Times have been tough financially for media companies across the board and satellite radio has been no exception.
On Aug. 6, Sirius XM Radio (NASDAQ:SIRI) posted a second-quarter loss and the company hasn't lived up to expectations after Sirius and XM completed a merger a little over a year ago. According to "CNBC Reports" host Dennis Kneale, part of the satellite radio's problem is shock jock Howard Stern's compensation and the company's debt.
"I feel so, bad - there's, being run by one of what I think is the best executives in media, Mel Karmazin, a great salesman," Kneale said on CNBC's Aug. 6 "Power Lunch." "But in the end, does it turn out they just overpaid for Howard Stern and they have too much debt? I wonder if John Malone bailed them out temporarily hoping that they kind of go belly-up so they can get a hold of those assets really cheap."
In 2006, Stern was granted a five-year, $400 million contract and $220 million in stock according to an article in the Jan. 10, 2007 New York Post. However, Sirius stock is way off its 2006 levels.
Julia Boorstin, CNBC's media and entertainment reporter, agreed with Kneale that the problems could be attributed to Stern's salary, but also said Sirius XM banked on a better market for auto sales.
"I think that a high-cost structure is a problem, but it's only one of their problems," Boorstin said. "This is a business model that counted on Americans going out there and buying cars and paying for this service once they got it already in their car."
She explained the company was attempting to expand its business model by offering subscriptions on Apple's iPhone, but said there was no guarantee that would bring in revenue for the company despite its early popularity.
"I think the meltdown in the auto industry has been a huge problem for Sirius XM and now they're trying to figure out another model," Boorstin continued. "They have this, this uh, application to download to your iPhone. Tons of people, I believe over a million people very quickly downloaded this application, but once you download it you have to start paying. We have heard a lot of people have downloaded it, but we don't know how many people actually paid for the service."
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Imus on Hannity tonight Fox News
August 6, 2009 - 17:07 ET by lareeTonight on Fox News at 9:00 PM Eastern, 8:00 Central. Sean Hannity
airs his visit to the Imus Ranch For Children With Cancer and Blood
Disorders.
http://youhavetobethistalltogoonthisride.blogspot.com/2009/08/sean-hannity-imus-ranch-special-tonight.html
Imus has gone up in his local radio ratings in NYC, many fans hope the show goes to a Fox Affilate.
A waste of resources
August 6, 2009 - 17:48 ET by kch50428Howard Stern is.
I listen to nothing but XM daily except for noon to 3...
August 6, 2009 - 17:49 ET by JTPI can not take 5 minutes of regular radio. For the cost of 2 packs of cigarettes you can listen each month.This is one service that I think is charging too little. I don't think Howard's pay is the problem.
"Live for yourself...there's no one else more worth living for.
Begging hands and bleeding hearts will only cry out for more"- Rush--Anthem
xm
August 6, 2009 - 17:58 ET by traderjamesTheir business model relies on car sales. Simple as that. Then they pray that folks begin to pay after their trial is up. I was one of the few who actually signed up and put the hardware in my 'clunker' several years ago, because I heard xm's classic rock channel and was totally blown away with it. Nothing like commercial free music and dozens of genres to choose from, not to mention a conservative talk channel and most TV news outlets as well. BUT...my friends called me nuts: "why are you paying for radio? That's insane!" Unfortunately, that is the sentiment of most people. I was not pleased with some of the program changes due to the merger, but I hope it survives, because the choices and content are amazing.
One of the best things about is...
August 6, 2009 - 18:07 ET by JTPThe same channel can be listened to anywhere in the country and much of Canada. I also did not like some of the program changes but like the fact that they run trial programming and there is usually something new every couple of months. It is strange to be on a boat in the middle of a lake in Canada early in the morning where NO radio signal reaches and be listening to Fox news.
"Live for yourself...there's no one else more worth living for.
Begging hands and bleeding hearts will only cry out for more"- Rush--Anthem
Sirius XM will take off if...
August 6, 2009 - 22:09 ET by DustBunny01Sirius XM could easily become the dominant radio if three things happen:
First - They produce a pocket version that you simply plug in batteries, a headphone and switch on.
Second - Economies of Scale hit and the price comes down.
Third - President Obama's FCC kicks Talk Radio off of the AM/FM Radio spectrum and the hosts move to Sirius XM.
Sirius XM could then style itself as Freedom Radio in a similar fashion to the short wave stations that used to transmit into foreign/communist countries. Since President Obama would control the terrestrial radio spectrum like he now controls the MSM, the public would flock to the alternative rather than submit their ears to endless hours of Air America droning on and on with praise for "The One".
They do have those...
