As much as I travel, a lot of people ask if I have satellite radio in my car.
The simple answer is - no, I don't. Why? Because I don't know which service - XM or Sirius - I'd have. Both have over 110 different channels to choose from (with XM now up to around 170 channels). Both bring some things to the party that I'd like to listen to, but both don't have everything I'd want.
I've tried rental cars with both XM and Sirius and I found myself listening to only three or four stations during trips - if I listened at all. There are areas in the Midwest that satellite radio would come in handy - a stretch of Interstate 35 between Des Moines and Kansas City immediately comes to mind. You can only pick up about three FM stations for a 40 mile stretch and they play only country music or have farm reports on non-stop.
Sirius has a base of just over 4,000,000 subscribers, while XM has a base of 6.5 million with a projected base of 8.5 million by the end of 2006. However, XM had to recently downgrade their projections by 500,000 subscribers which lowered their stock price.
A lot of that has to do with a slower than anticipated new General Motors vehicle sales. Over 50 2006 GM models come with XM radios. And Ford has an agreement with Sirius to provide satellite radios in their upper end vehicles, primarily SUV's. With the price of gas around $3 bucks a gallon, those big gas hogs are sitting parked on dealer's lots.
Sirius has picked up some steam versus XM, but their earnings are still woefully low - hovering around $4 a share. A lot of that is attributed to their overall net losses and the lack of anticipated new subscribers.
After Sirius announced that Howard Stern would begin to broadcast his show on the system, they expected an uptick in subscribers. From September of 2005 to January of 2006 just before Stern went on Sirius, market projections were that Sirius would add about 1.5 million subscribers. However, that total number of new subscribers ended up being about 225,000 fewer than expected (see chart).
The "Stern Effect" - a marketing term used for the surge in Sirius subscriptions - has begun to stall. According to the Bridge Ratings, a Southern California firm that tracks weekly and monthly radio audiences, Stern converted about 1.1 million of his listeners to Sirius. Given that Sirius' subscriber base is about 4 times that size, you can see the importance of Stern's presence on the satellite radio provider.
However, the number of new subscribers has fallen dramatically since the January 2006 debut of Stern's uncensored show. In March and early April, the Bridge Ratings asked over 3,000 former Stern listeners as to why they hadn't switched to Sirius. 31% said that they don't miss Stern that much to listen. But the underlying fact may actually be the next stat - 23% said that the price of the equipment and subscription is too high.
Stern at his height had about 12M listeners. Figure that he probably has about 1.5 to 2 million on Sirius (considering that many Stern listeners were already Sirius subscribers well before January of this year), and his replacements on over-the-air radio probably have a like number of listeners, that means that approximately 8 million former Stern listeners are not listening to Howard any longer. That's a huge number that has to bewilder - and concern - many Sirius executives.
I know it concerns Stern, who went on a rant recently saying that instead of 4M Sirius subscribers, it should be 20M.
One of the interesting things about satellite radio is that many people have not renewed annual subscriptions. Paul Nachreiner, who heads the sales division for Madison,WI-based AMS (and one of my dealers), told me recently that their revenues for renewed subscriptions were down for the first five months of 2006. And it didn't matter if it was XM or Sirius - people who had put satellite radio in their cars in 2004 and into 2005 were not renewing the annual plan.
Paul said there are a number of reasons. He said the biggest reason seems to be the quality of sound that people get with satellite radio. Coupled with signal drops and black-outs during heavy weather, some people have dumped satellite altogether for the traditional - and free - terrestrial radio stations.
Both XM and Sirius claim "CD quality sound". While it is true that the broadcasts are picked up by a digital receiver in most cars, they are down-converted to a radio frequency band to be played over the vehicle's radio that ultimately compresses the signal and limits the full range sound that people think they're paying for.
There is a web site - radiosatellite.org - that does a wonderful job of comparing the two services and gives you a good overall perspective of which one has what. And there is a blog site - Orbitcast - that deals with news and information regarding the satellite radio industry.
I'm not sold on satellite radio just yet, but I don't think it's going away any time soon. Like any new medium, satellite radio is finding it's way, trying to narrow-cast their multiple offerings to millions of people. If there was just a way to combine the two services, then I think I'd be interested.
I've read many of your audio video entries and I am fascinated by your knowledge. I haven't decided between Sirius and XM Radio either, but this entry certainly helped clear some things up. My thanks. T.R.
Posted by: Tom Robinson | June 21, 2006 at 08:36 PM
Is it not true that Sirius and XM are blaming manufacturers for the lack of hardware available to play their given formats?
At one of my local Circuit City stores, the young man was telling me that a lot of the problems Sirius and XM are having, financially, is the lack of receiving units on the market.
And I read recently that XM had to lower their forecast again for projected subscribers by the end of 2006.
Posted by: Edward Sloan | August 21, 2006 at 10:02 AM