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Sirius looking beyond radio to profit from Stern
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| Sirius looking beyond radio to profit from Stern
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By Sue Zeidler
LOS ANGELES (Reuters) - Sirius Satellite Radio Inc. on Tuesday said it was
looking at various ways to get a return on its $500 million investment in
radio shock jock Howard Stern, including rebroadcasting his show on the
Internet.
Stern announced in October that at year-end 2005 he would move to Sirius
from Viacom Inc.'s Infinity Broadcasting. Sirius agreed to pay Stern up $100
million per year for five years, beginning in January.
When asked if Sirius had the rights to rebroadcast Stern on the Internet,
Scott Greenstein, president of entertainment and sports for Sirius, told
reporters at the Reuters Telecommunications, Cable and Satellite summit that
Sirius had not yet announced what it will do about that.
But he added that the company was looking at everything it could possibly do
with Stern.
"We're in the game of setting things, shaping them and announcing, then
delivering. It (Stern) was an expensive transaction but something we feel
confident we will get the return on as we stated," said Greenstein at the
summit, held at Reuters U.S. headquarters in New York.
Stern recently signed a three-year deal with In Demand, a U.S. distributor
of pay-per-view movies and events, to carry the TV version of his daily show
on Sirius satellite radio.
Some observers had wondered if this would detract from the value of Sirius'
arrangement with Stern. But Sirius executives said the extra exposure did
exactly the opposite.
"We're fine with the deal, we like the extra exposure," he said, pointing
out that Stern used to have a TV deal on the E! network, which only boosted
his image.
Greenstein said the company remains confident with its goal of securing one
million additional subscribers through Stern, based on the passion his fans
have displayed.
"There's no reason from any of the research to see that the passion is any
less," he said, noting that Stern is currently only on in about 40 markets.
More fans in more markets will be able to gain access to Stern via satellite
radio.
"By increasing the places people can receive satellite radio, Sirius will be
able to drive consumer awareness, consumer demands and potentially
advertising," said April Horace, analyst with Hoefer & Arnett. "It is
unclear whether Internet rights were part of the Stern deal," she said.
Greenstein said that with Stern and its exclusive deal to provide National
Football League coverage sewn up, the company does not expect any other
programming deals of that magnitude.
"We went after Howard and the NFL when they were available, but we don't see
anything on the horizon anywhere near that type of deal," Greenstein said.
Sirius CFO David Frear said he expected advertising sales to increase.
"The total radio ad pie will grow as a result of satellite radio," he said.
"The terrestrial radio advertising market is $20 billion. What the satellite
radio players offer to advertisers is actually the first efficient way to
actually put national ads up on the radio.
"As our subscription bases grow they will be able to reach a national
audience with a fairly simplified placement strategy," he said.
Frear said subscriber growth remained a key focus. "The business plan is
based around a subscription radio service, and far and away the vast
majority of shareholders' returns will be generated by our success in
driving subscriptions," he said.
Greenstein said he believed that some Stern subscribers had already come on
board and expects more to come in subsequent quarters.
Sirius, the No. 2 satellite radio provider, has 1.81 million subscribers and
recently raised its full-year subscriber forecast to 3 million from 2.7
million. |
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