Monday, April 21, 2008

Radio: Satellite of Gov


Why is radio so scared of a merged XM and Sirius?

You’d think that the industry would be more concerned with the Microsoft-Yahoo merger or who’s next in line to get gobbled by Google.

Here’s another case of radio criticizing what it can’t understand.

Show me how it is going to take money away from radio? Or listeners? You can’t.

Terrestrial radio derives revenue from advertising. Satellite gets theirs from subscribers – and some paltry national business and a fair share of p.i.’s.

Just let the merger happen.

A combined XM-Sirius would have roughly 17.3 million subscribers, based on current estimates. A done deal would have each share of XM stock replaced by 4.6 shares of Sirius – and stockholders would retain approximately fifty percent of the merged company.

Sirius CEO Mel Karmazin and XM Chairman Gary Parsons would retain their titles with the merged company.

Memo to Fumbles and the NAB: The FCC shouldn’t play into your losing game any longer. You’ve spent enough membership money on pricey lobbyists and other special interest ploys with this lost cause. I ask you - just how many bottles of Screaming Eagle wine does the Boy need to show off at his dinner parties?

You have a better chance of hitting a Sirius or XM satellite with a slingshot.

Fumbles, you’ve far important fish to fry. Start with the fact that the chain that benefitted the most from radio deregulation couldn’t afford to send any of its people to your convention this year.

That, and “Radio Heard Here,” a campaign that’s certain to repel the iPod generation…but we’ll save that one for another time.

You know as well as I do that FCC Chairman Boy Kevin Martin’s rubber stamp is inked and ready. He’s just stalling for strokes.

There’s an old saying, “every job corrupts a little.” With Boy Kevin, it’s a lot.

The Boy has combined the veracity of his wife’s employer, Dick Cheney with the dexterous accounting of Henry Paulson.

We know the business reasons why the companies want the merger. Just pull a page out of Mergers for Dummies: trimming the herd, debt service, efficiencies of scale, shareholder benefit…need I continue?
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Have you no empathy for the plight of the poor shareholders and the surviving executives of the merged companies?

Terrestrial radio, must I question thy patriotism? How many companies were merged or bought out to create behemoth broadcast chains like Clear Channel, CBS, Citadel, Cumulus, and others?

Never let the facts get in the way of a good story.

I know the merger benefits only subscribers that prefer that all pro sports be on the same system. Otherwise, they’ll be fewer choices on just about everything else.
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Have you listened to XM or Sirius lately? Does it sound like some of the stations have tightened the playlists? Even the comedy channels. Punch lines get a little stale when you’ve heard them for the fourth of fifth time in just a couple of weeks.

There are already signs of things to come following the proposed merger. You don’t have Lee Abrams to kick around anymore, for example.

It’s actually a worst case scenario for terrestrial radio if the merger doesn’t happen. XM and Sirius will not go under. Even if they file for bankruptcy – they will not go away. They’ll up the promotion and marketing on their battle against terrestrial radio and cut deals for automotive placement that HD Radio hand puppet Peter “Sgt. Bilk-o” Ferrara can only fantasize about.

And forget the argument that satellite radio doesn’t do live or local. How many terrestrial stations are left that do?

Just to make it look like Boy Kevin’s doing his job for the FCC – or as it’s known by those in the business – the Federal Communications Hackmission; the new combined satrad company may have to turn over a few channels to independent contractors. They’ll firm-up their a la cart offerings – knowing that it’ll be revised many times over. Remember the number of channels you used to receive on “basic cable” – the lowest tier? Satellite radio? Same thing. You want the good stuff? You better be prepared to pay.

When you’re the only game in town, you call the shots.

Anyone who’s worked for CBS/Infinity knows what’ll happen when it becomes a one satellite radio universe. They’ll never see another dime in upgrades. You’ll never see more than a three percent increase in salaries.

Name me one company whose product improved when its competition was eliminated?
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Then there are those who, for whatever reason, just don’t like Mel Karmazin.
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Come on. He’s not going to be around forever.
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When is Howard’s deal up?
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Same time as Mel’s?
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Coincidence?


17 comments:

PocketRadio said...

