This, the first of our regional blogs, is authored by the technology and financial journalist Dominic Basulto. Dominic is a New York native, has been a senior editor at Corante since day one and has written for a number of online and offline media companies. Send tips or story ideas to: basulto@gmail.com.
About this weblog
Here we'll report daily on the latest tech and business developments in New York City. Impossible we concede: comprehensive coverage of the city's every story. What we hope you'll find: tips, tidbits and perspectives you won't find elsewhere. As well as unique insights, original interviews and more that should be of interest to New York's vibrant community of technologists and those who track, invest in and report on them.
"By now you've heard that I, David Lee Roth, have been appointed Howard Stern's successor for the Howard Stern Radio Show. Maybe some of you read about it in the papers; others of you may have just seen me renovating Stern's office, replacing his furniture with six Marshall stack amps I like to call my "musical desk," and his iMac with a collection of vintage guitars I plan on assembling into the shape of the internet... You have nothing to worry about with me, and things aren't going to change at all. I may not be the King of All Media, but I am the King of Allmusic. Take a look at that website and type in "David Lee Roth"--yeah that's right, I've influenced over ten different bands.
And after several hours of discussing this with some EMT friends of mine, I've even decided to keep calling the show the "Howard Stern Radio Show." I know that sounds incredibly modest, especially after considering several fantastic suggestions, including " The Howard Stern Radio Show presented by David Lee Roth," the "David Lee Rothio Show," and my personal favorite, "Diamond Dave's Diamondz..."
The New York Post reports that Sirius Satellite Radio is ready to launch a 24-hour Bruce Springsteen channel called "E Street Radio" on November 1. The launch date of the new satellite radio channel is no accident - it's about two weeks before the release of an anniversary box set of the album "Born to Run." It also coincides with a recent "blockbuster" record deal that Springsteen signed with SonyBMG's Columbia Records label, rumored to be worth close to $100 million.
As Howard Stern prepares to make the move to Sirius Satellite Radio in 2006, Infinity Radio has been scrambling to find a replacement. Or, as the case may be, replacements. The latest word, according to Crain's New York, is that Infinity Radio will use "five or six people" to fill in for Howard Stern. In the process, Infinity passed on a number of other high-profile entertainment personalities:
"[The head of Infinity Radio] said his team began brainstorming Stern’s replacements starting back in December and that “we went to a lot of people from Jon Stewart to Whoopi Goldberg to Geraldo Rivera… but we decided not to try to replace Howard with one person and try to hit a grand slam..." CEO Joel Hollander declined to name the talent signed but said that some of the media reports were accurate and some were not. Adam Carolla, David Lee Roth, Erich “Mancow” Muller, Danny Bonaduce and Jonathon Brandmeier have all been floated as potential replacements."
Sirius Satellite Radio has locked up another key content partner: Cosmopolitan magazine:
"The satellite radio provider said the ''Cosmopolitan Radio'' channel will feature talk shows covering topics of interest to women with guests including magazine Editor-in-Chief Kate White and other editors and writers. The channel also will play pop and other music."
No word yet as to whether the new satellite radio channel will feature some of the racier bits from Cosmo ("10 hot new bedroom tricks," "secret sex cravings") or whether it will stick to the standard fare of fashion, career and beauty.
The New York Daily News asks: With Howard Stern moving to Sirius Satellite Radio next year and more radio listeners making the jump to satellite, what will become of the broadcast radio airwaves in New York City? In fact, says the Daily News, New York radio "faces its last great wakeup call" as it responds to changing technologies, changing consumer tastes, and changing radio formats.
On a related topic, MSNBC (via Hollywood Reporter) has more details on the new channel lineup at Sirius Satellite Radio, which will include two (count 'em, two!) Howard Stern channels. If you don't like the notorious shock jock, don't worry... Sirius also plans to offer five "family and kids" channels - as well as three Christian music channels - for listeners with decidedly different tastes.
