For Those Who Think Satellite Radio is the Second Coming…

Michael Hedges May 2, 2006

Our media world is just one big laboratory now. Experiments are continuous. All the new platforms are getting the test; sometimes in public, sometimes not. Here are early results on the Stern trial.

While satellite radio in Europe remains in the design phase – WorldSpace, notwithstanding - the Americans are well into very expensive testing. The biggest suppliers – Sirius and XM – have tested “high quality” and “more music” as unique selling propositions (USP) and, with tons of investor money, are testing “unique content.”

The big experiment is Howard Stern, to whom Sirius is paying $500 million (plus bonuses) to apply the “shock-jock” routine exclusively on satellite.

Ftm obtained non-surreptitiously a memo from Katz Radio’s Maggie Hauck detailing an analysis of recent Arbitron audience figures. In New York City, Nassau/Suffolk (Long Island, almost NYC), Chicago and Los Angeles terrestrial stations formerly affiliated with Howard Stern lost three-quarters of their morning show audience.  This was not the big news.

“The Stern audience poured out all over the terrestrial radio dial and the PUR (persons using radio) barely budged so there was no significant loss of listeners to Satellite radio as Stern and Sirius said there would be,” said the Katz memo. Radio listeners formerly listening to Howard on terrestrial stations seem to have switched en masse to other terrestrial stations, most often those with big personality morning shows, including those on the AM band.

Katz Radio is one of several US radio sales-houses and probably has an ulterior motive in adding to the current industry narrative disapproving non-mainstream terrestrial radio.

New National Association of Broadcasters (NAB) President David Rehr, in his first major address at last week’s Las Vegas convention, took on satellite radio, focusing on the numbers. Satellite “supposedly” has 10 million subscribers, he said, while “260 million people listened to broadcast radio last week. Furthermore, satellite radio lost about a billion dollars last year. Its business model is bankrupt.”

In the same speech, Mr. Rehr called on US radio broadcasters to embrace change. The future, he said,” …is a broadcast signal on every gadget - cellphones, laptops, PDAs - and of course multi-channels of DTV and digital radio.” Yep, all those things are just gadgets.

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