The fate of Sirius XM up for debate, will satellite radio survive?
The struggling Sirius XM has a rather bleak forecast for its future, and with good reason. Sirius XM and the satellite radio industry in general hasn’t been growing as fast as some might have hoped, which begs the question; will satellite radio survive? As an avid listener and fan, I sure hope so.
Merrill Lynch sponsored an event on September 9th for investors, in which Sirius XM CEO Mel Karmazin had some choice words for competing radio companies; “the reason why radio sucks, and the reason that most of you don’t want to invest in it, is principally because the growth stopped.” The discouraged CEO lashed out at investors during the same time he announced his company’s subscriber growth forecast and profit projections were nowhere near what had been projected earlier, according to BusinessWeek.
The good news is that Sirius XM is seeing better growth then its AM/FM counterparts, but the radio industry as a whole is slowing down faster than many had originally thought. “Terrestrial radio is going through its challenges, but I’d be hard-pressed to say the future of satellite radio is much brighter,” says Tuna Amobi, an industry analyst. Why has it slowed so greatly in the recent months? The source is still unknown, but much of the blame is put on internet radio.
Online radio is likely to account for a growing percentage of business in the coming years, analysts say. CBS Radio, the second-largest provider of radio service, recently began managing all of AOL’s radio channels, becoming the largest Web radio provider in the world. While this can be seen as competition to satellite radio, it could also be the solution. Traditional radio off-air revenue, a category that includes Internet radio, rose 12%, to $889 million in the first half of the year, according to RAB. That’s roughly half the amount the industry receives from national advertisers. Sirius XM already streams 80 radio channels online and provides unique Web content for $12.95 a month, but in my opinion, they need to greatly expand on this to become competitive once again.
I’ve been an active user of Sirius since the beginning, and I’ve always seen the nominal charge of $12.95 per month well worth it when compared to the benefits satellite radio provides. Given, I travel more than most people, but I still see it as a much better alternative to regular FM radio. The fact that they’re no commercials will always seal the deal for me, but maybe others see it differently.
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