"You can listen to news from The Wall Street Journal on SIRIUS Satellite Radio. Get hourly updates during the business day with The Wall Street Journal Report and Dow Jones Money Report. You can also tune in to The Wall Street Journal This Morning every business morning..."
Stern, Stewart, and now Simmons. Sirius is still serious (ouch!) about adding top talent and brand-name programming as a way of pulling in subscribers. According to the New York Post, fitness guru Richard Simmons, following in the footsteps of mega-stars like Howard Stern and Martha Stewart, has inked a deal with Sirius Satellite Radio to host a weekly program starting in October.
Last week, Media Post reported that The New York Times Co. inked a deal with XM Satellite Radio that will result in more content from the newspaper company distributed to XM's talk radio and classical stations. The branded audio content will include news, commentary, reviews and features from the newsprint and radio divisions of the New York Times. In addition, the two companies will collaborate on hourly newscasts.
As Media Post points out, "XM's deal with the Times Co. is one of several recent moves by print publications to branch out into the audio realm." For newspaper companies eager to expand revenues, branded audio content is one potential area of growth.
Which is better, XM Satellite Radio or Sirius Satellite Radio? That's like asking who's better, the Red Sox or the Yankees? With radio, it often depends on the DJ, and with baseball, it often depends on the pitcher. (Even with Melky Cabrera in center and Tony Womack in left, we still like our chances when The Big Unit is on the mound.) The New York Daily News weighs in with its own evaluation of the two competing satellite radio providers in three different categories (oldies, country, popular standards).
Choosing a clear-cut victor may be difficult, but consider that Sirius offers an all-Elvis channel and, starting next year, an uncensored Howard Stern.
Maybe the idea of combining satellite radio assets with terrestrial radio assets wasn't such a good one anyway... Business Week is skeptical that Sirius Satellite Radio will make a play for Disney's radio assets. According to sources contacted by Business Week after published rumors of a Sirius-Disney radio deal appeared in the New York Post, a far more likely scenario would be a tax-free spin-off of the radio assets to Disney's shareholders. An analyst from S&P explains why a Sirius-Disney deal would not make sense:
"The deal would significantly dilute Sirius' long-term profile. It's not clear to us that there would be compelling synergies that would arise from the relatively incompatible business models for satellite and terrestrial radio."
The New York Post is speculating that Sirius Satellite Radio is considering a bid for Disney's ABC Radio unit. The asking price, according to initial estimates from Wall Street investment bankers, could be north of $3 billion. Rumors about a Sirius/Disney deal were stoked when journalists spotted Sirius CEO Mel Karmazin and Disney CEO Bob Iger hobnobbing at last week's media mogul conference in Sun Valley.
Crain's New York hints that maybe Sirius Satellite Radio has been a little aggressive with its willingness to pay top dollar for premium content. Expensive content deals with Howard Stern, Martha Stewart, NASCAR and others have "raised concerns over whether the No. 2 satellite radio service can keep its promise to have positive cash flow by 2007. Any stumbles could mean trouble for its stock price, a possible return trip to the capital markets to raise cash and a boost for rival, XM Satellite Radio."
The deal with Howard Stern is most troubling, says Crain's. In order to earn back the $500 million scheduled to be paid out over the next five years, Sirius will have to crank out new subscriptions at a healthy pace. Sirius doesn't see the deal as an obstacle, though: "The company maintains that its monthly rate of $12.95 means it must attract just 1 million of Mr. Stern's estimated 12 million fans for the deal to start paying off."
Reuters reports that Sirius Satellite Radio is launching Chinese and Korean language channels in order to "court a contingent of listeners generally underserved by mainstream media." Sirius will partner with MultiCultural Radio Broadcasting, which owns 44 U.S. radio stations, to create a mix of news, music, and entertainment in Chinese and Korean. These foreign language/ethnic channels will join the 3 Latin music and 3 Spanish language channels that Sirius already offers.
On the news, investors on Wall Street sent shares of the company up 5%. Memo to self: increase the value of anything by 5% by announcing some kind of tie-in to the Chinese market. Corante Beijing maybe?
