Is Stern dead weight on Sirius?

by Rusty Tanton, May 2, 2006 - 11:03am

Most of the people I know who have XM Radio or Sirius give both services stellar reviews. Specifically, I have several friends who love the Opie and Anthony show on XM. Almost to a person, they (and others) are also ecstatic about the genre-based music channels and lack of commercials.

The question of the day comes from this report that Sirius has doubled its losses but tripled its subscriber base since hiring Howard Stern: are large salary, large audience jocks like Stern going to become obsolete?

Within the next fives years, The Diffusion Group projects 60 million people will be listening to podcasts. What that means to me, and call me on it if you think I'm off-base, is that the big network hub in all forms of radio (terrestrial, internet and satellite) is going to eventually become a dinosaur. Like what happened to network stations when cable came along, the big market hubs are going to lose their clout in favor of a less organized network of niche channels.

The same audiences will become distributed over a vastly wider array of channels. In this case, channels may consist of a single web site carrying a single show or of larger group sites that more closely resemble the old-style networks, but still cater to niches themselves.

But, I might be wrong. There is a marketing principle (damned if I can remember what it's called) that people won't use a product until they've seen someone they know use it. It's why you can watch car sales in a neighborhood increase if one neighbor is given a loaner of a new model and shows it to his or her neighbors. If that principle bears itself out in the new radio market, there may yet be room for large market jocks like Stern. Time will tell.

The most likely scenario as I see it is somewhere in-between, with the large market jocks losing some of their audience. Where does that leave Sirius?

I think satellite radio has a place under circumstances where people want access to music or (to a lesser degree) talk radio, but don't feel like playing station director. These situations apply:

Podcasts are going to eat into the talk market further, making carrying a large salary like Stern's a bigger gamble than it was when they hired him. Satellite's most sustainable audience, as I see it, is for commercial-free music channels and for broadcasting sporting events and maybe live news. It's going to get harder and harder for talk radio to remain profitable.

Tags: Howard Stern, Opie and Anthony, satellite radio, Sirius, XM Radio

Full a full index of blog entries, visit the blog entries page.