Stern May Boost Revenues With “BEST OF” Option
Within three months of the merger, SIRIUS XM Radio has committed to getting a “BEST OF” option available to consumers. Unlike true A-La-Carte programming, “BEST OF” will work on all existing services with legacy receivers on both the Sirius as well as the XM system. The “BEST OF” programming is simply the broadcasting of content that used to be available on only one network onto the other network using existing technology and systems.
Howard Stern will likely be the biggest “BEST OF” draw. Stern, used to only be available on Sirius, and for those that bought a car that only installed XM, were either forced to buy a Sirius retail device and get a full subscription to Sirius on top of their XM subscription, or to simply do without him.
These consumers now have an inexpensive and viable option that allows them to access Howard’s channels without the cost of new equipment, without cluttering up the dashboard, and without paying a full $12.95 per month for the second service. For an additional $4.04 per month, XM subscribers will not only get Howard Stern, but several other “BEST OF” channels from the Sirius line-up.
The “BEST OF” concept goes both ways. Sirius subscribers will have access to XM’s best for the same $4.04 per month. Many consumers feel that the sports programming will cross over as part of this package. I do not believe this to be the case, at least not on an “every game” basis. Negotiations with the major sports outlets likely still need to be conducted to deal with the new concept of a merger. Look for “BEST OF” to include exclusive content that is controlled by each respective entity.
For this reason alone, I think Howard Stern will be the biggest impact of the ‘BEST OF” line-up. Think of it as another extension of The Stern Effect. Personally I see a bigger demand for XM subscribers to get Sirius content than Sirius subscribers to get XM, but the ONLY REASON I see this is Howard Stern. People who like music on XM or Sirius like it for a reason. There is no hurry or need to get even more music. It is the exclusive content that matters, and for the most part, the King of Exclusive content is Stern.
XM boasts 9.5 million subscribers. If only 1% were to opt in for the “BEST OF” programming, that would translate to an additional $384,000 in revenue each month. Not a huge sum, but that is assuming what is likely a worst a case scenario at only a 1% crossover. Get 10% to opt in and the revenue jumps up to $3,800,000 of additional revenue each month.
Is there a demand for Stern? Retail numbers, and web statistics would indicate that there is. The biggest numbers this site has ever seen are attributable to stories about Howard or someone from his show. An article I wrote titled “The Stern Effect” garnered web hits that have not been replicated by this site ever since, and that is inclusive of the day the merger was approved by the FCC.
Pick any number you want, but understand this. The 9.5 million subscribers to XM are a captive audience who will be well aware that The King of All Media will be available for what translates to a nominal fee, and every XM subscriber that grabs the “BEST OF” will add revenue to the satellite radio picture.
As yet things are still pretty quite. This is the calm before the storm. Once SIRIUS XM Radio cuts loose with the marketing, Stern will be unstoppable in his promotion efforts. For him, this crop of XM subscribers represents more subscribers to his own Howard TV brand. Whether you like him or not, he is a marketing machine, and he understands this business. Stern sees opportunity here, and he will seize it.
Position – Long SIRI
I wonder how many Stern fans with xm in their cars have already gotten the kit to convert, or a separate aftermarket Sirius receiver. Despite this, 1% will definitely be a worse case scenario.
We may see NFL come sooner than you think. I suppose it will come down to how big of a piece they want. And how big of a piece will Stern want or is he contractually entitled to.
But if you can get Stern and NFL for $4, that will be bigger than many realize. Think how many guys will ask their wives or parents for the upgrade as a gift… “Hey Honey (Mom, Dad) I’d love to get How… err… Football and it is only $4 more a month. Like getting 12 mos. of Sports Illustrated for the swimsuit issue or saying you’re getting Playboy for the articles.
Speaking of Playboy, I wonder if that channel will be included. I think Hefner might want a little more exposure with business waning as of late.
Just the announcement should be good for at least a 25 cent bump in the stock.
In one of his interviews and I think his Q & A with employees Mel did say that sports was one of the things that would be included but this was still preliminary. For example, SIRI will be able to get some baseball games (i.e. a featured game or two) from XM but they would not be able to have access to all of the games…Some NFL to XM was also possible.
That is why getting this going in September no later then October would help al ot with these subs.
I also can’t wait to see how many Stern haters that own SIRI stock will soften as he helps make their portfolios balloon. I work with a “born again” who got in for the “merger pop”, but is now long. I look forward to see how long it will take him to stop calling him “What’s his name… the guy with the mouth.”
Ah, yes… How sweet it will be down the road to tell everyone (that is disgusted by my interest in Stern) how “that mouth” just made it so that I can almost retire.
sounds good, but it doesn’t take into account those who will cancel their Sirius sub, because they already have xm or vice-versa. revs for some current subs could DROP by 12-4 or about $8/sub
Only a tiny fraction subscribe to both Sirius and XM. The vast majority subscribe to one or the other. That was one of the main arguments made by the DOJ when they approved the merger sans conditions.
I hope they do SOMETHING concrete soon. I am confident about the long term synergies, but I am worried about the short term smack down the stock has taken. The shorts are back in control…and it pisses me off.
