So, in a little over eight months what has Howard Stern -- the King of all Media -- done for Sirius Satellite Radio? The famous shock jock moved from the public airwaves of CBS to the privately-owned and subscription-only Sirius Radio network in January of 2006, taking a $500 million multi-year contract with him for himself and the crew he operates with (Hi Robin!). But let's pull out the measuring stick and see if Stern has been worth it, although a direct measurement can't really be made. After all, would newer Sirius subscribers have signed up for Sirius if Stern had not moved over? That is the question we can all speculate on, but nobody can definitively answer, although some marketing statisticians have tried.
Sirius has gained customers this year, no doubt about it. Even Mad Money's Jim Cramer calls SIRI stock a "buy" at $4. But there are rumors all over that the overall disappointing performance of Sirius and larger competitor XM Radio might force the two companies to make a deal and merge their networks. Cramer says this would spike SIRI shares to $10 or more. It very well could. Both companies are unprofitable so far (as expected, launching satellites is not cheap), and a merger could eliminate tons of financial redundancies and other factors.
Even as Stern has more than likely brought legions of his fans to the Sirius network in the last eight months, it will take more than the arguable most-popular show host on radio these days to rescue Sirius from mounds of debt and impatient institutional shareholders, who are ready to try and recoup some investment. It's true that it takes time to make a profit after launching satellites (at a cost of hundreds of millions) and facing huge costs up front.
Then you have to spend hundreds of millions of dollars on customer rebates to hit price points and marketing costs (like Stern) to drudge up a loyal fan base that will pony up $13 a month to help you pay all that debt off. That's apparently not happening fast enough, even with Stern's recruits onboard.
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Reader Comments (Page 2 of 2)
9-02-2006 @ 6:10PM
Earl Phillips said...
No one act can save satellite radio. There is a built in audience,truckers,travel sales, full time rv retired folks.
These people know and want this service. Five minute commuters and people driving to the store aren't going to shell out for Howard, Opie and Anthony or even my favorite Ron and Fez.
9-02-2006 @ 9:43PM
Elliott Johnson said...
After reading every comment, all I can say is there were simular beliefs of negativity and skepticisim when land radio was new. I just rented a rental car for 2 weeks that came with sirrius SatRad and I am hooked. Just as some have stated all of the negative possibilities, I have to stick with the positive ones. I think over time, someone at Sirrius will come up with a plan to make this more profitable. At this point I think we are in a stage of testing the waters for what works and what does not. That I believe is common for any new avenue in which we decide to venture in. We are intelligent and we will learn from our mistakes. The Wright Brothers are and excellent example and there are many more. This is too good of a product to just dissapear because of 'growing pains'. Be patient and positve and PROSPER..................
9-02-2006 @ 10:35PM
William Devane said...
Earl Phillips, Do you have cable TV? How many homes do you think has cable TV? Think all the people using IPOD's are long-haul truckers? Think they are all RV travelers? Think they are all travel sales? I think you need to go back to the basher drawing board, because it is obvious that you have no idea what you are stating.
9-02-2006 @ 11:38PM
Robert said...
I love my Sirius Satellite Radio, however...... these two companies are burning cash like a California Wildfire !!! This can't go on forever. I am keeping my Satellite radio but SELLING MY Stock !!!
9-03-2006 @ 5:12PM
harry banana said...
what is satellite radio good for.?. really...I mean it's not free.. you do have to own a receiver to listen to it... so what good is it??? ok.. I'll tell you... I have had an XM Radio and it's service for going on three years now, and what the best part is you can listen to the same channel from coast to coast without changing the radio.. try to find your favorite type of station every fifty to seventy miles, driving down the interstate at warp speed or put it on your presets on your XM receiver and touch a button and its rock or country or talk radio from coast to coast and border to artic circle....
9-04-2006 @ 1:43PM
MITCHELL SCHIMKO said...
I HAVE BEEN A SATELLITE RADIO STOCK SINCE 1998 WELL BEFORE SIRIUS AND HOWARD STERN ARRIVED. I DO HAVE 5 SIRIUS ACCOUNTS AND I TRAVEL 1300 MILES IN MY CAR TO MY VACATION HOME TWICE A YEAR. SATELLITE RADIO IS THE GREATEST, THE STOCK SHOULD EVENTUALLY CATCH UP
9-04-2006 @ 7:55PM
WirelessDJ said...
>I don't see a consumer subscription type radio source ever beating FM/AM radio
ARE YOU INSANE!! XM and Sirius are the "Cable TV" of radio. They said the same thing when cable was first introduced. "Who would pay for TV?" Now everyone has Cable.
I can tell you this: once you get it you won't want to live without it.
Satellite Radio caused 36% of respondants to listen to less traditional radio, while 23% actually listened to more radio and 41% said it had no effect. Overall, satellite radio caused a -12% loss in listening to traditional radio. And it is just beginning...
Have you listened to terrestrial radio recently?
--> This video just about sums it up...
http://www.orbitcast.com/archives/reason-332-why-terrestrial-radio-sucks.html
Satellite Radio offers a huge variety of stations. HUNDREDS of digital channels. Virtually every musical style is represented in depth and variety. Also there is a ton of news & talk stations that you just can't hear without being at home plopped in front of the TV
9-05-2006 @ 12:14AM
Wolf said...
