Headline Feeds
Satellite radio got a bolt of energy with the announcement that shock jock Howard Stern will be delivering his controversy-stirring show over the Sirius satellite radio network starting in 2006.
While the company remains number two in satellite radio to XM -- which earlier this year added former NPR voice Bob Edwards to its roster -- Sirius hopes to gain ground by signing Stern, who has more than 10 million listeners in the valuable demographic of 18- to 49-year-old males.
Sirius claims it will need to generate only one million more subscribers to pay for the five-year, US$500 million deal with Stern.
The Sirius signal reaches as many as 10 million users when those who subscribe through DishNetwork are factored in. When considering only exclusive satellite radio subscriptions, however, Sirius has closer to one million subscribers, while market leader XM claims to have nearly three million.
Sirius Gets Serious
Gartner (NYSE: IT) G2 senior analyst Laura Behrens told TechNewsWorld that despite continued skepticism, Sirius and XM have shown that consumers will pay for radio in sufficient numbers to sustain the business.
Behrens said that although it has half the market share of its rival, Sirius is aggressively pursuing XM.
"It's been fashionable to write off Sirius, and we don't think that's [wise]," Behrens said. "They're not going away. They're running hard to play catch-up, and this is a big deal to do that."
Free the Force
Sirius chief executive officer Joseph Clayton called the deal "the most exciting and transformational event in the history of radio." He said Stern is an entertainment force capable of changing the face of satellite radio and generating Sirius subscribers, who would pay about $13 a month to hear Stern beginning in January 2006.
"There is no one like Howard Stern, and I'm excited that, for the first time, his show will be heard across the entire country as it was always meant to be heard."
While taking advantage of satellite radio's ability to reach everywhere in the country with a unified broadcast, Stern will also benefit from less oversight from the Federal Communications Commission, which does not oversee satellite communications as it does traditional, terrestrial broadcasts.
Tech Edge To Fade
Gartner G2's Behrens said satellite radio can claim a technical advantage over traditional radio broadcasting because of its superior audio quality. However, high definition (HD) radio, which is supposed to improve FM signals to CD-quality and AM sound like FM, will soon even the playing field.
Behrens, who said Stern will complement an earlier deal for National Football League games in Sirius' efforts to attract male 18-49 demographic, indicated listeners will gravitate to whatever technology delivers the content they want.
"The success of satellite or terrestrial service will come back to the value consumers see out of that box," Behrens said.
Commercial-Free Future
Behrens said that while satellite does hold the advantage of a unified, nationwide reach, the market is hindered by the inability -- based on current regulation -- to provide local programming for local markets.
However, to skirt the issue, satellite service providers are delivering local content on a national basis. Although this practice is allowed, it consumes valuable bandwidth. But Behrens said the satellite players can afford the bandwidth now. Before they run out, they hope to improve their compression and delivery technologies.
Behrens also said satellite radio now offers the value of commercial-free
music, although some news and other information does come with commercials. Still,
Behrens added that with HD terrestrial radio may one day offer commercial-free subscriptions.
