Tuesday, February 10, 2009

Radio Head

I am listening to banjo music now, on Sirius/XM, The "70's on 7" Channel....I like this channel...very much. But the combined business entity of Sirius/XM announced today, that bankruptcy will be unavoidable...Sirius VS XM ...After a time of brutal but capitalistic market rivalry, they recently bought each other in some kind of complex, fictitious value "deal thing". It did not work out so well. Too many $ spent for too few 'buyers". Not unlike the GM, Chrysler predicament. I think XM bought Sirius, after the FTC effectively said "go ahead" we are tired of the monopoly fight" :)

XM has OPRAH and Sirius has STERN. So all audience segments are covered...EXCEPT ... well ... NOT. I will listen to both ends of the spectrum for free, but not for $12/month. They are seeking a bankruptcy filing...typical, right? I guess there is solace in the fact that they are not waiting online, asking for TARP funds ... Yet. Perhaps that is to come.. I mean really, what would we do? How could we survive ... without paid "Muzac" in our elevators?

What is perplexing to me, is that they fought, hard, to combine. Now they have found that the combination will economically fail...Did they not run business model scenarios prior to their run for air waves domination?

A little bit sour tonight ... I am, I am. Should I allow myself to go through these phases ?

I love that the free market prospers .. due to consumer demand? I would hope that both Sirius and XM could profitably survive. They each have the appropriate and scalable cornerstone when it comes to marketing, programming and audience segments. Problem is, they overpaid for their talent. Does Howard Stern really need a $509M/ ten year contract to luxuriously survive? That is 5% of what we are paying to feed, shelter and protect our US troops in Iraq each month. I know that this sum of money is paid out over 10 years...but in the event of bankruptcy, Sirius owes Stern this with or without 10 years of service. Many people around the world, (approximately 12 million) listen to Howard Stern ... which is fine, but is that price tag reasonable to distribute his voice - globally? There is real value for MANY consumer in "boob" chatter. I begrudge no one. But $509,000,000 ? Oprah's deal is significantly larger. Both sums of money are unconscionable. ESPECIALLY on a subscriber base minus advertising base revenue model. Stern is funny ... occasionally ... and Oprah is inspirational ...
but neither are they funny enough or inspirational enough to balance that P & L ...

I think that the CEO's and the CFO's are smart ... of course, right? But then you have to ask yourself, how can this happen. I hate to say it, but my guess is that TMZ is the 24/7 loop in their office, as opposed to the 24/7 loop from MSNBC, CNN, FOX, APR/NPR Public Radio, FNN, CSPAN ... Conservative, Centrist, Liberal. I don't care. But at least try to inform yourself on things that matter, VS entertain yourself on things that don't. They are smart because they understand the system which will offer bankruptcy, as a way to resolve and organize losses, with little consequence to management, talent or the general public...the only people it hurts, potentially are the shareholders. That is the risk upon which capitalism is built. It is appropriate. Only recently have you been able to be bailed out by taxpayers when your business fails.

I get it. We all have a business to run. Perspectives from almost every vantage point seem to be somewhat out of whack these days... For now, I will consider it creativity ...

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