Arik Hesseldahl of Forbes highlights a new partnership between Sirius Satellite Radio and Sprint PCS (Sirius will provide music content to Sprint's mobile phone customers) and hints at other product announcements that could be coming from Sirius over the next 12 months. For example, Sirius could launch a video service sometime in 2006, as well as a number of data services for radio listeners.
There's also a persistent rumor that Sirius and Apple are talking about a collaborative partnership of some kind:
"Sirius is also said to be talking with Apple about adding Sirius content to Apple's iTunes service and bringing the Sirius service to a future version of the iPod... Another possibility is for Apple to offer some Sirius programming within its iTunes software. Already, many streaming radio stations are listed within the radio section of iTunes, and Sirius, and indeed XM, might be natural targets for such an offering."
Sirius Satellite Radio is extolling the virtues of hierarchical modulation, a new technology that will enable the satellite radio company to offer more programs and expanded services to its subscriber base. According to a press release from the company, the new technology will maximize network capacity by 25%, thereby giving the company more capacity for data and video transmissions, and allowing it to add to the 120+ audio channels that are already available.
Looks like Sirius Satellite Radio has picked up "Cousin Brucie" (Bruce Morrow) from Infinity Broadcasting after he cleared waivers in the radio world. The financial terms of the deal were not disclosed, but it looks like the music DJ will get three weekly shows on Sirius: a talk show and two music programs that play music from the '50s, '60s and '70s.
Bruce Morrow spent more than 40 years with traditional radio, but now claims that he's converted to the satellite radio religion. In fact, he claims that he has five Sirius radios in his home and car. This is your destiny, Bruce.
Sirius Satellite Radio is running huge full-page ads in all the local New York newspapers, urging traditional radio listeners to make the move to satellite radio. The impetus for the move was a decision last week by Infinity radio station WCBS-FM to abandon its oldies format in favor of a new "Jack format" (i.e. Aerosmith, Duran Duran, Bruce Springsteen and R.E.M.) -- without giving listeners any say in the matter.
For Sirius Satellite head Mel Karmazin, the move is sweet payback: he is the former president of Viacom, which owns radio giant Infinity. And there's also the matter of keeping an eye on the competition: "Sirius' move came one day after XM took out similar ads in two papers in New York and Chicago. XM plans to continue to bait Infinity with an extensive print and radio campaign."
Former Viacom president Mel Karmazin, now the head of Sirius Satellite Radio, explains why he thinks satellite radio has a chance to disrupt the audio broadcasting industry. At the D conference on the West Coast last week, he also shared some insights on the economics of the $100 million Howard Stern deal: "For the Stern deal, Sirius only needs 1 million recurring subscribers paying $12.95 to make it work. If that happens, Howard Stern will add to our profitability."
Sirius Satellite Radio has inked a deal with the Rock and Roll Hall of Fame and Museum to become its official satellite radio partner. Under the terms of the deal, Sirius will be able to broadcast daily from the Hall of Fame’s Alan Freed Radio Studio in Cleveland. The Cleveland Plain Dealer has more details about the types of exclusive rock 'n roll programming that Sirius is planning.
All over Wall Street, analysts who cover Sirius must be thinking, "It's only rock 'n roll, but I like it, like it, yes I do."
First Howard Stern. Then Martha Stewart. Now Jimmy Buffett is coming to Sirius Satellite Radio. According to the New York Daily News, Jimmy Buffett is planning to launch Radio Margaritaville, a 24-hour satellite radio channel that will feature, among other things, live broadcasts of his concerts.
The New York Times has details on Adam Curry's new podcasting gig at Sirius Satellite Radio. The four-hour daily show ("Adam Curry's PodShow"), which is slated to start in about two weeks, will be devoted solely to amateur podcasts. Curry joins Howard Stern and Martha Stewart as yet another high-profile name in the Sirius talent pool.
"The company again raised its 2005 year-end subscriber estimate, now forecasting more than 2.7 million subscribers at year-end, up from previous guidance of over 2.5 million, due to strong subscriber growth trends and continued demand for its service."