August 7, 2009 - 01:15 ET by SgtCheeseNOLS1) They have had a pocket sized satellite radio for awhile. It was around when I used to work at Electronics in Walmart, and it was expensive then...but the price has gone down. Just Google "Delphi" and portable. Delphi makes most of their portable products. Also, the iPhone has a new app to listen to the satellite radio on the go!
2) Price is already very cheap. I think the problem is channel selection. I don't care about an all day Elvis station, news from Korea, and 20 different sports channels. I stay at home to watch sports...
3) Sirius Patriot 144 (if that is still the name of the channel) has Hannity, Levin, and Andrew Wilkow...who in my opinion is the best talk radio host ever. The man uses logic and reason in all of his arguments, and I love listening to him. Hannity has him on Fox sometimes... All they are missing is Rush, who is replaced by Mike Church...and financial news which is replaced by Mike Reagan (Reagan's son).
The problem IS Howard Stern, and also their selection. I stopped my subscription because I realized I was paying money to ONLY listen to Andrew Wilkow...the rest of the radio I can get anywhere else for free.
USCG
It Won't Just Be Terrestrial
August 7, 2009 - 08:53 ET by American MetalheadThe FCC regulates satellite bandwidth as well. If Obama brings restrictions to talk radio on terrestrial, then it won't take very long before those restrictions are imposed on Sirius XM.
I think they paid him way
August 6, 2009 - 22:30 ET by balboaI think they paid him way too much considering they didn't know exactly how satellite radio would go over. But I suppose they justified the risk.
Personally, I like XM (what happened to alternative station Lucy?!), but I also like listening to local radio stations.
Huge Howard Stern fan here
August 6, 2009 - 22:42 ET by shawn228I was devastated when he left terrestrial radio. Without a doubt he was my favorite part of my drive to work in the morning. He along Vince McMahon from WWE is a pioneer of free speech and has done tons for the free speech movement. Before he moved to satellite he was the only person not on AM talk radio that had the numbers and popularity of Rush Limbaugh
That being said, when you pay a person 500 million, not including stock options, it puts you at risk. You also have to pay tons of money to the NFL, and other personalities and don't have much ad revenue and only rely on subscriptions, so yes paying Howard Stern too much money did help with the downfall even though many subsciptions happenned because of Howard Stern.
"I swear sometimes the self-appointed moral police are as obnoxious and demanding of big government interference as "environmentalist" gun control advocates, labor unions and trial lawyers"~fitzfong
I don't think Howard alone
August 6, 2009 - 23:49 ET by YarblesI don't think Howard alone is responsible, but he is just the biggest example of both companies overpaying for talent/content. Sirius paid Martha Stewert over $30M for a 4 year contract. XM countered by signing Oprah to a $55M/3 year contract that required her to do one half hour show a week. There are many more. Then there are the sports contracts. XM paid $650M for MLB, Sirius $220M for NFL, XM $100M for NHL, Sirius $107M for NASCAR... and on and on. And the sports contracts are not even exclusive, which means they are paying huge sums and the most valuable markets are still getting their local team games free over the air.
Fundementally, the problem was they were paying national syndication prices and expecting to finance it with an install base that was never going to be more than a small fraction of the national audience.
tired of liberal lies If
August 7, 2009 - 00:49 ET by stunnedtired of liberal lies
If they start regulating political speech on radio it would be a huge boost for Sirius as many shows would end up on satellite. That said over time I think free radio like free access to news on the net will disappear and we'll all be signing up for various media sources down the road. My parents would have thought it nuts if you told them 30 years ago that they would be paying for cable TV. What??? pay for TV? Hee Hee I think my Dad's head would have exploded if you told him that was coming, he had us kids wearing sweaters all winter long (way before Carter made it sexy) and a light on in a room where no one was sitting, even if you just left to go to the bathroom, was enough to make that good man as nutty as the wackiest environmentalist you could find today. I think my family had the smallest carbon footprint in town. LOL!!
I share this opinion, but
August 7, 2009 - 08:23 ET by dvdaughtryI share this opinion, but only on the personality contracts.
The sports packages will keep the service afloat. I am HUGE into baseball and is the only reason I have XM--baseball 24-7-365.
Once these personality salaries are "off the books" there will be more cashflow.
The service is very cheap, as mentioned above. However, even through the prices are falling, the hardware is still too expensive.
Clear the uncessary overhead, and the cash flow will follow.
You trying to say Jesus Christ can't hit a curveball?
Stern makes about $100
August 7, 2009 - 03:29 ET by ckc1227Stern makes about $100 million a year; they lost $157 million for the quarter. Not sure how you can pin that on Stern's pay package.
