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Star-Power Surge for Satellite Radio

By Cynthia L. Webb
washingtonpost.com Staff Writer
Thursday, October 7, 2004; 9:48 AM

Shock jock Howard Stern's decision to jump ship from traditional radio gives a boost to the emerging technology of blasting tunes, news and other staples of AM and FM radio via satellite.

The New York Times gets the clairvoyance award, for running a piece on the growing reach of satellite radio on Monday, two days before the announcement on Stern's departure in 2006 from Viacom's Infinity Broadcasting to Sirius Satellite Radio. The Times piece, which focused on National Public Radio veteran Bob Edwards's new show at XM Satellite Radio and other developments in a satellite radio business kick-started by new, personality-driven shows.

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"They are being broadcast only on satellite radio, a new medium that became broadly available in the United States just three years ago. The hope among [XM] executives ... is that the radio personalities will motivate some of their devoted fans to pay XM's subscription rate of $9.99 a month. 'Morning Edition,' for example, grew to about 13 million listeners a week over the 24 years that Mr. Edwards was the host. Sirius Satellite Radio, XM's competitor, charges $12.95 a month. The shows highlight a change in the landscape of radio. XM, started in Washington in 2001, and Sirius, started in New York in 2002, have sought to grab more of the audience of conventional radio, but XM's recruitment of well-known personalities at both ends of the programming spectrum has been the most aggressive effort to date to win listeners," the newspaper wrote.
The New York Times: The Broad Reach of Satellite Radio (Registration required)

Just as the Internet is the Wild West for unfiltered content, satellite radio can play by different rules than traditional radio companies. That's a compelling prospect for Stern, who is known for his envelope-pushing, bawdy antics on air. Stern portrayed his $500 million deal with Sirius as "a response to 'censorship' efforts by the Federal Communications Commission, which does not regulate the content of satellite programs," The Washington Post reported. "I lost my joy for radio," Stern told the paper. "I believe this is the future. This satellite radio will overtake terrestrial radio." USA Today picked up a similar quote from Stern: "Satellite radio became a business today," Stern said. "When radio's biggest star voluntarily takes himself off terrestrial radio and an empire, you know it's the real deal. I'm saying to the medium, I'm saying to the industry, I'm saying to my fellow broadcasters, 'We do have a choice.'"

More from The Post: Combined with Edwards's defection from NPR, the paper said, "Stern's decision could lead a flood of subscribers to begin paying for what has long been taken for granted as a free part of the media landscape."
The Washington Post: Sirius Lands a Big Dog: Howard Stern (Registration required)
USA Today: Radio's Badboy Kisses Radio Rules Goodbye in $500M Deal

CNET's News.com had one of the funniest ways to describe what Stern's move could mean for the upstart business: "Potty talk could be just what the fledgling satellite radio industry needs to become a viable, mainstream business, industry analysts said Wednesday in the wake of shock jock Howard Stern's defection." The publication quoted media executive and BuzzMachine blogger Jeff Jarvis, who pinned high hopes on the lasting effects of Stern's move. "We're going to mark today as a moment of sea change," Jarvis said. "This is going to be the breakthrough for satellite radio to become large enough to be a viable business. ... Satellite and the Internet will become the delivery mechanisms for audio programming, and broadcast is just going to become duller and duller." Janco Partners Inc. analyst April Horace told the San Francisco Chronicle: "It validates satellite radio as an industry."
CNET's News.com: Will Howard Stern Deal Turn Satellite Radio Into a Star?
The San Francisco Chronicle: Shock Jock Defecting to Satellite Radio

The New York Times in an article today cautioned that satellite radio "is still a nascent business. A Sirius spokesman said the company had only about 600,000 customers when last measured at the start of September. Mr. Stern, whose show is often ranked No. 1 in many of the cities where he is carried, has a national audience estimated at about 12 million. A spokesman for Sirius, Jim Collins, said the company had research that indicated that as much as a third of Mr. Stern's fan base might be willing to pay a fee to listen to his show on a satellite service." The Los Angeles Times wrote, "The Sirius deal is fraught with risks for both sides. Stern ... is trading his vaunted broadcasting perch for a role at a niche 'satcaster' with just 600,000 subscribers. The host, who reportedly earns $20 million a year at Infinity, could wind up a forgotten and isolated figure if large numbers of his core fans fail to follow him to satellite."

The New York Post picked up on this theme in its coverage today: "While satellite radio is growing in popularity -- and Stern's endorsement is likely to mark a watershed moment for the industry -- Sirius is still taking a risk. Sirius, which has lost about $1 billion since 1999, said it agreed to pay $100 million a year to fund the Stern show. Stern's cut of that was not disclosed, but he makes some $31 million a year at Infinity, Forbes has estimated."

More, from the New York Daily News (which plastered a picture of Stern in drag on late-night TV to illustrate its story): "The shock-jock pioneer has made a career out of taking risks, pushing standards of good taste and good humor with his radio show and off-color stunts. But Stern's move from the free airwaves to a subscription-based service may be his biggest gamble yet -- putting the King of All Media on a form of media most people don't get."
The New York Times: Howard Stern to Shift Show to Satellite Radio in 2006 (Registration required)
The Los Angeles Times: Stern Vows He'll Rise Above FCC (Registration required)
The New York Post: Satellite Boost
The New York Daily News: Howard Tunes Out FM With Sky-High Deal

The Wall Street Journal, in a front-page piece, concluded: "Even if Mr. Stern's move is a risk for Sirius, it underscores the growing problems facing traditional radio, which is struggling with flat revenue and declining audiences. Other well-known radio personalities recently have jumped to satellite radio ... but the 50-year-old Mr. Stern is by far the biggest name to make such a move. If he makes good on his promise to lure other high-profile personalities to satellite, terrestrial radio eventually could find itself falling behind satellite in ratings and buzz, just as broadcast television is struggling with cable," the paper said.

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