The company had 1.45 million subscribers as of March 31. Adding to the good news: as a result of solid subscriber growth over the past year, revenue quadrupled for the quarter, from $9.3 million a year ago to $43.2 million this year. More ears, more dollars. Once Howard Stern and Martha Stewart start revving up their programming for Sirius sometime in 2006, look for those numbers to improve even more.
Looks like Mel Karmazin of Sirius Satellite Radio is once again floating the idea of melding together satellite radio and MP3 players like the Apple iPod to create the next "killer app." At least, that's the story he's telling CNN/Money. The article notes, however, that "there is no evidence" to suggest that such a union is any closer than it was a few months ago, when execs at Sirius Satellite Radio apparently approached Steve Jobs with the idea. In the meantime, Wall Street analysts continue to salivate over the prospect of such a deal:
"The iPod is the biggest, baddest thing around and satellite radio is this small, cool device. Put them together and it's the ultimate."
Martha Stewart may still be under house arrest, but that didn't stop her from inking an exclusive four-year, multi-million deal with Sirius Satellite Radio to create and launch a new satellite radio channel. Martha's newest creation will offer classic Martha Stewart programming (cooking, gardening, housekeeping) 24 hours a day, seven days a week. In just the past six weeks, she has already signed deals to create two new television programs ("The Apprentice" and "Everyday Food"). Now there's satellite radio. What's next -- a Martha Stewart podcast series?
UPDATE: Business Week says the four-year deal is worth $30 million.
Business Ethics magazine has released its list of the 100 Best Corporate Citizens in the U.S. The top-ranked company in the New York area is none other than Sirius Satellite Radio, coming in at #21. Of course, that's before Howard Stern joins 'em next year... (Hat tip: Treowth)
Satellite radio is on pace to have 8 million subscribers by the end of the year, making it "one of the fastest-growing technologies ever - faster, for example, than cellphones." It's a threat that traditional radio is finally starting to take seriously:
"Broadcasters are cutting commercials, adding hundreds of songs to once-rigid playlists, introducing new formats and beefing up their Internet offerings. A long-awaited move to digital radio could give existing stations as many as five signals each, with which they could introduce their own subscription services - but with a local flavor that satellite is hard pressed to match..."
The only question is whether the two leading satellite radio players -- XM and Sirius -- can keep up the furious pace of subscriber growth.
How do traditional radio stations compete with the wider-ranging playlists and more diverse formats of satellite radio stations? Here's one solution: split yourself into two different radio stations, one that plays mainstream stuff and another that plays less mainstream stuff. According to the New York Daily News, WXRK (92.3 FM) has "split itself in half, expanding its on-air playlist to include more vintage rock while launching an Internet-only twin, K-Rock 2, that will focus on new music."
Rob Cross, the station's program director, explains why the move is good for listeners: "One of the great things about K-Rock 2... is that it gives more exposure to new bands while allowing the on-air K-Rock to loosen up. You create expectations for listeners. When they are used to a certain sound, you violate that expectation if you play, say, a Van Halen song. Now we have the freedom to do that."
Bloomberg News takes a closer look at why satellite radio giants Sirius Satellite Radio and XM Satellite Radio pose such a competitive threat to traditional radio giants Clear Channel Communications and Viacom. In fact, within four years, the two satellite radio companies may have as many as 25 million to 30 million subscribers. Currently, Sirius and XM have a combined total of 4.8 million subscribers while Clear Channel and Viacom have a combined total of 170 million listeners, so it's clear that any audience gains will come at traditional radio's expense. The chief marketing officer at Booz Allen Hamilton explains what's going on:
"Today, satellite radio is where cable television was in the 1970s, a business with few subscribers compared with the traditional broadcast networks. Yet it has the potential to disrupt an industry."
In 1970, cable TV subscribers accounted for only 8% of all TV viewers; in 2004, though, cable TV subscribers accounted for 68% of all viewers. Satellite radio service has taken only four years to capture 4% of the market, while cable TV needed 13 years to capture the same share of the market.
