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Now that the dust has settled on the flurry of programming announcements last year from Sirius and XM Satellite radio, including Sirius' hiring Howard Stern and XM airing Major League Baseball, analysts say the true test of programming superiority will become apparent when satellite radios are interoperable.
Unfortunately, no one is prepared to say when that will be. Suppliers say they must wait for third-generation chipsets (expected this month from XM and in the fall of 2005 from Sirius). And issues regarding antennae and the chipsets working together are expected to put interoperable radios at least years away.
“Once consumers can flip between the two services, that will be when you tell which consumer likes what content,” notes April Horace, equity analyst for Janco Partners, Denver.
For now, the big question is whether all the maneuvering for content last year will pay off in more than just publicity and stock activity and generate the millions of subscribers necessary to cover their cost. Lehman Brothers estimates XM needs 900,000 subscribers to break even on its deal with Major League Baseball (MLB) and Sirius requires two million subscribers to cover Stern and its deal with the NFL.
“The question is if there is enough demand. The risks are higher for Sirius,” said Vijay Jayant, analyst for Lehman Brothers, New York. “While the agreements validate the satellite radio brand, they significantly increase the financial risk.” He added that the race to win these new subscribers will heat up what is already a spirited competition between XM and Sirius.
Overall, Lehman Brothers is predicting satellite radio subscribers will reach 40 million by the year 2013, with the market split 59 percent to 41 percent between XM and Sirius. Heading into CES, the market share favored XM at 68 percent vs. 32 percent for Sirius.
Both companies claim a churn rate (of lost subscribers) of only around 1 percent, so clearly users are happy with their service.
Ask Sirius or XM about their relative strengths and weaknesses in programming and it is apparent that Jayant is right and competition is heating up.
Both companies claim superior programming. “We give you more music and a wider range of music,” said an XM spokesman, adding, “We don't repeat the same songs as often as Sirius. They are more hit oriented and that works fine over the short term. But Sirius is programming their channels basically like FM radio … they tend to repeat the songs more often and that is not what we believe people are looking for over the long term.”
Jay Clark, Sirius' executive VP of programming, said the company caters to all tastes. Referring to XM, he said, “We play a lot of hits and they play a lot of hits. We have some channels that do play hits and others that are as deep as theirs. The reason we do that is there are some people, a lot of people, who listen to music as a comfort zone and they want to hear music they are familiar with.”
XM said that while it offers hits channels such as “MTV radio,” “20 on 20,” “KISS” and “UPOP,” “That is not what is anchoring our lineup. It is anchored by depth and breadth,” claimed the spokesman.
And Sirius retorted, “We offer the idea that you can land on a particular channel and have music you are familiar with, branching out from those are channels that go deeper. Our competition has decided that everything has to be eclectic,” said Clark, adding “so there's nothing for the general public.”
Clark said Sirius made a “concerted effort” to improve its programming about two years ago. “We felt and still feel very strongly, in the end, the company with the best programming will win. If you are in the entertainment business, and this is the entertainment business, and you have great entertainment, people will come to you. So we are constantly on the lookout for great entertainers.”
In addition to Howard Stern, who will be joining Sirius in January 2006, Sirius partnered this year with Eminem, who is co-producing a Shade 45 hip-hop channel, and with sports enthusiasts, such as Tony Hawk, who host their own shows. It will also air a talk show starting in February hosted by Robert Evans, the famed producer of “The Godfather” and “Chinatown.”
XM live celebrity hosts include Snoop Dogg, Jay Z and Tom Petty, as well as Bob Edwards of public radio fame and the outrageous radio jockeys Opie and Anthony.
XM said it pushes live programming as a means of differentiating itself. The company offers programs including “Then …Again ... Live,” where classic albums are recreated live by the artist. The Allman Brothers, Jethro Tull and Cheap Trick have been participants. In another series, “Artist Confidential,” artists talk about their lives and music and they play live music. Participants have included Bob Weir, Bonnie Raitt and Lenny Kravitz.
XM said live programming will continue as a focus for 2005, as will sports programming, another area where both companies claim superiority.
XM said it will heavily promote its coverage of baseball and said, “We have other plans in mind for other sports content. Sports will be a big part of our story in 2005,” according to the spokesman.
Sirius invested heavily this fall in TV advertising for its NFL programming and said it will continue to do so in 2005.
Sirius also claims it is interested in serving the groups of people “that are underserved by local radio. We have an NRA channel and a gay channel,” Clark notes.
As to the impact new Sirius CEO Mel Karmazin will have on Sirius' programming, Clark says, “It's too soon to say where Karmazin will go, but Mel is the smartest broadcaster that I know, and I've worked for him twice. He understands the business and more importantly, the customers.”
How is XM responding to all the publicity surrounding Sirius' aligning with Howard Stern and hiring Karmazin? “We're going to be strategic in our marketing approach, publicity approach and distribution and technology approach. We're going to continue to do what has worked for us,” said the spokesman, adding, “HBO reinvented TV. We're doing the same in radio, but we're not doing it with dozens of press releases….The real test is hearing it and the fact that 99 percent of the people who get XM radio, keep it.”Recent Satellite Radio Programming And Sports Highlights
|Howard Stern— exclusive 5-year contract beginning in January 06.|
|“In Bed With Robert Evans” weekly show starts in February with the producer of “The Godfather” and “Chinatown.”|
|Shade 45 — a new uncensored hip-hop radio channel co-produced by Eminem,|
|Sirius Faction — a music channel created for action sports enthusiasts with hosts such as volleyball ambassador Sinjin Smith, Tour de France champion Lance Armstrong and skateboarding legend Tony Hawk.|
|NFL — 7-year partnership with current programming including NFL Radio, NFL Sunday Drive and a pre-game program by John Madden|
|College sportsin partnership with CSTV: College Sports Television|
|NCAA Division I Men's Basketball Championships begins airing March 15|
|Opie and Anthony— offered on a premium channel for an additional $1.99.|
|The Bob Edwards Show with the award-winning public radio newsman.|
|Live Shows by artists including “Welcome To Da Chuuch” by Snoop Dogg, “Roc Radio” by Jay Z and Damon Dash and “Buried Treasure” by Tom Petty.|
|NavTraffic— Real-time traffic incident reports and other information can be received by navigation systems — and displayed on route maps — from companies including Acura, Pioneer and Alpine.|
|Major League Baseball(MLB) exclusive 11 year distribution arrangement|
|College sports—Atlantic Coast Conference (ACC) and Pacific-10 Conference (Pac-10) football and men's and women's basketball games.|
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