Satellite Radio’s Dilemma ($$$)

The New York Times is out with a piece on Sirius/XM’s quest for cash. While subscriber numbers and revenue have been growing at a very healthy clip, the company is heavily burdened with debt – which they’re finding difficult to refinance at favorable terms in the current economic climate. And bankruptcy is on the table. While I represent the tech vanguard, rather than the mainstream, the Times did cite my defection (and questionable taste in music) to Internet radio as one of Sirius’ challenges… as they prepare to spend $250-$300 million on another satellite launch:

Dave Zatz […] was an XM subscriber but dropped the service after his favorite channel, Chrome […], was dropped. Now, he says, he streams Pandora, a popular Internet radio service, through his iPhone while driving. “The price is right and you can get whatever music you like,” he says.

15 thoughts on “Satellite Radio’s Dilemma ($$$)”

  1. You’re famous! Too bad they didn’t link to or even mention ZNF by name though… I guess those NYT writters are still trying to figure out this whole internet thing while the newpaper print business continues to decline.

    Still, very cool to be mentioned in the “Times”.

  2. Yeah, it’s fun – I’ve talked to them a few times over the years. And it sure beats having my content swiped, which mainstream media has also done – for example, notice the floor in this pic. (I asked for a photo credit, instead they replaced it with a stock image.)

    Back in 2006, the Times actually wanted to photograph me in front of a monument for an article on TiVoToGo. But I directed them to a ZNF reader’s teenage granddaughter, who made for a more appealing photo from Hawaii.

  3. I love my SiriusXM radios, and I truly hope that the company survives (or at least that the service continues). However, I think they have a problem similar to that Iridium faced: huge infrastructure costs for a relatively small market. In the Iridium case, there just aren’t that many people who need a “works anywhere on the globe” phone, at least when put in perspective with the cost of launching and running such a system. The market for SiriusXM is substantially larger than Iridium’s, but the real hardcore market (those of us who don’t think that Pandora or an iPod on shuffle are replacements for radio, and are willing to pay for something better) is not all that big. Others will use it if it’s cheap/convenient/has that one show they like, but there’s little loyalty and they’ll drop the subscription without much thought.

  4. Iridium is an interesting parallel. Their huge incurred expenses forced Morotola to provide service (and hardware) at such high prices that they basically shrank their potential customer base to near zero just as relatively cheap “cellular” service was taking off. It may not work in the desert or on an ocean liner, but it’ll work in most populated regions. Which is where most of us are, most of the time. After Iridium was sold off (at a deep discount), the prices were much more reasonable. In fact, right after 9/11 I looked into picking up a satellite phone and solar charging mat.

    Regarding satellite radio, I believe the market is sufficiently big, as long as they keep their content fresh and diverse with reasonable rates/plans. Should I end up back with a painful commute, I may even resubscribe… but not for the now watered down music stations, but for the talk. Satellite radio is sustainable and should survive – the only question is, who will be running that company and/or who will own it after a restructuring/bankruptcy. And don’t expect to ever see another $500 million deal for talent.

    (Also some of the blame is rightly pointed at those who contested the merger. It should not have taken so long – perhaps Sirius/XM could have refinanced their debt earlier under more favorable terms and reduced expenses earlier. NAB, etc partially succeeded in reducing the threat of competition. Which is not a good thing for consumer choice.)

  5. It’s funny that as soon as Howard Stern cashed in his stock incentive a year or two ago that he suddenly started taking vacation every other month.

    I think Sirius is also making a huge mistake bringing on talking DJS to tell un-funny jokes and talk over the records. They’ve also seriously missed the boat by not being in the iPhone marketplace. Near as I can tell their mis-steps are probably fatal.

  6. I was an XM subscriber for many years, almost as long as they had been around, and I had to bail a few months ago; the sound quality is just getting too bad for my tastes. I went through three XM radios (and even the XM radio built into my 2007 Nissan Altima) and the sound quality is still totally unacceptable. It’s gone from CD quality to worse than terrestrial radio quality.

  7. Thanks, Dave, for making my decision for me. I’m so angry about the loss of my favorite DJs from XM, the pontificating classical announcers (as opposed to the informative ones from XM days) and the utter lack of originality or creativity from this bunch that I’m canceling my one remaining subscription (in the Honda — which cost me almost $1000 to “install” (even though it was promoted as an XM Ready Radio).

    I don’t know why we can’t have at least as many classical stations as NASCAR — and I am sick unto death of commercials for incorporating in Nevada, “male enhancement” pills, bogus stop smoking schemes and others of that ilk.

    Not to demean others, but I’m certainly not in the demographic which gives a damn about such spurious enterprises. Advertise high end stereo, cameras, iPhones, and I’d not mind if they did it even on the music channels.

    Mad? You bet. I’d sell my stock, but the commission would be greater than the price I’d get. Mad? You bet. I’ve personally been an evangelist for XM and was responsible for selling more than a few subscriptions, myself.

    I’ve been wondering about the iPhone/Pandora combination for a few weeks now. Could you review the process, and what coverage is like in places where satellite radio made sense (rural Nebraska, for instance), its cost thru the wifi or other iPhone networks?

