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Radio is Becoming An Easier Competitor.

9-12-2012

Sirius XM CEO Mel Karmazin answered questions at the Bank of America Merrill Lynch Media, Communications and Entertainment Conference, Wednesday, and kicked his old love in the teeth a few times. Karmazin said terrestrial radio is becoming more of an easy target because it lacks investment in programming and technology. "Ten years ago radio revenue was $20 billion and satellite and Internet radio were zero. Today, radio is a 14-15 billion dollar market, Satellite radio gets $3.4 billion, and Internet radio gets between a half and one billion. In the future, terrestrial radio's share will go down and satellite and Internet radio will go up."

Karmazin added, "We don't think music was designed to be listened to with commercials. Terrestrial radio and Internet radio have business models that are advertising driven. 95 percent of our revenue comes from subscriptions. We are the largest radio company, in terms of revenue, in the world and growing. It was Clear Channel but not anymore."

Marmazin said when he joined the company, around the same time Howard Stern signed on, Sirius had 600K subs. It now has 23 million. The company had $67 million in revenue. It now brings in $3.4 billion. "How big we can get? I can't tell you that we've seen where it stops." Karmazin said Pandora is a good competitor but he's more concerned about what Amazon, Google, or Apple might do.




(9/14/2012 8:36:01 AM)
Well Bob,

A slight misquote by you. I eyeballed management for the pricing problem radio definitely has, and has had, for years. Management is allowing mediocre salespeople like you to bend at the slightest rate resistance, whining that your company's product is overpriced. The fact is, most local radio has been underpriced relative to it's impact.
If radio's revenues do not increase soon, the necessary investments in radio's future will be unaffordable because of small profit margins. A good first step would be to see that excuse-makers like Bob are not employed in the business.

- Phil
(9/14/2012 12:13:46 AM)
What an uninformed comment here by Phil, when he states that "radio salespeople determine rates." ...Lew Dickey from Cumulus made a similar charge, awhilecago. The reality is, THE MARKETPLACE determines rates!! In ANY business. Supply and demand. And if there are not enough customers interested in buying your radio time, the "demand" is not there, to drive the rates. Don't blame the salespeople.

- Bob
(9/14/2012 12:13:05 AM)
What an uninformed comment here by Phil, when he states that "radio salespeople determine rates." ...Lew Dickey from Cumulus made a similar charge, awhilecago. The reality is, THE MARKETPLACE determines rates!! In ANY business. Supply and demand. And if there are not enough customers interested in buying your radio time, the "demand" is not there, to drive the rates. Don't blame the salespeople.

- Bob
(9/13/2012 12:50:09 PM)
Mel, ever the salesman, was in his element for these quotes; people who readily accept a statement of the unprovable. Terrestrial radio has held it's own quite nicely considering the factors stacked against it, namely:
General Managers and Sales Managers who don't manage, instead allowing salespeople to determine pricing. Much of radio's stagnant or slightly lower revenues can be attributed to this practice.
Terrestrial rado isn't as "Old Hat" as many in the business believe. The listeners still love it as do many advertisers. Ask Mel how much political advertising XM/ Sirius is getting this time around. Same goes for on-line.
Pretty low compared to broadcast radio-TV. Politicians use what works when they only get one shot.

- Phil
(9/13/2012 11:43:44 AM)
Mel hit the nail on the head once again. Can't argue with the truth!

- Jay Clakr

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