Terrestrial-Satellite Radio

Is satellite radio better than terrestrial radio?

Is the programming better on one rather than the other?

Which business has the best chance of survival in the digital age and through economic upheaval?

Have you heard Sirius XM since the merger?

It sure sounds like the opponents every fear has come true. The new satellite company is being pruned down to the basics. Mel Karmazin fired a whole lot of XM and Sirius staffers. He combined the programming to a large extent making it basically the same service fed over two satellite technologies.

It’s almost as if the surviving XM people (known for their love of large playlists) got a hold of Sirius (previously known as the satellite system that played the hits). The same could be said if you are an XM subscriber and feel the musical and formatic influence of Sirius.

Two are now the same.

If you’re paying money just to avoid commercials, you may have a problem with what you're getting. Hell, with terrestrial stations not doing a very good job of selling lately, there aren’t as many commercials on free radio.

EchoStar was supposedly looking to get control of Sirius XM. It has bought up and holds a lot of its debt and satellite radio – monopoly or not – is nothing if not full of debt. Satellite never made money and never really hurt terrestrial radio – the latter was done by terrestrial radio CEOs without the help of satellite radio.

Sirius XM CEO Mel Karmazin made a deal with Liberty's John Malone to infuse some cash into the company to help pay two major debt repayments this year. In return, Malone got a stake in the satellite company.

Sirius XM owes the NFL a lump sum payment for football rights. It’s Major League Baseball deal that is in trouble. Could be those two advantages of satellite radio are a thing of the past.

Howard Stern – the man who built Sirius – could be a casualty of no money at some point in the future. His $500 million contract is up soon and it is hard to believe this cash-strapped company will actually have enough green to resign Stern. Even if Stern took a pay cut, it’s hard to employ talent when you can’t afford them.

If all this comes to pass – and other cutbacks occur that subscribers won’t like – there will be nothing on satellite radio worth $12.95 per month. Apparently Mel’s not worried about that small detail right now.

What's a media world when the two satellite companies are merged into one – and there is no reason for even one to exist?

Satellite never had its day because the Internet took off before it could realize its promise. And as incredible as it may seem to some -- satellite is old technology. Who needs to pay for satellite programming that is done on the cheap and unremarkable when you can get a world of plenty on the Internet?

Soon WiFi will enable even more consumers to listen more readily on the fly.

Then, there’s good old terrestrial radio which started going off its meds back in the late 1980s. That’s when radio stations still employed local people but when owners got too cute and decided to play it safe with the same handful of music formats and hybrids. Playlists got even tighter than the famous forty from Top 40 (which rarely existed in reality anyway – more like top 30).

As deregulation first came and owners could own a few more stations, their minds couldn’t handle being innovative and entrepreneurial at the same time. Once full fledged consolidation came along, well – you know the rest. We’re seeing the results of consolidation gone bad right now.

Advocates argue that at least radio is free. It’s in every car. Well over 200 million people a week listen.

Oh, yeah?

Then why is it dying?

Why is it having trouble getting the next generation to listen?

Why are terrestrioal radio companies doing the same thing as satellite radio – firing its assets?

The reason is that there’s not a dime’s difference between satellite and terrestrial radio.

That’s true of the share price of its stock.

And its programming – that, too.

I know few young people who are avid radio or satellite fans (I recognize the cost of satellite radio is out of their reach, but not out of their parent’s price range).

I know of few young people who like terrestrial radio – unless it is KCRW-type stations or NPR – both of which they don’t even consider to be radio.

And for the record, NPR is beginning to lose it. They have made a number of bad anti-consumer decisions that could soon land it in the dog house with the next generation. Because NPR still offers some quality programming, this won’t happen overnight.

But in my opinion NPR is acting a lot like terrestrial radio lately.

Back to satellite and terrestrial radio.

There’s really very little on either to attract a crowd.

I’ve always said satellite had one chance to reinvent radio and what did they do? They hired radio people in the Nineties and had them basically create more terrestrial radio for a subscription fee. The only thing it had – and to some extent still has as an advantage -- is that they play no commercials on most of their music stations. Of course, that could be remedied if terrestrial radio would limit their spots and promos, but…

Even older people – the ones driving a Lexus or BMW – have little reason to pay $12.95 a month to Sirius XM and as the year unfolds, they will have even less.

You see, the reason satellite and terrestrial radio are no better than the other is because they are run by the same people.

Unfortunately, not the content people or marketing people, but the Do It Yourself Radio CEOs who have proved over and over again that they are one trick ponies.

No innovation on either.

No digital road map (in fact Mel thinks he’s going to get subscribers to pay for the Sirius XM online service). That’s not change. It’s more of the same – to lift a phrase from Vice President Joe Biden.

No investment in content – that ended when those fools overspent for Nascar rights.

No building of personalities. Terrestrial radio is in the process of firing theirs and Sirius XM had very few to start with. And they’ll fire theirs, too. Too bad because some of the Sirius XM talent stable is actually very good.

No cool new radios – hey, it matters. When you think of a physical radio you think of an ugly box. When you think of an iPod you think of – what?

No social networking component.

Hell, they can’t even get their music right.

The one chance satellite had to differentiate itself from terrestrial radio was not to become terrestrial radio but to not become terrestrial radio.

Create 125 channels that absolutely could not be imagined on a terrestrial radio.

New formatics.

New approaches.

New everything. Not the same old same old.

So, which is better?

Sirius XM or Terrestrial radio.

Since they are basically the same thing, you’ve got to give the edge to Sirius XM since they talked 20 million people into paying $12.95 a month for something they can get for free on terrestrial radio.

With Sirius XM now in the process of raising rates, one of my readers wrote that he was considering opting for the lifetime Sirius XM subscription special but that he didn’t know whose lifetime they were referring to – his or theirs.

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