Company News · February 11, 2009

If Satellite Radio Went Away Tomorrow

By sross

Okay, the reported pending Sirius XM Radio bankruptcy filing is a reorganization, hastened by a potential struggle for control of the company, it’s not a liquidation. But you can be sure it’s already inspiring no amount of wishful thinking on the terrestrial radio side. “Satellite radio crashes,” reads the headline in this morning’s Inside Radio. So there are undoubtedly broadcasters this morning licking their chops and wondering, “Well, what if Sirius XM does go away?”
That one isn’t hard to answer. If Sirius XM suddenly ceased to exist tomorrow, it would in no way “solve everything” for terrestrial commercial broadcasters, who have already gotten way too excited about satellite radio attracting “only” 20 million subscribers. Local stations will not automatically repatriate all those listeners. And here’s why:
For starters, Sirius and XM, as separate services, found their early adopters in the people who were never going to be satisfied with mainstream terrestrial radio. That wasn’t a large enough number of people to make satellite profitable. It wasn’t as large a group as the daily newspaper radio/TV writers (many of whom fell into the group themselves) would have liked to believe. But it’s still a few million people who aren’t coming back. And you can ask the PD of any commercial Triple-A station if those listeners have been missed in recent years.
More important, Sirius and XM also changed the expectation of 20 million listeners. Those listeners are comfortable with radio being national – not that terrestrial broadcasters haven’t been helping the rest of us with that transition. They are accustomed to commercial-free music, particularly when choosing a station for a public place. They are no longer willing to wait for “traffic on the eights.” They are used to Howard Stern in any market at any hour. Most important, they are used to having over 100 channels available, even if they only want to use the most mainstream handful of them.
Even among my Edison colleagues, several of whom cheerfully evangelized for satellite for several years, there’s been some churn and a redistribution of listening that suggests what would happen on a larger scale. One co-worker has gone back to WPLJ, and is back to providing the same regular updates on their programming that she did four years ago. But another co-worker has filled the void with more podcast programming. And several now have iPhones and at least one co-worker is using his to listen to Classic Rock KGB San Diego, of interest to him in a way that local WAXQ (Q104.3) never was.
The ongoing success of the iPhone, even at this time of national austerity, is telling. It combines the two biggest challenges to local radio – the iPod for when you’re looking for your own music and multiple suites of multiple channels (local or national) for when you want somebody else to pick the tunes. And some of the same listeners who think $13 a month is too much for satellite are willing to pay close to $100 a month for their iPhone service- suggesting that if Sirius XM came with an app that let you read an MRI (or any of those other spiffy apps on their TV commercials), it might be perceived as a better value!
So if Sirius XM went away tomorrow, the owners of terrestrial radio would have to have a strategy ready to offer national radio to those listeners who are now wise in the ways of The Infinite Dial. Inroads were clearly made during 2008 by CBS, Clear Channel, the iPhone app clients of Jacobs Media, the clients of FlyCast and others. But there are still strides to be made in ease of use; in helping explain why you would want to listen to Jack/Vegas today, but Jack/Baltimore tomorrow and, most important, in making the national stations that have already been deployed into full-fledged choices. And services like Radio IO seem to have a head start in gearing up for this day.
If Sirius XM went away tomorrow it would not be an automatic boon for HD Radio. Again, there are too many other choices already deployed. The national stations that broadcasters are finally smart enough to offer via HD-2 multicast are barely better realized than the local stations that are mostly being assembled from parts found around the house. Then there’s that ease-of-use issue. If satellite listeners think hearing a station identified with separate Sirius and XM channel numbers are goofy, what would they make of “107.3 HD-2 in Washington, 95.5 HD-3 in Los Angeles, etc.”?
If Sirius and XM went away tomorrow, it would force terrestrial broadcast owners to think about finally serving the niches that don’t make sense on a market to market basis. That requires format innovation, which slowed to a crawl on Sept. 15. But some Sirius XM brands have national equity and smart broadcasters would find a way to either buy the intellectual property of or at least provide a successor to Coffee House or Faction (the most durable experiment in rap and rock together). For that matter, there’s still not a CHR in America like Sirius Hits 1 and I, for one, would want them represented somewhere on the Infinite Dial.
And, yes, broadcasters would have to find a way to get Howard Stern back on FM radio. Programmers have spent the last four years telling themselves that he wasn’t such a big deal anyway. No, not all of his audience (those that followed him to satellite or those that scattered to the winds on terrestrial radio) would be repatriated. And in a PPM world, Stern will no longer automatically translate to five daily hours of listening for his fans. No matter. Anybody programming a male-targeted radio station will tell you that those Stern listeners would bring some traffic back to the mall. And any Stern solution would have to include an angle for listeners who were used to hearing him at 6 p.m. or in a market where he hadn’t been on the radio before.
I’m not rooting for satellite radio to go away tomorrow. I appreciate many of its as-yet unduplicated offerings. And too many people are already out of work. But even if its stock issues, its Echostar relationship, and the auto sales slump are miraculously worked out tomorrow, the likelihood is that the delivery system for satellite radio’s programming will not be a satellite radio in five years. And regardless of who its current programmers are working for at that time, they will have had a head start on terrestrial broadcasters in programming for The Infinite Dial.
So what terrestrial broadcasters have to do if satellite radio goes away is the same thing they have to do if it remains a force. So it doesn’t include just waiting them out. Or hoping for somebody else’s problems to be bigger than yours.

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