Exclusivity Is Harder To Come By
One of the big selling points of satellite radio when it launched was limited (XM) or no (Sirius) commercials, nation wide coverage, and the exclusive content the companies were able to offer. As the years have passed, some of the things that made satellite radio so special are not quite as special as they used to be. It is for this reason that Sirius XM needs to be very careful in considering the exclusive contracts they do have.
Content like the NFL, even though it was not exclusive, had something special and unique that Sirius could offer. Every game with both the home and away feeds, the NFL channel, and some good marketing rights. Today, the NFL has their own app on smart phones that takes away from some the uniqueness Sirius XM has enjoyed.
Over the weekend the NFL season started. I found myself engrossed in my NFL app on my Android smart phone. The app features instant scores, video clips, text messaging on anything relating to my favorite team (New England Patriots in my case), standings, schedules, injury reports, etc. You can get general information as well as team specific information. All in all, it is a great product. It does not give an audio feed, but the interaction is great, and the ability to customize is huge.
Seeing how this app functioned got me thinking. Should Sirius XM renew the NFL deal, and if so, at what cost. Certainly having the NFL gives Sirius XM some cache, but in the end is paying top dollar for it worth while? Could the NFL go on their own and begin streaming games (at least the audio) through smart phones? Will another service such as Pandora enter the bidding mix for broadcast rights?
At first blush I would think that a new deal with the NFL may come at a discount when compared to the first deal which was struck when Sirius and XM were competing. Looking deeper, there are other potential suitors, and perhaps even the NFL themselves.
Simply stated, the NFL is not as exclusive as it once was. The mobile Internet has given the NFL and virtually any company a presence in the mobile arena. They can work direct to the consumer more than ever. Howard Stern and Opie & Anthony are in negotiations right now. There is an exclusiveness to those shows that Sirius XM needs to keep. If either went to a company like Pandora it would make the Internet Radio provider that much more close to delivering the same type of content delivered by satellite.
The key going forward is owning exclusive content, and marketing it properly. Sirius XM has several deals that they are considering right now. They need to understand that the exclusiveness that got them where they were is beginning to vanish. They need to hold onto that as best they can. With new competitors in the market Sirius XM may need to pony up a bit more than they thought just to keep their edge.
Position – Long Sirius XM
Exclusivity, but not at too high of a cost, because at the end of the day it is a business that needs to make $ and grow its profits.
NFL contarct will be interesting, especially if they strike next year.
One thing i never liked as a siri listener/investor is the fact that NFL,MLB, and other leagues are not exclusive satrad content. They are all available on terrestrial radio for free and IMHO most team loyalties are specific to local markets. How many Yankee fans in Kansas subscribed to XM to hear Yankee games ? They need exclusive content as in the Howard Stern show , which can ONLY be heard on siri/xm. Anyone remember the Sopranos ? think it might have made it possible for HBO to compete with the Networks? SIRI need to keep howard and figure out how make him a partner and monetize the show with an app.
“The key going forward,” is you getting a life.
I agree on exclusive content,as a truck driver I also enjoy having the NFL to listen to while I’m driving. I think having the sports holds a certain cache for advertising even though you may never use it its a nice selling point. They should not pay more than before for the NFL which will be new to the NFL who see profits rise but if the NFL is smart they will let sat radio have a break.
One thing is sure with Sirius XM contracts going forward and that is the ridicuously high contracts are a thing of the past as there no more bidding war between Sirius and XM to nail down the content as their own. Howard is fixing to hit the wall on that one. NFL and MLB are next. Afterall, it’s not even exclusive. It’s just a means of ditributing what most people can get for free on television or their home town radio. These forms of content had a good deal, make that ludicrous deal, going for five years, but it’s now time to get real.
I continue to believe this….Sirius-XM is like ESPN. Once you have the eyeballs in this case ears you have the ability to pay more than anyone else. Logically no one would believe that ESPN could pay what they do for sports properties and survive but they do and they prosper. Why? Because they cover ALL sports. NFL is only interested in the NFL. MLB is baseball. So once you get the product by paying what you must you get the ears. The ears give you the duel revenue stream of advertising and subs. Sirius-Xm is better because they cover every Sport and News and Music. Malone knows the game and he sees the tax forward losses. Its a no- brainer to double from here.