Another day, and another indicator SiriusXM is taking no prisoners in its march to truly go after broadcast radio's near-century long franchise. Other players have talked about their desire to erode AM/FM radio's share of audience and revenue. But the satellite radio threat is the one that poses the most serious threat to broadcast radio as we knew it.
Yesterday's headline confirmed the rumors: SiriusXM has completed its purchase of Stitcher, buying the podcasting company (along with Midroll) from Scripps for $325 million.
And let's not forget that among their other holdings, SiriusXM took the big leap when they purchased one of the original streaming players – Pandora – in 2019 for $3.5 billion, giving the satcaster another way to augment its portfolio.
Yet, when you ask many people in radio which of its competitors represents the greatest existential threat, many mention Spotify. Or podcasts. But rarely do they view satellite radio as their top challenger – radio's public enemy #1.
Today's post lays out 10 reasons why SiriusXM constitutes the toughest challenge to broadcast radio.
1. SiriusXM is most similar to AM/FM radio. By sound, by style, by format, and by personalities, they provide a very similar -but importantly different – experience: no commercials on their music channels, more channels, and the ability to carry a signal all over the country.
But perhaps it's the demographic similarities that are most striking. Music streaming services, podcasts, and social media all lean younger – with the highest usage typically coming from Generations Y and Z. But satellite radio is one of the few tech media platforms that skews older – yes, just like broadcast radio.
2. They are heavily connected to cars. Like broadcast radio, the lion's share of listening to satellite radio comes when consumers are moving on four wheels. And like AM/FM, there's an important partnership in place with automakers. As a result, satellite radio isn't just available when you buy or lease a new car – it's typically free for 6 months or a year.
That's proved to be a perfect sampling tool, snaring car owners into continuing the service long past the trial period elapses. And when broadcast radio listeners acquire a “connected car,” their AM/FM listening tends to shrink, while their satellite radio usage goes up.
3. They are betting heavily on voice. To become less dependent on in-car listening, SiriusXM connected with Amazon in 2019 to ensure their 300+ channels would be available by simply barking out a command to “Alexa.” This smart speaker distribution feature has no doubt come in handy during COVID-19 when so many Americans are no longer spending much time in their cars.
But to remind us just how aggressive and focused on multi-location the strategic team at SiriusXM is thinking, they sent their subscribers an attractive discount last week. That's right – for the cost of a Whopper and a chocolate shake, you can have an Echo Dot on your nightstand streaming Howard 100.
4. They have a solid music streaming asset with Pandora. Granted, it has lost share to Spotify in recent years, Pandora is still a force to be reckoned with on the digital menu. It also provides another key form of audio content and entertainment, as well as access to millions of mobile phones that already have the app. Music streaming is a key component in building SiriusXM's media menu.
5. Podcasts are becoming a bigger piece of the SiriusXM portfolio. In addition to the Stitcher deal, SiriusXM has been busy since the pandemic took off, purchasing Simplecast last month, another sign podcasts will be a part of their burgeoning content and distribution empire. At the same time, they also bought AdsWizz to facilitate a better podcast advertising experience.
The need to escape the onerous streaming royalty fees (a reason why Spotify is heading in this same direction) is part of SiriusXM's thinking. But as podcast consumption increases, they're also well-positioned to take advantage of the on-demand audio trend.
6. They have celebrity. We're not just talking about influential former broadcast radio jocks, from Jim Ladd to Cousin Brucie to Kid Leo to Nik Carter. SiriusXM has done a marvelous job partnering with some of the biggest names in music for prominent special programming or dedicated channels: Tom Petty, Little Steven, Billy Joel, U2, Dave Matthews, Michael Bublé, Bruce Springsteen, Kenny Chesney, Ozzy Osbourne, and many others.
And on the News/Talk side, all the big networks are in the channel lineup – including Fox News, CNN, NPR, MSNBC, CNBC – as well as big names like Michael Smerconish, Dr. Lauara, and Dave Ramsey.
7. Howard Stern. Let's not forget their anchorman – their cleanup hitter is none other than once broadcast heavyweight, Howard Stern. Howard's defection to Sirius in 2006 was a big move for him – and for satellite radio. It helped legitimize their brand, bringing credibility and stardom to their portfolio. The fact Howard continues to be a prominent part of SiriusXM's profile speaks volumes about his continuing star power.
Could satellite radio get along without Howard Stern's content and his tacit endorsement? Perhaps. But given the choice, Howard's presence is important. As SiriusXM CEO Jim Meyer made it clear at a conference just last month, “I don’t see any reason why we won’t pick up the pace on those discussions. I want Howard to work at Sirius XM for as long as Howard wants to work.”
That says a lot.
8. The subscription model provides financial stability. While there is advertising on some spoken word satellite radio channels, the bulk of their revenue comes from those monthly subscriber fees, a trend that is growing in popularity over the last decade, and particularly since COVID-19.
Radio listeners have come to detest commercials – especially those long stopsets – and a growing number of consumers would rather shell out a few bucks a month than be bombarded each hour with commercials that have become less and less entertaining and relevant over time.
9. They have data. Thanks to their 30 million subscribers (as well as those who have left the platform), SiriusXM has a great deal of personal and media usage metrics on a large group. Add to that, Pandora's 60+ million users in the U.S., along with Stitcher's 8 million users, and you've got scale.
Yes, broadcast radio has many million more listeners each week. But the satellite radio brain trust has better data, including credit card information.
While public radio and Christian radio might make that same claim, much smaller percentages of their audiences actually provide financial support.
10. They have an aggressive distribution strategy. SiriusXM doesn't care which device you choose or where you listen. They have rapidly moved to ensure access on myriad platforms and gadgets. And as importantly, they are marketing and promoting the many ways and places subscribers experience their content, especially on the increasingly important home front.
Like all mass media in 2020, radio broadcasters have their hands full.
But planning and strategy can be better focused when you have a solid understanding of who wants to eat your lunch – and your breakfast and your dinner.
To be sure, the AM/FM platform has longevity, habit, trust, and connection as assets. It is the one medium that has the ability to be real-time, in the moment, and reflective of the communities it serves. As we've learned during the COVID-19 crisis, these strengths set it apart from the pack.
And yes, let's not forget it's free.
Radio broadcasters need to be clear-eyed about its competition.
Satellite radio is in the rear-view mirror, and coming up quickly in the fast lane.
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