More-and-more automakers are installing Satrad, as standard/optional equipment, so with that "AUX" button available on in-dash Satrad receivers, more consumers are tuning out terrestrial radio. The NAB may be against the merger, but I am sure iBiquity is for it, since that snake Struble wants the FCC to legislate HD Radio crap technology into all Satrad receivers, including interoperable receivers.

Anonymous said...

Satrad’s shelf life is incredibly limited. Internet radio will hurt broadcast, forcing it to revamp its business model, but it will eliminate satellite. Within 10 years, satrad receivers will be garage sale curios. The only remaining question involving Satrad is whether it will be able to con one of the media companies into buying it before it swirls down the drain or whether the media companies will be smart enough to avoid making this disastrous acquisition. Media companies? Smart? I guess I answered my own question.

Anonymous said...

i don't want to come off as one of those 'it used to be better' jerks but in this case it is true. i am a radio geek and had both xm and sirius. loved them both. xm was a little contrived and sirius was close to free form. then sirius tightened up and xm followed suit. now both services music and comedy channels are dull and repetitive. i did not renew sirius and they were not very nice about it and i plan not to renew xm. my ipod on shuffle does better programming. i listen to npr for news. that is it for am and fm.

Anonymous said...

I find it hard to believe there wasn't some MelKarmavillian background to Howard going to Sirius and Mel showing up as CEO shortly thereafter. Aren't Mel and Buchwald partners in managing Howard?

Anonymous said...

You may have missed the Jacobs Media study about XM & Sirius. They talked to subscribers and potential subscribers, and basically discovered that the only people who love satellite already have it. There's not much room for growth. It's a s big as it's going to get, and they better learn how to live with their current subscriber base.

I really don't think actual radio companies are worried about satellite. Clear Channel has kept a relationship with XM. Several of their stations are still available on XM. I think that once the merger is done, you'll see more strategic relationships between terrestrial and satellite.

Anonymous said...

I would never believe any research "study" from Jacobs Media. Fred Jacobs is a paid shill for HD radio and little else matters in his consultant company other than to continue to "b.s." his clients about rock radio. Satellite radio lost its luster with the rock audience. Something is missing. I don't know what it is but both XM and Sirius and especially the latter have let their rock stations run on automatic pilot like terrestrial rock radio has. Abrams at XM and Sabo at Sirius would never let Jacobs near their satellite channels. It is proof that a snake can spot another snake a mile away.

Anonymous said...

To the poster mentioning the relationship with Mel and Howard Stern. You are correct. Mel and Buchwald are partners with Howard and handled his syndication separate from CBS. Mel made sure he had a CBS station in every morning carrying Howard at full price. For some stations it was better for Howard not to be number one considering the spif they had to pay him. Mel is loyal to Mel. He was not loyal to Viacom and he is not loyal to Sirius except for his piece of Howard's deal. I consider Mel a smart businessman. When the radio chains go broke and John Hogan is on the beach begging for spare change, Mel will be sitting pretty in the largest beach house on the shore.

Anonymous said...

To the poster mentioning the relationship with Mel and Howard Stern. You are correct. Mel and Buchwald are partners with Howard and handled his syndication separate from CBS. Mel made sure he had a CBS station in every morning carrying Howard at full price. For some stations it was better for Howard not to be number one considering the spif they had to pay him. Mel is loyal to Mel. He was not loyal to Viacom and he is not loyal to Sirius except for his piece of Howard's deal. I consider Mel a smart businessman. When the radio chains go broke and John Hogan is on the beach begging for spare change, Mel will be sitting pretty in the largest beach house on the shore.

Anonymous said...

If satellite radio continues its decline in programming quality subscribers will leave. I believe that is already happening and both XM and Sirius are suffering from increased churn.

I think the golden moments of both XM and Sirius are gone. They messed with the product and probably overworked and underpaid their talent and programmers to the point where morale is bad and that translates to on air.

The music stations have tightened up. Sirius is the worst of the two. All of their formats have declined and are so predictable. XM is not far behind. They were the first to tighten up playlists years back though Sirius now has them beat.

I had both services being a radio and music junkie but except for the car I never listen and even in the car I find myself getting a better variety of music on my ipod shuffle.

Anonymous said...

