First hope you had a happy Easter. I won't duplicate my KFOG post about my Easter at Lake Del Valle, Livermore, and inspiring words from The Pope's Easter message. If you're interested here it is.
updated March 28th
Here's the proposed pricing plans! They will allow you to pick some stations if it gets approved like this. This type of plan will also let them see what people like. If no one picks a station in their plan guess what happens to that station?! So when you can pick your favorites to let them know what you like.
Tuesday, March 25, 2008
XM + Sirius What Will Mel Do?
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So it looks like the XM and Sirius deal will happen. Sirius basically buys XM. Both are gaining ground, but are losing money so there would be one in the end either with the merger or without. So what do I think will happen?
First 3 things not to show that I am an "expert" or have any insight on this, just kind of a "who am I" thing. I am just guessing at all of this. Your guess really is as good as mine!
1) I work in commercial radio. The NAB represents the owners of radio groups and has been very opposed to the merger. They will fight it to the end. They don't represent me.
2) I own Sirius stock. I bought it at around 3.25 and yes I thought it would pop on the merger approval and I'd sell it. It did but it dropped below 3 since I bought it so I just want to make a little profit and I'll get out. An advantage to it taking so long to get approval is that my trading fees will be lower when I sell. :)
3) I subscribe to Sirius and have for a long time. I think since just after they started. I use it to listen to music and sports (NFL.) I'm not a Stern fan. I don't love Sirius and hate XM. I just have it.
OK now here's what I think will happen. This is based on working at a Mel Karmazin company for a few years (CBS Radio) and watching how he works.
Mel likes big names. Howard, NFL etc. He spends his budget for the big names on the top end. Not so much on the mid and lower ends. Any 2 music stations that are very close to each other in style on XM and Sirius will be dropped down to 1. No need to duplicate. He will cut out anything he can that doesn't add value to the service. Stations that cost money to put on the air will be at risk unless he sees that they can add subscribers, or he might offer them the space for a fee.
Big names will probably stay. Of course Howard and the sports contracts NFL, MLB, NASCAR etc. Also the Dylan station on XM and Jimmy Buffett's Sirius radio channel will probably stay as well as others that are hosted like that. I'd also think that he will cut more deals with name hosts (rock stars, athletes) or content providers to expand the service.
How about all the weird little stations that people (like me) listen to? On Sirius I have presets for the Punk, Blues, Old School Rap, Elvis, Outlaw Country stations and more. I am sure some of these don't have lots and lots of listeners. Will they stay? Probably. The have the room. But some of these are hosted by dj's. (kind of ironic since people switched to satellite so they didn't have to hear dj's) Some of these djs are famous in their field, like on weekends you can hear Cowboy Jack Clement on Outlaw Country, and Grandmaster Flash weekdays on Rewind old school hip hop.
So names like that stay, (maybe they don't get a pay raise!) but Mel will find places to cut. The less famous might be out the door. I don't think he likes to buy things that need fixing, but he will find places to cut expenses. Hey that's what always happens in mergers right?
When CBS took over some Entercom stations including KITS Mel actually came to an all staff meeting to speak to us. It was very brief. He said "We don't buy things that need fixing at CBS. We think you are doing a good job here. So if you ever see me again it will be really bad news!"
Ha! I'll never forget that line. In time the entire airstaff (except for me) would be replaced by the KOME airstaff and Howard Stern was the morning show. In management all the KITS managers were replaced by the KOME group. That's business.
So how about subscribers?
There will be radios out very soon that will get both XM and Sirius. (stories in the news say I'm wrong!) In fact I wouldn't buy ANY hardware for either for a few months. (well maybe go ahead!) I want a new Sirius radio. Mine is old and funky and has to sit in the cradle just so or it won't work, but I am going to wait. I did hear Mel say in an interview on CNBC last year that he has one that gets both, but it isn't for sale yet.
