"Satellite Radio Is Dead"???

[BurnedOutOnTheBoards]

I've posted elsewhere on this board my opinion that AM/FM radio could very realistically be positioned well in the longer term during the impending economic downturn, in terms of audience being available as more & more middle-class/lower income audience will simply not be able to pay high cable/internet bills and keep rent & food in order, and with a potential demise of satellite radio due to tech/financials......

Mike Elgin at Datamation.com agrees:

http://itmanagement.earthweb.com/features/article.php/3786146

Thoughts?

 

[andreajesus]

i'm not so sure on this one - the one thing i can tell you is that more likely than not (and i see this already happening), the newly-merged Sirius-XM is going to be offering MORE and BIGGER deals on its radios and its programming...but i also think that the next 6-12 months (if not sooner) are going to tell the whole story...

Andrea
(i'm a subscriber, too - so i stand to lose as much as the rest....)

 

[Snafu]

That could be the case of Thomas Friedman is right and the worst of this economic mess is yet to come. But I see terrestrial stations in very deep trouble as well. As least four ownership groups/content providers could be in Chapter 11 in 2009 and I suspect that only two of them have any real chance of survival in their present form.

What is going to happen first is that we're going to see AM & FM stations in some markets going dark. Mostly smalller AMs owned by non-profits and the like, but if this recession/depression lasts in 2010 you will see stations you know in markets you know pull the plug.

Sirius/XM will have to develop a model that works with 75% of its present subscriber base and some sort of rate decrease or long term package. Everyone who isn't able to come up with a different business model in the next six months is probably dead in the water.

 

[Walter Graff]

The responses to his blog say it best:

1: The NAB paid him to try to put down sat radio
2: He knows not much about what he talks about
3: Everyone is an expert and a blog "prooves" it!

 

[BurnedOutOnTheBoards]

AndreaJesus -

I'd like to see the newly-merged entity survive & prosper, but I know too many people {in radio and out} who are cutting back on expenses, and two families shut off XM as one of those cost-cutting moves. No question Sirius/XM will try a few tricks like deep discounts to get some cash flow heading in their direction, because they've got enough red ink to kill off most companies.

Snafu {sounds like my job description at Clear Channel} -

I agree wholeheartedly with your analysis....those four are in very, very deep trouble, and profitability is a long ways off. What The FCC should do {in my humble opinion, of course} is everything in their power to streamline the mess of regulation {that I've eyewitnessed on more than a few times} and paperwork to ease up on broadcasters and concentrate on the real tech issues...

One would hope there will be some major fire sales so maybe a bit of local ownership could actually occur this century.

Walter Graff -

While it is always instructional to examine a post's comments, I did not see a whole lot in this post that doesn't make sense....there are growing alternatives to satellite distribution, and if The Internet can indeed provide reliable service, that is gonna be a major step away from the birds in the sky.

 

[Kent]

From reading the article, I agree that much of what the author says makes sense. I'm not sure, though, that I agree with him on the rise of podcasting and that being a threat to satellite radio. To those who want satellite to survive (myself included), I don't think his point was necessarily that satellite radio would go away forever, or at least that wasn't what I took away from his article.

The article, at least to me, made more of a point that the existing satellite radio company would go away. I can't see the concept of satellite radio going away, at least in the near future, even if Sirius-XM were to go belly up tomorrow. The company would likely continue to operate as the debts were being worked out, and someone else would buy it on the cheap.

Sirius-XM almost certainly has tough times ahead of it. While the stock price may not have a direct effect on the company's day-to-day operation, we're talking about a company that used to pay for millions in debt with stock, and it did this quite frequently. It's getting harder to do that now as the stock is below 20 cents per share. This is the same issue that's affecting terrestrial broadcasters today. Companies would buy stations, and even other companies, with a small amount of cash and millions in stock. A company I worked for sold to Cumulus a few years ago for only around $1 million in cash but nearly $40 million in stock. Cumulus executives have effectively said such deals aren't possible today given the company's stock price, and Cumulus stock is trading at five times the value of Sirius-XM stock!

 

[RadioStarOne]

What would you all say if Uncle Mel took the SiriusXM private, then bought CBS Radio and stocked the Sirius XM music channels with the best of the CBS radio formats?