Stern is the reason Sirius is still around
August 7, 2009 - 07:04 ET by Alpedhuez55If not for Stern, Sirius would habe been gone a few years ago. They said he needed to bring about 1 million listeners with him to pay his salary and he has brought much more than that. The bigger question is if he were to retire after his 5 year contract, how many subscriptions will they lose. Itis not his fault. If anything is to blame, it is the I-pod which has gotten a lot cheaper in recent years.
Like him or not, Stern has a huge influence on normal radio. When he left, a bunch of stations saw their ratings drop and tried to either change formats or go under. Most recently WBCN has announced they are ging off the air. Stern gave the stations a boost that lasted all day long. With out him, these stations are hurting. He basically killed the CBS Radio division.
This is just the latest in a long line of media stories that have tried to downplay his role, They talk about false rumnored returns to regular media, print inaccurate subscriber numbers for siriusand now try to blame him for theirlack of profits. If anything, the merger was a bad idea for Sirius since they were starting to have XM on the ropes.
"I drink a great deal. I sleep a little, and I smoke cigar after cigar. That is why I am in two-hundred-percent form."
-- Winston Churchill
I was an XM subscriber and
August 7, 2009 - 07:50 ET by BruzillaI was an XM subscriber and changed to Sirius, then dropped them too. The reason I quit both of them was the same: commercials and yacking "hosts". I kept hearing about how satellite radio was commercial free, but then they started running commercials. They started with spots promoting other channels or shows the system was carrying, and soon progressed to ads for computer software, websites, etc. Add to that they started having hosts who would chatter between songs, and satellite radio quickly became just like over-the-air radio, and there was no way I was going to pay to hear that.
Sirius/XM
August 7, 2009 - 08:16 ET by UnsaneSirius/XM intrigues the living hell out of me. In some temporary digs last year I had access to Sirius via Dish (well, I think it was Dish) and it was cool. I was constantly flipping between the all 80s channel and the heavy metal channel. Thanks to them, I expanded the selection on my iPod by getting new songs and checking out bands I would have otherwise never heard.
So, why don't I have a subscription? I simply do not listen to radio enough. A friend of mine who is a truck driver has a subscription but he can listen to radio all day and all night when he is on the road. A typical day sees me in constant motion to the point where I really don't have radio with me all that much. Therefore it doesn't do any good for me to blow the cash on a subscription.
"CONSUMED DEMOCRACY RETURNS A SOCIALIST REGIME" - Slayer, "Fictional Reality", from Divine Intervention (1994)
Hey Un, My SUV has XM.
August 7, 2009 - 08:21 ET by Roger the ShrubberHey Un,
My SUV has XM. The wife usually drives it. Last weekend I had the privilege, er, was allowed, to drive it. The Boneyard played the entire first side of "2112".
Beautiful.
Almost makes up for that channel playing friggin Aerosmith every third song. Gag.
Almost.
We have assumed control... we have assumed control..
August 7, 2009 - 09:46 ET by JTPI can't wait.
"Live for yourself...there's no one else more worth living for.
Begging hands and bleeding hearts will only cry out for more"- Rush--Anthem
Stern
August 7, 2009 - 09:01 ET by RoloTI have been a long time Stern listener (man I'm old). I became a Sirius subscriber to get the NFL broadcasts and then Stern came on board.
His 4 day work week was a surprise. The amount of commercial breaks are becoming unbearbale. His non-stop vacations (this week included) are getting ridiculous (I don't want to hear more replays of the History of Howard Stern). Now that Beth has gotten him in with the upper west side/Hamptons crowds, when he veers away from comedy to politics, I have to turn him off. When he passionately went on and on about the late Dr. Tiller and described him as a "hero," that was the day I walked into my office and cancelled one of two of my sirius subscriptions.
Most observers agree that
August 7, 2009 - 18:45 ET by Tyler DurbinMost observers agree that Stern brought at least 4-5 million listeners over to Sirius. If he only brought over 1-million subscribers, that would still represent $13 mil a month in subscription fees -- more than enough to cover the show's payroll. And who knows how much additional revenue Sirius gets for the (ever-expanding) commercial load it runs during his show?
Speaking of commercials, that's my biggest problem with Sirius right now. Even the "commercial-free" channels are packed with annoying announcers cross-promoting other channels, and incessantly repeating the channel's name. What was once fresh and original has become stale and derivative. The same people who screwed up terrestrial radio are doing their best to ruin this medium.
In most businesses, payroll expenses are the real back-breaker. Sirius could lower its overhead significantly by simply firing most of its announcers. Few subscribers would be disappointed at the prospect of hearing truly uninterrupted music. And more high-end business (like restaurants and professional offices) would be inclined to purchase subscriptions, if they knew their clients wouldn't be subjected to the unnecessary station IDs blurted out during every quarter hour sweep.