NY Post: Lucrative Satellite Deals Vanishing
Sunday, January 21, 2007 at 11:16 AM
Tags: 2, XM
There's an interesting article in today's New York Post about the possibility of XM and Sirius no longer be signing, or renewing, the high-cost programming deals as they did in the prior years.
Deals like the NFL, Howard Stern and Martha Stewart on Sirius' end; with the MLB, and Oprah Winfrey on XM's end; were cited as being some examples of the lucrative deals signed. And of course the New York Post hints that these "rich paydays will expire when the contracts do."
But the fact of the matter is that the very earliest any of these contracts will expire is in 2009. If this article was written one-year ago, the headline most likely would have had a completely different tone. (Ah, the fickle media.) A lot can change in the next two years, and the circumstances in which a deal would be renewed would be based on the conditions when the contract is up.
Of course, the lack of newly signed "lucrative deals" shouldn't be a surprise to anyone. Management from both Sirius and XM have said that the major content deals are over. And there's no doubt that either company would evaluate the value of each deal to determine it's renewal cost (or if it would be renewed at all).
Rightfully so, as both companies are in the business to make money, not sign deals at any cost.
Now what if XM and Sirius were to merge? RBC Capital Markets analyst David Bank is cited in the article stating that, "a combined XM/Sirius would be able to negotiate a 20 percent decrease in each contract upon its renewal" thanks to the lack of competition in a merged entity.
Then again, what if the renewal deal wasn't lucrative enough for the content provider?
[New York Post via SSG]
Thanks Gary!
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Comments
Not only will the renewal money not be as rich, who else is left in radio or TV to generate "Howard-Like" buzz? There are really no national names left who have a large following in radio or TV. After Howard and Oprah, it's a big drop to the next tier in fame.
Posted by: Max | January 21, 2007 12:20 PM
so people say satellite radio burns up tons of money getting exclusive celebrity/sports/radio hosts, and now there is a content drying up issue because they haven't signed up another 50 million worth of radio programs.
Posted by: FaFaFluFly ? | January 21, 2007 1:00 PM
Well it was a good run for those who took the risk to get in early. I think everything shows that satellite radio has stablized, both companies know what a realistic outlook is from now on. The "big deals" helped put sat. on the map, but it can now focus on real content and providing a quality product at an appropriate price. The celebrities will take the money they have and walk away knowing they helped make it all happen depite nearly bankrupting the industry, and the industry knows it won't ever have to make those deals again. Personally, I have the satisfaction of knowing that at the end of the day, Howard Stern didn't get any money from me to do six new shows a month.
Posted by: Sean | January 21, 2007 1:18 PM
The question about continuing a satrad relationship after the salary giddiness is over depends mostly, I think, on whether the person involved is mostly a radio person or not.
I could see O&A sticking around on satellite regardless of the money because they're pretty loyal to their fanbase. Or maybe not. As far as Stern goes, it'll be an interesting dilemma for him if the money just isn't there next time around. Does he slink back to terrestrial like a hypocrite? Retire and deal with anonymity? Work for (relative) peanuts and endure the prestige hit?
I don't see anyone else (Stewart, Oprah, NFL, MLB, etc.) having any interest in satrad unless the money is there. Somehow I can't imagine Oprah staying up at night planning programming for her channel. And the NFL is more or less drowning in revenue streams. Turn one tap off and they might not even notice.
Posted by: Andy ? | January 21, 2007 1:22 PM
You can't get blood out of a turnip.
( I made that up to reflect the fact that you can't get money where there isn't any )
Posted by: Pockpie Hates War-Bush | January 21, 2007 3:18 PM
Predictions:
1. Howard retires at end of contract (and why shouldn't he?)
2. Retail becomes insignificant - OEM is what will drive each company, as sat radio becomes as standard as CD players
3. Retail will be focused on XM/Sirius ready head units and combo portable/car devices -- the PNP will slowly die
Posted by: iband | January 22, 2007 11:01 AM
Ryan said:
"Rightfully so, as both companies are in the business to make money, not sign deals at any cost."
Someone should have said that to Clayton a few years back. That is what started the "content at any price" wars. This is why SDARS isn't making any money today.
Posted by: SatelliteRadioFan ? | January 22, 2007 4:42 PM
I sometimes wonder where XM would be if they just concentrated on music programming with great sound quality--Do one thing really really well, and only charge $9.99.
Posted by: JG | January 22, 2007 9:00 PM
JG Wrote "I sometimes wonder where XM would be if they just concentrated on music programming with great sound quality--Do one thing really really well, and only charge $9.99."
I think it should be priced like that now (with everything it has now)...
If they were to get it under $10, I think alot more people would switch. They wouldn't make as much per customer, but they would have a lot more customers. (McDonalds model = profit 1 penny per hamburger x 1 billion each day world-wide = $10,000,000.00) ;)
Posted by: DudeManCentral | January 23, 2007 9:18 AM