"Sirius' radios as yet remain a bit on the uninspired side, at least when compared with the MyFi and other previous efforts from the XM camp. That's the feeling I have after trying the XACT STR1 Stream Jockey receiver from XACT Communications... If Sirius is your choice for satellite radio service... you could do worse. But certainly I think that Sirius and its hardware partners can and should be doing better."
Engadget reports that Mitsubishi is the latest auto manufacturer to make Sirius Satellite Radio a factory-installed option on new models: "Mitsubishi tags along behind all the other auto makers already offering Sirius: Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jeep, Lincoln-Mercury, Lexus, Mazda, Mercedes-Benz, Nissan, Porsche, Scion, Toyota, Volkswagen and Volvo."
Timeshifting -- the ability to watch or listen to a program where and when you want (think TiVo) -- is suddenly a hot topic in the world of satellite radio. Start-up company Time Trax Technologies is unveiling software that "won't take the place of a subscription but is designed to help XM and Sirius subscribers make the most of the pay services by letting them record and timeshift. One twist gives TimeTrax more appeal than its would-be competition: content (music, talk radio) is recorded as individual MP3 files in what [the founder of the company] describes as "useable chunks."
More details at Engadget, which published a lengthy interview with the CEO of Time Trax Technologies, Elliott Frutkin.
Perhaps the only thing worse than a call from the IRS is a call from the SEC asking you to "explain a few things." The SEC has launched an insider-trading probe at Sirius Satellite Radio and the first person brought in for questioning was gossip journalist Chaunce Hayden, who was "grilled for two hours yesterday by five SEC attorneys." Sometime before the October 6 announcement that Howard Stern was joining the company, insiders actively bought shares of the company in anticipation of a run-up in the stock price. (In the five trading days before the deal was announced, in fact, Sirius shares soared by 26%)
Hayden says that he's innocent - and that he's never even owned any shares of Sirius stock, which leads to the obvious question: who's next to face the SEC inquisitors?
Sirius Satellite Radio inked a five-year, $107.5 million deal for the broadcast rights to NASCAR races, effectively pulling the rug out from under XM Satellite Radio, which currently broadcasts the races. According to the New York Post, XM CEO Hugh Panero exploded in a "volcanic" rage when he was informed of the deal. Starting in 2007, Sirius plans to offer a 24/7 NASCAR channel supported in part by advertising.
XM Satellite Radio and New York-based Sirius Satellite Radio may both still be losing money, but investors are willing to look the other way as long as subscriber growth projections remain optimistic. According to a best case scenario, the number of satellite radio subscribers could grow ten-fold over the next five years; however, some analysts warn that these projections are way too rosy, especially since "the industry is new and demand is difficult to gauge."
For investors, that means keeping a close eye on subscriber growth figures. Says one media analyst, "Subscriber growth is the key and critical driver for satellite radio. Any snag in obtaining that growth could cause a sharp correction in the stocks of these companies." For Sirius, the magic number is 2.5 million subscribers by the end of 2005. Failure to meet that goal could torpedo the company's stock price.
The SEC has launched an insider-trading probe of Sirius Satellite Radio related to Howard Stern's announced decision on October 6 that he was making the move from traditional radio to satellite radio. Two weeks before Stern made the announcement, shares of the company soared by as much as 40%, leading to some speculation that "someone who knew the deal was coming started buying up stock in anticipation of shares skyrocketing when the news got out." In order to figure out who knew what and when, the SEC has already issued a subpoena to New York gossip journalist Chaunce Hayden, a frequent guest on the Stern show, seeking information about trading in securities of Sirius Satellite Radio.
At the McGraw-Hill Media Summit in New York, Sirius Satellite Radio CEO Mel Karmazin mentioned that he's spoken with Apple Computer about ways to add satellite radio to the iPod. Karmazin conceded, though, that Apple doesn't seem to be interested right now: "They don't need to put a satellite radio in their box." It almost goes without saying that "for either Sirius or XM Satellite Radio Holdings, a deal with Apple would be huge..."
