[BC] XM only wishes ... Feeding the Competition

[Rich Wood]

------ At 03:45 PM 7/4/2005, Scott Fybush wrote: -------

>Back to the point at hand - it seems like just about every day, I'm seeing 
>another announcement about one of the satellite radio services expanding 
>its reach. The one just the other day was XM, I think, putting receivers 
>in 50,000 Hilton hotel rooms around the country. They don't say so, but 
>I'd bet that the revenue stream there will come from one of those 
>"optional" dollar-a-night charges on the bill, just like the USA Today 
>outside the door and the safe in the closet.
>
>"Many, many, many years" before satellite radio is universally available 
>will be down to "many years" before we know it. They're being very 
>aggressive about getting the radios out there. Can anyone say the same 
>about HD Radio?

No, they're not. Radio is cheap (not a compliment). For a medium that pays 
the bills through advertising revenue, they're incredibly reluctant to 
promote their own product anywhere but on their own air, where it's 
considered clutter by listeners.

IBOC, I believe, doesn't have sufficient confidence from the broadcast 
industry to do the kind of marketing any new consumer product manufacturer 
would expect to do. Of course, much of that promotion money is going to 
IBOC fees. Self defeating, it seems. Would you take your meager promotion 
budget and sink it into promoting something that really doesn't have a 
unique selling proposition? What if everyone puts it on the air and there's 
nothing left to receive but digital hash until everyone in your market has 
replaced their billion or so radios so the hash generators can be turned 
off? Many, many years isn't that much shorter than many, many, many years 
when you can lose an entire audience in days. Or less.

When was the last time you listened to the radio in your hotel room? It's 
useless for ratings because you're in the industry and can't fill out a 
diary. The radio tells me it's time to get up and turn on the TV to find 
out we haven't invaded Nova Scotia, yet. Unless you're already a satellite 
subscriber are you going to learn how to operate another multi-button 
contraption on a trip where there's not enough time to eat properly? Again, 
we have to divide 50,000 by 130 or so to get an approximate number of 
listeners per channel. I'll bet there are more people using the vibrating 
bed thing which sounds better than the 80% distortion on the hotel bedside 
radio.

If the content naysayers are right what will we fill the other IBOC 
channels with? Will the FCC give the secondary channels the same freedom to 
do weenie talk that satellite does or will we have to be pure once the 
religious folks take over? What's the progress of the 5.1 remixing project. 
The one that accurately recreates the feel of the original we grew up with 
on mono AM radio? That's important because AM skews older. On FM friends 
who can compare tell me that there's not much improvement, that a well 
engineered analog FM sounds cleaner than IBOC. Fewer artifacts.

Let me put another issue on the table. Saga's head honcho has said any show 
that appears on satellite will not be carried on any of his stations. He, 
rightly, sees market exclusivity clauses in contracts as important. Since 
this might cause some significant programming changes, we'll have to wait 
and see how serious he is. Other companies are considering the same 
directive. Most small syndicated shows are on satellite and make a big deal 
out of it even though the vast bulk of their audience comes from the angry 
radio stations who are being used to promote satellite against their wishes.

That leaves satellite providers looking for more programming. If the 
syndicator says "we're staying on the satellite" it leaves them looking for 
replacement affiliates. Personally, I don't think the broadcast groups will 
follow through on the threat, so it might all be rhetorical. We're feeding 
our competition. It's a grossly unbalanced equation where satellite gets 
the huge terrestrial audience to notice while radio drops their pants in 
view of the tiny satellite audience and the response is "you'll never get 
the job done with that!"

What's your company's position on satellite services tromping on your 
market exclusivity, especially with syndicated shows you're paying a 
fortune to carry?

Rich