 

[music_man]

All of the points the author made also apply to the decline of terrestrial radio as well. People's habits are shifting and if they can get decent content from other avenues they will. Most of the stations in my market play the same tired songs over and over, whether it top 40 beating the same 40 to death every hour or two or the classic rock stations wearing out the "greatest hits".

 

[jasper933]

What would you all say if Uncle Mel took the SiriusXM private, then bought CBS Radio and stocked the Sirius XM music channels with the best of the CBS radio formats?

Mel purchase CBS Radio? If you look, he is a major stock holder in CBS corporation. Only Summer Redstone has more stock investment in CBS.

It would not surprise me if we see a Sirius / CBS merger. CBS just bought Yahoo's music service, so anything is possible.

 

[John Waywoods]

You got it, right. I believe that is why CBS is going through massive cost saving measures.

 

[jasper933]

I think Satellite radio has to do some improvements in order to survive. I don't think they should rely on car owner subscriptions. Most people listen to radio outside their cars/trucks. They need to improve and invest in areas of portable devices and terrestrial repeaters. Sirius has limited terrestrial repeaters and they seem to be placed in areas where most business operates or downtown areas. The range or a repeater is 5 miles, and does not penetrate buildings well. Most cities have only one repeater. If you live more than 5 miles from a repeater, you are SOL on getting a signal in a building or at home. Most WiFi's are secure, so there are limits here. They really need to partner with cell phone companies to stream their service over their network. Example, I have a T-Mobile G1 with 3G service. I would love to have Sirius streaming on the device, but there is no plug-in for Sirius. I can listen to other streaming radio on the G1 FREE but would love to listen to Sirius on the G1. Sirius cannot develop a plug in for cell phones? They cannot develop a portable device that tags off a cell company's 3G network?

Now I understand that Bubba is leaving Sirius. WTF are they thinking on letting this talent go. I guess paying Martha 9 Million to do a 1/2 show can do a better return and has more listeners.

Also what is sad is they could use their top guy Howard to help promote them. They could also use DirecTV and Dish to promote their service. They could offer Howard and other talk on DirecTV and Dish and have the Satellite TV service charge an extra fee.

I really like Sirius / XM and do not want to see them go away. The top dogs really need to get off their a*s and do this company /service right.

My final thoughts are that Sirius / XM will merge with another media company. If not, then I give them 2 more years.

 

[Walter Graff]

"Most people listen to radio outside their cars/trucks."

Actually the largest group of radio listeners are those in the car and it's a substantial group.


They need to improve and invest in areas of portable devices and terrestrial repeaters.

Actually like terrestrial radio folks are not much interested in portable devices anymore, and hence why they stopped investing into it. As for terrestrial repeaters, they have about 200 now and don't plan on much investment. Personally, I don't have any issues with signal and I travel up and down the east coast.


"They really need to partner with cell phone companies to stream their service over their network."

Once again portable radio devices are not of interest to most so this would be a waste. And telephones and streaming have been a bust.

"Now I understand that Bubba is leaving Sirius. WTF are they thinking on letting this talent go. I guess paying Martha 9 Million to do a 1/2 show can do a better return and has more listeners."

Bubba has a small and dedicated listenership. He has been made offers from terrestrial that would not work for both sat and terr. He can;t do both well as he is now according to his words. But then again Bubba has talked of leaving Sirius since he started so you never know if what he says is true, even if he gives you a date, and he's just a small part of a big picture so his loss will be limited. And yes, Martha has a far, far bigger name and draw than Bubba. Look at XM who paid Oprah 50 million not to even be on here channel other than to do the ads for it. Her name associated with Sirius will have great impact though.


"Also what is sad is they could use their top guy Howard to help promote them."

Stern has a limited draw so he alone would not be the answer. Since Sirius is 120 stations of every shape and color, they target each genre in different ways. Stern gets his million listeners a week, so there really isn't much more he could do that can't be done as it is now.

"They could also use DirecTV and Dish to promote their service. They could offer Howard and other talk on DirecTV and Dish and have the Satellite TV service charge an extra fee."

They already advertise on both networks. And a package for sat TV is very limited in reach as most folks don't listen to the radio currently on sat TV.