Among the other tidbits from Karmazin's speech: Sirius is building a retail store in midtown Manhattan.
If Sirius Satellite Radio is thinking about adding commercials to its programming mix, it's worth taking a look at a recent JPMorgan study showing that "the major promise of satellite radio is its ability to deliver commercial-free content." In other words, original content from the likes of Howard Stern is great, but consumers really like the idea of no commercials more than anything else. JPMorgan also surveyed consumer appetite for satellite radio, noting a "healthy level of demand." The investment bankers estimate that XM Satellite Radio could achieve at least a 35% penetration level at its $10 price point and that Sirius could reach at least 19% penetration at its $13 subscription price.
Gizmodo has pictures of the JVC-made Sirius satellite radios that are now included in the swankiest suites of the W Hotel New York Times Square. With any luck, these will become standard-issue at every high-end hotel in the city.
Hotel Chatter likes the idea: "What a cool idea, we have to think that other hotels will line up quickly to adopt this room perk. Think about it, you are from out of town, and have no idea what radio stations to listen to, and usually have to deal with a static filled in-room clock radio, a satellite radio can solve your problems. It also is a great way for Sirius to demo their service to potential customers."
Om Malik on the rumored merger between Sirius Satellite Radio and XM Satellite Radio: "It should not come as a surprise as both companies despite all the buzz (ala TiVo and Treo) are sucking wind, and losing money. Once together, they can stop spending marketing dollars bitch-slapping each other and instead focus on getting more customers away from terrestrial radio networks."
Sirius Satellite Radio's Mel Karmazin is gearing up to "hawk shock jock Howard Stern to advertisers," according to the New York Daily News. Karmazin has a reputation within media circles as a "hard-charging ad salesman," so it's perhaps no surprise that he's thinking hard about ways to increase ad sales at Sirius Satellite Radio. By the time that Howard Stern moves to Sirius in 2006, Karmazin hopes to have established relationships with a number of big-name advertisers, including Heineken, Snapple and Dial-A-Mattress.
The only problem, hints the New York Daily News, is that the move may backfire if it annoys subscribers who view satellite radio as an "ad-free zone." The company may not have any other choice, though -- in the most recently ended quarter, Sirius posted a net loss of $261 million.
It's still in the rumor stage, but it looks like Sirius Satellite Radio and XM Satellite Radio are discussing a merger of some kind. Unnamed sources claim that the hiring of former Viacom President Mel Karmazin by Sirius Satellite Radio is additional proof that Sirius is getting, well, serious, about a merger: "Mel is a roll-up guy, a deal guy." The satellite radio industry is currently an FCC-licensed duopoly, so a merger of equals would create a monopoly.
Engadget thinks any merger between Sirius and XM is at least 12 months away: "Doesn’t sound like things are too far along—it could take as long as a year before they put together a deal, and there are plenty of technical, antitrust, and FCC licensing issues that would have to be hammered out first—but given how small the overall market for satellite radio is (especially considering the infrastructure costs), some sort of merger or alliance like this might be inevitable (the big question is whether the Feds would ever allow it)."
In Can Howard Stern now relax? Declan McCullagh takes a look at the legacy of FCC chairman Michael Powell and speculates about who might be next to take on Howard Stern in the public indecency battles: "The question now, of course, is who the president will nominate to succeed Powell. One obvious choice is [Kevin] Martin, who's eager for the job. But that risks tarnishing Powell's broadband and VoIP legacy by replacing a proponent of the free market with someone with a much weaker appreciation of it. Let's hope that Bush is up to the task. If we're lucky, Powell's successor may even appreciate the First Amendment as well..."
Within 18 to 24 months, it may be possible for radio listeners to download songs from their favorite broadcast radio or satellite radio stations. The New York Post notes, for example, that XM Satellite Radio filed several patents at the end of December that would enable the company to develop music downloading services and devices. An EVP from Clear Channel Communications also confirmed that, "Downloads are definitely on the list..."