I think you will be able to have different packages for your monthly subscription fee. Now you get it all when you sign up. I do not think you will get each station for a price. Could you just buy the Howard Stern stations subscription for 5 dollars? No I doubt it. I guess they want to make 15 dollars a month from each subscriber. So there will be packages above and below that. The calling card will be sports and Howard Stern. Think like satellite tv. You want NFL games? Buy the NFL package. Same with baseball. Same with Howard.
But you say "wow that will get expensive fast!" Yes it will. I am sure there will be just music packages w/o Stern or sports. For just music or news fees will be close to what you pay now. Maybe you get to pick 3 music stations and 3 news stations to add to the basic package for the basic fee.
So things will stay the same for awhile, but as new radios come out and the 2 companies really become one here's my take.
1) big names stay and to listen to some of them you'll pay more than "basic"
2) little weird stations might not stay or if they do will with staffing cuts
3) I don't think there will be any programming duplication and Mel can be a loyal guy so if there is a choice XM staff gets cut, not the big names, they stay
In his many years in Radio radio Mel oversaw lots of mergers and buyouts from Metromedia, Infinity to CBS radio, growing all these companies. He has always had a reputation of moving "his guy" up the ladder and the other guy out the door. It happened to the management at KITS when CBS took over that Entercom station. Our "new" GM had worked under Mel for many years.
3) new hardware is coming soon, very very soon
4) the NAB will fight it all the way (and lose and look bad doing so and be sore losers about it)
5) the very under the radar Sirius Backseat TV service will expand quickly
One more thing...
Satellite radio isn't always coming from a satellite. Sometimes it comes from a ground station like a cell phone tower. XM and Sirius always wanted to sell local ads your sat radio would hear only if you were listening off the local towers. The NAB said no way, that's too much like local radio, and it hasn't happened. Yet. But I know Mel really wants to do that. When this gets the final OK from the FCC watch Mel change from a sleeping tiger, playing nice and letting the legal dept. file all the paperwork to get the merger approved, to a full on attack tiger trying to get more more more.
Ok one last thing...
Mel and Sirius like to count installed radios with paid for but not activated trial plans on new unsold cars in dealer lots as current "subscribers." That's lame and might change since he doesn't have to pump up the numbers anymore.
UPDATE
Welcome to visitors from SiriusBackstage a great forum that has been around a long time. I use it to find out about hardware I am thinking to buy. They are a good source of info on Sat. radio and probably getting lots of new visitors! Same for XMFan.com! Another busy forum for XM users. I have always had Sirius (honestly I forgot why I picked it over XM way back when...) I can't say much about the XM programming, but I know people love it.
Here's part of an article at Smart Money about the future pricing plans.
After Justice cleared the deal this week, both companies said "no existing radio will be made obsolete by the merger." Subscribers would be able to receive select programming from the provider they don't currently subscribe to on existing radios, the companies said.
They haven't specified whether popular programming, such as Sirius' Howard Stern or XM's major league baseball, would be part of the "select programming" available.
XM and Sirius say they plan to offer eight options that combine the companies' offerings, such as a "mostly music" package with 65 channels, for $9.99 a month - less than the current flat rate of $12.95. Six of those eight options will be available on current radios.
The two "a la carte" packages that promise the most flexibility, however, will require new radios.
The cheapest "a la carte" option would offer 50 channels for $6.99 a month with additional channels costing 25 cents each, though premium choices, such as the NFL channel, would cost $3 or $6 each per month. Another "a la carte" plan would offer 100 channels for $14.99 a month.
Analysts expect few current subscribers to pay for the new receivers. Current satellite radios cost between $40 and $200.
Perhaps 5% to 10% of current subscribers "might go through the trouble" of buying new radios for the "a la carte" option, Stifel Nicolaus' Spring wrote in a recent note to clients.
Spokesmen for Sirius and XM declined to comment beyond their statement because merger approval is still pending before the FCC.
When the two companies made their debut a decade ago, the FCC approved their launch with a requirement that they design interoperable radios, which the companies say they have done. But until now there was little incentive to invest in making the design commercially available.
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