Mel has to REALLY make some changes that wall street can see NOW. He can’t just keep saying 400 million saved in 2009 and expect wall street to care. And since it’ll be several quarters until his predictions are apparent, he has to do something NOW…Like cleaning house at XM. Yeah, I kinda agree with Cramer on this one.
Cutting jobs at XM would go a long way in showing wall street that Mel is serious as a heart attack about changing things.
Since interoperable radios won’t be available until next year, the BEST OF thing is IMPORTANT. THis combined with job cuts now will send a clear message to wall street.
After the early promises of Sirius and then 18 months of being in limbo because of the merger delay….we don’t need TALK anymore….we need ACTION.
It’s the only weapon we have against the shorts right now. If Mel doesn’t come out swinging, the shorts will beat the pps into the ground. Why do you think GS keeps lowering their price target. Everyone thought their target of $1.75 was bullshit…and now they’ve lowered it to a FRIGGIN $1!!!!
No. NOW is the time to act for Mel. We can’t wait 6 or 8 months for the synergies to become clear in the earnings reports. If we do, the shorts will pummel this stock to the GS price….and we will have so much farther to go back up once synergies kick in.
We have to stabilize the price now. Establish a DEFINITE bottom now so we can start building on it. This is WAR…and if we give up ground now…we will suffer greatly.
I thought the merger would scare the shorts away….but the ugly xm refinancing to close the deal has brought them back in like hungry sharks. Even with all the promise this stock now holds, the shorts smell blood and are coming back to their old feeding ground.
Come on Mel…kick some ass. You talk a good talk, but these sharks aren’t frightened by loud splashing. We need some serious shark repellent to scare these mo fos away. We need action.
So when you go on Cramer Monday, KICK some ass. Make some announcements you haven’t made already. Something real. Something concrete. Go toe to toe with Cramer if he challenges you. Punch those sharks in the nose.
Give em hell Mel. Give em hell.
The CEO of Overstock.com founded this website because he was sick of his stock being NAKED SHORTED.
http://www.deepcapture.com/
I think 10% or higher is much more likely, assuming they make the content compelling. I also believe the comments about contractual issues being a problem are over stated. Obviously, I don’t know, but I get the feeling there is no contractual issue at all with Stern.
These offerings must be compelling. Stern and sports are what will make people buy these packages. No one is going to purchase extra music channels. Expect to see some MLB and some college sports from XM on Sirius. And, honestly, college sports may be the easier and best option. (MLB is almost too big- but perhaps they will again allow the ESPN broadcast on Sirius?) Without sports, these offerings are a big waste of time.
It would seem to make sense for the Baseball channel and the NFL channel, NBA channel and Hockey channel and NASCAR as well as Golf to be best of. Probably not the games except for the playoffs to the title games of each league. This would attract a significant amount of people and not use a lot of channels. Also expect Oprah to be on best of and the canceling of Martha S. to save costs.
I would like to see the best of programming include the major sports. Perhaps they can eliminate the home and away broadcasts during season overlaps to free up enough spectrum.
Now that everything is under one roof it is a foolish underutilization of assets to not have everything that Sirius has not be 100% available to XM listeners and vice versus. This content has been bought and paid for. What is the delay in making it available to both formats? It should have been planned for (15 months) and put into service the day after the merger was signed. Investors want an answer to this question!
I agree with Jim Smith on this one — in most cases it makes no sense to offer dedicated music channels as part of each others “best of” programming. But again, that is in most cases. Their may be an instance or two where the package includes a music channel… but remember, music channels take up a lot of bandwidth, comparatively speaking, to talk channels.
I would expect to see heavy negotiations with the various sports leagues to work out deals to alow the anchor stations (for the lack of a better term) to be a part of the best of packages… and that each league would get a revenue cut from such new subscribers adding the best of programming.
From XM, I’d look for channels such as “Home Plate” “Home Ice” “PGA Talk” “Oprah & Friends” — and perhaps some of the college channels that XM has… also toss in XM’s “exclusives” channel, which is very unique and one that they own all the copyrights for. That would be a good (with zero cost increase) channel to add to Sirius.
Same thing then from Sirius, you’d see obviously Howard 100, plus the NFL and NBA channels — I’m not 100% sure about NASCAR, but you never know… perhaps they’ll take an increase and then allow the expensee to be split between the two companies. That would be acceptable for me.
You get the idea. But the problem that has to be kept in mind… is that this third party content (and hosts) have say in where their programming goes. Most will not just allow the content to be added to the other DARS without some sort of compensation… that’s just the media business. I’ve stated this since the merger was announced. Karamzin has his hands full as they negotiate this end of it out… but he is very good at that.
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Why couldn’t SiriusXM just offer their current customers the option of getting a second radio (Sirius customers buy an XM or visa-versa) and pay a rate for the second radio and get both?
No one taking about this NY Post article from today.
http://www.nypost.com/seven/08.....123933.htm
I look forward to being able to get O&A. I have Stern, but I really would like O&A as well especially on days when howard and crew is out on vacation. sometimes the replays are cool but if I already heard the broadcast, I’ live to be able to tune in to a live O&A show.
plus they could really make it interesting in their interaction with each other. I loved tuning in to both shows when they were having their “battle” to hear opposing sides of the story.
Screw them. Whey should I have to pay an extra $4 a month for Stern? If XM and Sirius merged, we all should have each other’s channels. The bottom line is GREED.