Solution to SiriusXM'S Future Growth?

Saw this in an article reply post,does anyone know him?
He has some interesting thoughts on what is wrong and what should be done.



by rcrask May 9, 2009 1:48 PM PDT
Post Part !

As a former terrestrial radio network engineering chief, a career satellite communications engineer and a former owner of three terrestrial radio stations, I would say I have a number of reactions to this story and the above comments.

1. My family has subscriptions to both XM and Sirius Radio. I don't know that I had a personal preference over the years, I enjoyed programming on both. But as an engineer, with an extensive background in audio and microwave engineering, I will say I preferred the audio and satellite signal performance of XM; I was really never happy with the digital compression used by Sirius and the resulting audio quality.

2. As a terrestrial radio station owner, I did not feel I was competing with satellite radio. My stations' programming were all about "local" and I invested a good deal of time and money in covering local/regional news and providing consistant quality programming. Really, as a local broadcaster, my competition was more the local daily newspaper, its newsroom and advertising group.

3. But the above being said, I also knew very well that as far as music programming was concerned, my competition was the personal music player devices, and I would include satellite radio in that group. So, rather than bashing satellite radio programming, much of which was nothing more than an automated MP3 player, I made sure my nitche (local programming) was the very best it could be.

4. The majority of market share decline of major and medium market terrestrial radio is not the result of satellite radio, MP3 players, 200 channels of cable TV or anything else, but instead rests squarely on the shoulders of the mega-corporate station owners, who have cut the local staff and news operations to the point that "local programming" has nothing to offer, and therefore listeners, more ofter than not, turn to their MP3 players and satellite radio to have other choices.

5. Satellite Radio: The dueling battles for the launch and survival of satellite radio is what drove both compaines (XM and Sirius) to do what they felt was best to create subscriber growth and ultimately survive. For those of us who have a pretty good understanding of what it costs to design, build, launch and operate a satellite system, including building spares and replacement spacecraft, it was fairly appearant from the beginning that it was unlikely two satellite radio operators could survive long term. And, it was very clear from the beginning that getting people to "pay" for radio was going to be a steep uphill task.

6. Like many other products available to consumers, there is a subjective "price" the market will bear, and XM and Sirius were allready near that number before the merger. Now as a merged entity, they are not going to be able to cut their losses by raising the price. Raising their price, at least for now is going to drive away those subscribers who were already walking the line of whether the cost was worthwhile and/or will cause people with multiple subscriptions to reduce cost by cutting subscriptions.

See Part 2 for remaining comments....
Reply to this comment by rcrask May 9, 2009 1:49 PM PDT
Post Part 2

7. Customer service at Sirius Radio was already weak, XM appeared better, but frankly neither was very good for an industry who was in a race for survival. One thing is for sure now, this is the wrong time for the management team to reduce further the quality of their customer and technical support teams.

In summary, it is clear the combined Sirius-XM operation needs to move aggressively to consolidate operations, get costs under control, determine what nitche they want to serve, then start investing the money saved in programming content and customer service, in order to turn around the subscriber defections and create long term growth.

My recommendations would be to:

1. Determine what programming is really going to sell itself; then work on developing that line-up.

2. Move to consolidate satellite operations onto one satellite system. For the sake of the long term stability of the company, to reduce technical-operational complexity and cost, and provide the best possible service to the subscribers, the XM satellite system is the best choice.

3. Figure out how to get the Sirius users moved to the XM satellite system with the least possible disruption, and put together some financing to assist users in this transition.

4. Get the new programming line-up on the XM system this fall, including premium content like Howard Stern. While Howard Stern is no fool, I have little doubt he would agree to a new much less expensive deal, as long as he could participate in the longer term upside. Cut all the junk programming and costs surrounding the Howard Stern program. Get Howard to do his show live five hours a day, 5 days a week, and repeat the show on one single channel the rest of the time.

5. Run the same programming on both satellite systems until March 2010 (allows people time to buy new hardware as Christmas gifts and birthdays, etc.). Allow Sirius subscribers to move to XM easily and very quickly. Shutdown the Sirius terrestrial repeaters at the end of 2009 to move people along, and shut diwn Sirius satellite operations on March 31, 2010. Allow only XM system users to access Internet programming at no cost, again prompting people to move to the XM system. Give people a financial incentive to keep ALL of their subscriptions active through December 31, 2010.

6. Decide whether Sirius-XM is going to operate from New York or Washington, DC, and start the full consolidation asap, and get it done by this September.

7. Look at other high profit revenue streams that could be combined into the XM digital transmission system.

8. Look to leverage the old Sirius satellite system by either selling it to a data provider, or by creating a partnership with a data-broadcasting partner to use it as a mobile/portable data network. There are a number of potential applications that could generate revenue for this extra system. If, as it turns out, these other applications are not financially productive and/or the Sirius satellite satellite system is in need of near term satellite replacements, then just shut it down and move on.

Finally, Sirius-XM will not survive even in a consolidated mode if there is not an effective, productive and focused operating-management team. The operating-management team needs to grow the business and make "long term" decisions. The public-company team needs to raise capital for the new group and keep their hands off the operation. There is no question Sirius-XM is in trouble and may even be on life support at this point, but a dedicated management team with a long term view has a reasonable probability of making Sirius-XM a real busienss, as long as there is focus on the operating company, and not creating "transactions." And, even if the management team can stop the defections and create subscriber growth, it is going to be touch and go for some time to come, so survival is really going to depend on good-quick decisions by an effective "small" management team, and focus, focus, focus.

That's the view from here....

Dr. Raymond C. Rask
rcrask@awti.info

funny, i was just considering copying that post as well. I actually believe every word this guy says. Written very honestly. Nice pull irish. I agree with almost everything he says. he knows a lot for a non investor. Good insider insight into radio.
Dont wait to advertise until the economy recovers. Its never been cheaper to advertise right now(inflation aside).. People might not buy now, but when they are, they will remember to buy sat radio. people dont forget good ad campaigns.