I have Sirius and will not renew. I did not get it for Howard. I wanted more music variety. When it delivered I was there. Today it no longer serves me. My car will be an iPod and work/home a cross between internet radio and an ipod.

Anonymous said...

Radio is short-sighted. A merger is definitely in the best interest of terrestrial radio. We know what Mel K. will do with Sirius when he becomes the only game in town. The opportunity radio has is concentrate on rebuilding/rebranding the programming and marketing. Satellite radio is competition to radio only when radio allows it to be.

Charlie Profit said...

So many posts about XM and Sirius tightening their playlists...There still isn't a terrestrial station, where I am, that plays the variety I can find on either service. I have both. And I will probably renew simply because there is more choice with SatRad, and also because of the sports packages. I am also a fan of Internet radio, but it is still in infancy stages as far as mobile delivery. So, SatRad is my mobile listening preference.

I agree that Internet will trump SatRad soon. Once the WiMax is fully invested in, and rolled out Internet radio will be easier to access and listen to. It's an exciting time to be in radio!

The only problem I see right now where SatRad has Internet beat is in areas where there isn't cell service. For example, last year traveling across the Country, my SatRad worked everywhere but the cell phone didn't. I'm talking about Interstate driving, not back woods with lots of trees that would interfere even with SatRad.

I also think that if SatRad provides some unique programming, and if they invest in their own Internet delivery, it's quite possible SatRad will be able to grow it's audience and compete with other Internet stations. After all, people do pay for Rush, Dr. Laura, Savage etc. Why isn't it possible to believe that people will pay for specialty programming that isn't being delivered anywhere else?

There is still so much to explore with the Internet, that it is hard to say how SatRad will respond. But the merger, I believe, should be allowed to happen. SatRad isn't Terrestrial radio's only competitor, there is also the iPod (which many here refer to) and Internet radio. What's next, will the NAB join forces with the RIAA to shut Internet radio down, and say "it's in the best interest of the consumer"?

Read my blog The RIB Cage: http://blog.cabradio.com.

Joel Raab said...

John,

Agree wholeheartedly that Satellite is not radio's competition. Never was. Great gadget that, merged or not will have difficulty achieving profitability

Don Beno said...

I believe it is like anything else. Once you have a steady diet of the something you tend to tire of it. Let's say you eat lunch everyday at a restaurant that serves burgers, hot dogs and fries. After a while you get tired of it. Then you discover a restaurant the serves burgers and dogs, but also has spagetti, pizza and subs. You don't mind paying extra, because it's different. But after a while, you are now tired of burgers, dogs, pasta, pizza and subs.

That's when you decide it's really not worth paying extra to go there every day.

radioman said...

I think it is wrong to hand over both spectrum to one company. I do not disagree with John Gorman that the satellite radio merger is not a threat to terrestrial radio and it fact would be good for it but I do not like to see one company get both spectrum. Would it not be in the best interest of free enterprise to award either the XM or Sirius spectrum to a new party.

A few months back John Gorman mentioned a third party interested in obtaining one of the spectrum. Is that company still around?

Anonymous said...

Lee Abrams is the most bloated over hyped self promoted egotistical nilhist in radio. He invented album radio? Ha! I beg to differ. I am not sure what he did an XM radio. Judging from his blog which you can read at http://leeabrams.blogspot.com/ it was not much. A legend in his own mind. XM happened in spite of him. As for his history someone should look back at his days with Kent Burkhart and Dwight Douglas. They covered his ass. I still laugh out loud remembering the time he was so gonzo that pissed in his pants in the lobby of a hotel at a Billboard convention in Los Angeles.

Anonymous said...

satellite radio is having its share of problems. for one, it was never profitable and will never be. it serves a niche audience & it is 'kinda nice' when you travel long distances and don't want to change the channel. i don't think that reason is enough especially with gas pushing $4 a gallon. people are going to travel less--at least by car. If you must travel by plane or bus an ipod serves the purpose better. satellite radio has hit its peak already. as bad as radio stocks are doing, satellite fares even worse. i agree that mel is the smartest man on the planet in some ways. he will get out millions richer and so will howard. the rest of the clan wont be so fortunate and if you get stuck with an xm or sirius receiver you can store it next to your betamax.