The State of Satellite Radio

By Deane Barker on December 28, 2008

Satellite Radio Still Reaches for the Payday: This is good article that reveals the current troubles with satellite radio. Sirius paid a lot for Howard Stern. Perhaps too much.

Although Mr. Stern brought listeners and prominence to Sirius, the move had a steep cost. His blockbuster, $500 million, five-year deal fueled a high-stakes competition between the two services that contributed to Sirius XM’s current bind.

Stern is talking of retiring in two years. If he stayed on, he wouldn’t get the crazy deal he got three years ago because of the economy, the condition of the company, and the fact that the move to Sirius kind of took him out of the mainstream. The article points out that you just don’t hear much out of Howard Stern anymore. He’s been…neutered.

Additionally, it’s up in the air as to how much competition Internet radio will provide. All you need is some cities to provide a Wimax network, and you could have a lot of people switch to some in-car Internet broadcast. Sure, they couldn’t listen to the same thing coast-to-coast, but that’s a theoretical benefit of Sirius that few people are actually in a position to use.

Sirius has a lot of debt that’s coming due that has to be refinanced, and that’s tough in the current economy, so no one can tell what’s going to happen with it.

I really did like this bit though, towards the end of the article.

MR. KARMAZIN [the CEO] is one of the few executives who can say his business really is rocket science. Next year Sirius XM will send another satellite into orbit, at a cost of $250 million to $300 million.

Three rocket scientists report to Mr. Karmazin. Whenever he receives e-mail from the person in charge of the satellite — even if it’s just a birthday wish or a thank-you note — the first words of the message have to be “the satellites are fine.”

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