    Thanks for making up my mind.

    Mike Scott

  8. I cannot agree with Mike Scott, more. I waited anxiously for years in Alaska, hoping XM would finally be offered there. Moving to the lower 48, I bought XM within weeks of landing.

    As I watched XM reduce the channels, thus eliminating one of my two favorites, I adjusted to listening to XM Cafe’ almost 24-7. Now with Sirius’s hatchet job, Cafe’ is now history and the channels that are left are a muddied up version of middle-of-the-road, mainstream, unexciting rock that replay the same songlist all day, a la ClearChannel Communication stations.

    My subscription is up in April, and I doubt I will renew. Why should I pay for junk that I don’t like to listen to??? All individuality is gone except on Bluesville.

    Without an IPhone, is there anyother way to stream Internet radio like Pandora on the go?

    Thanks for the blog. Now I know I’m not the only one.

    S. Fry

  9. I just read the Times article and noticed the mention of this blog.

    I was raving about XM for many years. I had worked on some patent applications that involved some digital radio technology shortly before XM started “broadcasting.” The technology grabbed my attention and I joined up the first year. My 69 Electra 225 was the one of the first equipped machines in DC. I also paid about 1k for a huge satellite receiver and a new radio/stereo. And I too had talked quite a few people into becoming subscribers.

    Since XM and Serius have merged, I have become very disappointed with the emerging content changes. I definitely will be dropping my subscription too as soon as the current one runs out.


  10. I’ve subscribed to XM since the beginning. After the merge, and totally unnecessary moving and cancelling of many channels I have decided that the combined company simply isn’t for me. The two primary music stations I listen to have narrowed their playlists to the point that I’m hearing repeats in less than 24 hours, and I don’t even have the radio on with the frequency I did previously. The “Broadway” channel has replaced two very knowledgeable announcers with someone whose only interest seems to be in promoting himself, what he’s done, who he knows and his weird feeble attempts at both singing and humor. The key to success is to know your subject and he absolutely does not. And that’s without even bringing up his stereotypical gay catty sounding voice. I’ll not be renewing come February and don’t much care about the future of the company.

  11. Wow I feel behind the times on this one. I quit listening to mainstream radio long ago after most of the radio station in my area now all play rap or oldies. I have been stuck on MP3 Cds for awile now. My newest radio is an HD radio and in my area all the HD channels are talk radio.

    I thought about upgrading to sat. radio but maybe I’ll hold off now. Maybe I’ll start using Pandora or AOL instead.

  12. I am here to tell you don’t buy the portable radio’s (stiletto’s, S50 or any on the XM side) if you plan to use them as an mp3 player. They advertise that you can save the music from your favorite stations and use it as a play list like and ipod of downloaded songs. Since the merger you can not get the songs saved because the segments run together so you can’t save your songs!!!!. I have complained to the customer care but they tell me it is my radio as I tell them my radio is just a receiver I don’t tell it when to start the song and when to stop it. But they don’t care to fix it. The music content has gotten a little better but like the fm stations the same tired songs get over played and I do listen to a wide assortment of music and with my S50 I can record stations while I am seraching for songs to save. It happens on 60’s 70’s 80’s 90’s The Pulse, Classic Vinyl, Classic Rewind, The Spectrum. Octane, Alt Nation, 1st Wave. Pop 2 K even the Country stations fall into this trap. The only time you get to here different songs is when they do a count down. Now on 70’s 80’s we have to hear Casey Kasem. It was better with Nina Blackwood on the 80’s and the guy doing the count down on the 70’s channel they gave you updates and new info on the groups. Casey’s shows are dated and I did not like long distant dedications. As a former nite club D J there are alot of song that are covered in dust and I got tired of the same old music so I was glad that Sirius came along because I was hoping that I would get to hear songs that are not played and songs that are not banned like the Clear Channel’s ban on songs from 9/11 list but it is the same songs no change from fm to satelite. Maybe they should let me be program director!!! Unless things change between now and August I will not renew either. Maybe this will get better but this merger thing sucks. Plus I am missing college football, college basketball, and the NHL. I got that for free now I have to pay extra for the best of XM to receive those games. One company needs to come out of this so that it is one satelite with one set of stations not make people pay for the best of XM or the best of Sirius after they buy a radio!!!!!!!!!!!!!

  13. I’ve been a subscriber to XM for years now and have just gotten off of the phone after cancelling service for my wife’s and my car. After the merger the channels that we mainly listened to switched to the Sirius equivalent and lacked any charm or personality. Other channels we listened to were removed completely. Probably the only channel I’ll really miss is the comedy channel, but I can probably download enough comedy content to my mp3 player from Rhapsody to make me happy.

    Oh well, going into the new year leaner and meaner :).

  14. I don’t understand you people who are canceling your subscriptions because your favorite channel was slightly changed. If you held off on canceling for 2 weeks, you would get used to the new channels and forget you ever had a problem. I doubt you will continue to miss the “charm and personality” of your favorite channels; soon you’ll relearn to listen to the music and ignore the dj’s.

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