"My final thoughts are that Sirius / XM will merge with another media company. If not, then I give them 2 more years."

Since they started there has been article after article talking of their imminent demise or take over. Yet, their listener is not dropping, they are making money. They just got some good press on some Wall Street journals (http://seekingalpha.com/article/109...on-sirius-is-the-street-listening?source=feed), showed some good things in the third quarter results which bettered the consensus of the all analysts covering the company. In fact it was more than twice the prior year's 3rd quarter results. Revenues for the full year 2007 were well above the prior year's results. They have shown some great things as in double digit cost reductions in operations and acquisitions of customers. Overall they continue to grow. Due to the merger they recently took a big impairment hit, but that too isn't going to put them out of business. Shortly they will introduce a radio that gets both services, but will remain separate entities due to how many years it takes to rebuild such a huge sat infrastructure. Since most radio listeners are in the car and car industry sales have slumped, obviously so have recent expansion of Sirius subscriptions as might be expected. Yet even with slower auto sales they increased subscriptions in the third quarter by 17% which is far better than anyone thought they could. Their churn number remains nearly constant. Overall, compared to other media and entertainment companies, and especially in this economic environment, they have actually shown good numbers and done well after their merger was choked for two years by terrestrial radio. I don't think they are going anywhere soon. None of the economics of the company say they would need to. Anyone who says they are has not shown any logical reasons why they would based on their numbers and outlook, but rather emotional distaste or "follow the leader" mentality in posting about Sirius.

 

[fredcantu]

You do realize that Sirius/XM stream their channels on the web as part of the subscription package. If you can't get them from the satellite you can listen online.

 

[jasper933]

You do realize that Sirius/XM stream their channels on the web as part of the subscription package. If you can't get them from the satellite you can listen online.

Yes, I understand about Sirius XM Internet streaming, but here is the problem. I work for a company and if you have 100 people streaming that depletes the bandwidth for company use. The company I work for had to make a decision and stop streaming. Now people go back to listening to boring terrestrial radio while at work. If Sirius has good repeaters, the Stiletto or other devices would work well.

 

[Walter Graff]

[quote ]

Yes, I understand about Sirius XM Internet streaming, but here is the problem. I work for a company and if you have 100 people streaming that depletes the bandwidth for company use. The company I work for had to make a decision and stop streaming. Now people go back to listening to boring terrestrial radio while at work. If Sirius has good repeaters, the Stiletto or other devices would work well.

[/quote]

Have you tried a Stiletto? Mine works quite well in buildings. And best of all you can record 10 hours of Sirius to listen to in places where you can't get reception like work. But then again, perhaps the boos is giving you folks a signal to work and stop listening to the radio.

 

[Snafu]

The real problem for Sirius/XM isn't cash flow, its debt service. They have something on the order of a $1 billion debt overhang this year and in this credit environment that is trouble looking for a place to happen. Yes, some of that is related to the merger, and yes some of that comes from Mel trying to paper over debt with more stock but its there and its going to have to be handled this year.

Sirius isn't going private in Mel's hands and isn't going to merge with CBS radio. Because of the plunge in the stock price of both entities Mel doesn't have enough net worth to make the deal work unless he could buy Sirius/XM from a bankruptcy court for less than a penny on a dollar of debt. That just won't happen.

 

[Walter Graff]

Sirius is restructuring that debt now. By mid next year, they will have structured it to mostly disappear and they will do some stock tricks to revalue some of the bad debt. Since they have good looking books they are not having trouble finding entities to restructure the debt with.

 

[RadioStarOne]

Hey Walter the SiriusXM cheerleader: KLLI in Dallas is playing your music!

 

[TheBigA]

Sirius is restructuring that debt now. By mid next year, they will have structured it to mostly disappear and they will do some stock tricks to revalue some of the bad debt. Since they have good looking books they are not having trouble finding entities to restructure the debt with.

Even before the merger, they were a long way from making the debt "disappear." The merger put them deeper in the hole. If they were not having trouble finding entities to restructure their debt, their stock wouldn't be trading at 15 cents, down two more today. Clearly, the street has no confidence in them. The stock reverse split will do nothing to their debt. It will just temporarily prop up the stock for a week, and then it'll drop again. It's sort of a useless exercise.