only so many new technologies and gadgets that marketing can sucker me into buying or paying subscriptions for before I say enough is enough.
I have had XM for six years now and I love it. I travel alot and I like having all of the different channels to choose from so that I don't get bored. A few years ago, I had some problem where I had to speak to tech support in India, which almost caused me to drop my subscription, but I haven't had any trouble since then.
Sirius XM isnt going anywhere. They will probably be bought out but i doubt subscribers will notice much of a difference. I was pissed to find out that they are gonna make you pay for internet listening (because I was using that to listen at home) but I would gladly pay a little more if that meant getting access to all of the sports channels. Also there are going to be new applications which will allow you to listen to sirius on your iphone/blackberry, I think this will save Sirius XM. The problem with satellite radio is that it costs a lot of money to launch a satellite and that Sirius and XM spent alot of money trying to compete with each other initially. The Stern deal did not lose Sirius a dime. Spending 55 million for the Oprah channel did.
There are several big problems facing satellite radio:
1. Maintenance costs on those satellites is over $100M per year. Not talent, advertising, auto manufacturer bribes, amortization of mind boggling start up costs, etc.. Just keeping those birds in the air.
2. Most major markets are over radioed meaning the audience is splintered over many locally based stations that offer a variety of formats that satisfy most people. The market will have same music format on multiple stations. Many of formats suck (especially the music formats) but for the vast majority of people radio is as much audio wallpaper as anything. Generally if a person likes more than 50% of what is on the local stations they will stick with it. This is why numbers of people listening to radio today is as high as ever (time spent listening is down slightly but that is another discussion) - about 97% of adults 12+ llisten to radio 4+ hours a week. Even on satellite radio, most popular music station by far is 20 on 20 which is a current hits based rotation of the 20 most popular songs. A top 40 radio station that would include these songs would have at least 60-80 songs in rotation. Also,the niche music formats(Jazz, Blues, hair rock, punk, etc.) don't have the following originally forecast.
3. Renewal rates for satellite suck. The service comes free for one year on many vehicles but renewal rates hover around 40%. Their initial model was much higher. Renewal rates are strongest in rural areas but raw numbers aren't there.
4. To get the satellites installed in cars, satellite companies cut deals with the car companies. Besides overpaying, the mistake satellite companies made was not having deals with all of the car companies. Now some of the car companies are switching to HD Radio (an inferior product) but it lowers the raw subscriber base.
5. Satellite technology also depends on terrestrial based repeaters. Original business plan included selling some local advertising inserted through the repeaters. Broadcasters screamed about this because it violated the agreement between broadcasters and FCC on the use of this spectrum. This has meant that only advertising they can accept is network based advertising which is very, very low CPM (cost per thousand). No arbitron ratings figures so very low $. Commercial free music was not supposed to last forever. If you notice, the current marketing for the product mentions that "many music stations commercial free". That "many" has changed from "all" and will eventually be "some" and then not mentioned at all.
6. Terms of financing their start up costs were not favorable, especially in today's environment.
7. Technology hurts. Online radio can deliver all of the features of satellite (except in car listening - for now) much, much cheaper. Never envisioned what the internet could become.
Many other mistakes but the key strenght is that the product is great. The future of satellite radio is likely online. They should market online service aggressively to capture more at work listening at a much lower cost, if not free. If they can get people in the habit of listening online at work when internet capable radio receivers are readily available in cars (5-10 years away), they could be a dominant content provider. They would still lose audience to locally based broadcasters but the cume in number of listeners should be high enough for them to make money.</p>
1. Maintenance costs on those satellites is over $100M per year. Not talent, advertising, auto manufacturer bribes, amortization of mind boggling start up costs, etc.. Just keeping those birds in the air.
2. Most major markets are over radioed meaning the audience is splintered over many locally based stations that offer a variety of formats that satisfy most people. The market will have same music format on multiple stations. Many of formats suck (especially the music formats) but for the vast majority of people radio is as much audio wallpaper as anything. Generally if a person likes more than 50% of what is on the local stations they will stick with it. This is why numbers of people listening to radio today is as high as ever (time spent listening is down slightly but that is another discussion) - about 97% of adults 12+ llisten to radio 4+ hours a week. Even on satellite radio, most popular music station by far is 20 on 20 which is a current hits based rotation of the 20 most popular songs. A top 40 radio station that would include these songs would have at least 60-80 songs in rotation. Also,the niche music formats(Jazz, Blues, hair rock, punk, etc.) don't have the following originally forecast.
3. Renewal rates for satellite suck. The service comes free for one year on many vehicles but renewal rates hover around 40%. Their initial model was much higher. Renewal rates are strongest in rural areas but raw numbers aren't there.
4. To get the satellites installed in cars, satellite companies cut deals with the car companies. Besides overpaying, the mistake satellite companies made was not having deals with all of the car companies. Now some of the car companies are switching to HD Radio (an inferior product) but it lowers the raw subscriber base.
5. Satellite technology also depends on terrestrial based repeaters. Original business plan included selling some local advertising inserted through the repeaters. Broadcasters screamed about this because it violated the agreement between broadcasters and FCC on the use of this spectrum. This has meant that only advertising they can accept is network based advertising which is very, very low CPM (cost per thousand). No arbitron ratings figures so very low $. Commercial free music was not supposed to last forever. If you notice, the current marketing for the product mentions that "many music stations commercial free". That "many" has changed from "all" and will eventually be "some" and then not mentioned at all.
6. Terms of financing their start up costs were not favorable, especially in today's environment.
7. Technology hurts. Online radio can deliver all of the features of satellite (except in car listening - for now) much, much cheaper. Never envisioned what the internet could become.
Many other mistakes but the key strenght is that the product is great. The future of satellite radio is likely online. They should market online service aggressively to capture more at work listening at a much lower cost, if not free. If they can get people in the habit of listening online at work when internet capable radio receivers are readily available in cars (5-10 years away), they could be a dominant content provider. They would still lose audience to locally based broadcasters but the cume in number of listeners should be high enough for them to make money.</p>
and good point about the Oprah show/channel. Opie and Anthony don't lose them any money ether. They are one of the highest rated shows on the platform and are splitting their salary's and production cost with KRock in New York on terrestrial radio. If you haven't heard them I suggest it.
The problem with relying on the work audience is that companies won't pay for you to use up their bandwidth to listen to streaming audio.
There is no way that it costs $100 million to keep the satellites up. What the hell are they spending the money on? It's not like they would fall out of the sky without funding, and I'm pretty damn sure that NASA isn't sending shuttles up to work on them. Please enlighten me...