Anyone that thinks satelite radio is a fad and is going to fade away should remember that T.V. was free at one time. Those of us old enough to remember probably said we would never pay for T.V. either. We also probably said we would never pay for a championship boxing match, since those used to be free also.When we start paying for the Super Bowl we will probably say that won't last either. Satelite is the only way to go if you travel a great deal or if you are a truck driver. The more people are exposed to it, via new car installations, the more we will all pay for it. If one is not a believer, try giving up your cable T.V. or your SATELITE T.V. for just one month. WON'T HAPPEN. That is what makes America great we love our luxuries.
9-05-2006 @ 11:30AM
Sebastien said...
I used to listen Stern in FM but as long as the stupid Sal still there in the show I am not signing with Sirius. Not even XM with that pair of idiots O&A.
FM keeps rocking and rolling for me. see ya!.
9-05-2006 @ 11:55AM
rick smith said...
as for howard stern xm said it was a bad deal for sirius . they said sirius would have to sign up an additional 1 million suscribers to pay for the stern contract. at the time sirius had 600,000 suscribers since the signing sirus now has 4.5 million.i guess it has paid for itself 4 times over now.as for content which drives suscriptions their is no comparison. howeard stern, nfl,college football nascar in 2007 the nba.blue collar comedy channel. all music channels with no commercials.my friend is really upset his favorite music channel o0n xm is full of commercials now and he wont has nascar in 2007.he is definitely switching.
9-05-2006 @ 5:08PM
Willard said...
I love my satellite radio. I am a big fan of classic rock, heavy metal, hard trance industrial and music from a different time. I am also a Stern fan, but he is not the reason I left fm/radio. It was 2 things, 1. Onn my drive home i would listen to a talk show, the host will be on the phone with a caller and at any moment say "thanks for the call of we got to go to commercial". The point i am trying to make is that commercials are put ahead of show quality. Also a person who works for the majow radio broadcasting company told me the purposely play more commercials between 12pm - 2pm and 4PM to 6PM so that durring luch times and ride homes there are more commercials. 2. This was the boiling point, I actually got through to a request line and made a request for one my favorite underground bands to be played, which is played often on Sirius - Buzzsaw, and the DJ said "we have no affiliation with that record label sorry - click". This was my turning point that i now know radios only play mainstream music and only play music from those companies that will give them a kickback. I will never turn on FM radio again, even when i use my wifes car I will only use my ipod. One note about Stern, his show has never been better, enuff said.
9-06-2006 @ 8:59AM
Sam said...
Before Stern got to Sirius they had about 400,000 subscribers. The attention he brought to the company in little more than 2 years have helped Sirius increase their # of subsribers by over 1000%. If only 2,000,000 people of the nearly 5,000,000 who currently subcribe joined because of Stern that would generate nearly 1.5 billion dollars for the company over the course of their 5 year contract...and that does not include the # of receivers and advertising sold. If Mel Karmazin says that Sirius will be turning a profit soon you'd be a fool to ignore what he said. his track record of success speaks for itself.
9-07-2006 @ 1:35PM
D said...
Oh Qua Tan Jin Wan, Qua unsa La ji Wan
I rest my case!!!!!
9-20-2006 @ 8:39AM
EMIL J KOVACH JR said...
Being A Private Media Analyst, I Did Some Workups, Prior To Stern's Move To satelite.
A Few Hedge Funds Wanted To Know, Who Would benefit Most from The Move, And What Number Of Fans Were Likely Follow Stern.
his audience, On terrestrial, Of People Who Called Themselves Stern Fans, Was, From what I Could Find Out, Was Around 12 Million People.
I Felt At least 3-5 Million Would Subscribe To Him, Since ANYONE In The USA That Wanted To Here Him--Would Be Able To.
The Added Benefit Of The Other Channels Does Indeed Seal The Deal--Most People Find The Niche Programming,Without Commercials--VERY VERY Addictive.
But The Question Was--How Do They Know That--Without Listening.
So, I Felt Retention Would Not Be A problem, Since The other Channels Would Provide Programming To Convince New Listeners, That The Monthly Fee, Is Worth The Package--With Stern.
The Wild Card Was--What Could Howard Do--With Satelite, To Widen His Audience--To Attract The Listeners, That Did Not Subscribe--And Make His Appeal, Even Better To Existing Fans.
I Proposed Howard Do Interviews, One On One As Specials, And Program A Music Channel--Geared To Howards Fan Base,
His New Audience Can Only Come From One Place--Young Males--Of The Internet Age, So There must Be A Connect Up--To Get Them--.
As His Present Audience Ages--Can He Find Younger Ones To Replace This Loss.
Does His Sense Of Humor--Attract Younger Fans--
To Sum It All Up--Can The Hip Hop Generation--Be Convinced To Listen To Howard--As The Older Generation--Eventually Gets On With It's Life.
Howard Can Pay His--And Sirius' For Now--But Is Mel Creative Enough--To Attract The Other Young Males He Will Need To assure Long Term Growth And Profitability--We Will See--Howard Cannot Relax--He Needs To Be Fresher, And More Current Then Ever, And Mel Has To Find The Right Programming To Get A Hold On The 60 Million Baby Boomers--Who Love Satelite--
But Are Not Addressed Here Or On XM--The 60's Channel--Just Won't Do It.
Once Again--Content Will Be King--And Always Remember--Only Satelite--Can Reach VERTUALY--Every Radio Listener In The USA--@13.00 Dollars --A Month.