By Relmor Demitrius -
Terrestrial radio. Broadcast TV. Newsprint circulations. If people heard it, saw it, or read it, they did it through these 3 mediums only a short time ago. Today is a much different age. People have access to information now through a vast array of additional avenues once thought to be impossible. The internet, Smart Phones, laptop computers, satellite television and radio, cable TV, and even the Kindle are allowing the distribution of information in a way that is becoming harder and harder for the old media companies to compete against. When Comcast (NASDAQ:CMCSA) purchased NBC Universal, it was a shot heard around the country. Is this the end of broadcast TV? The content of networks like HBO, Showtime, CNN, ESPN, and hundreds of other cable and satellite TV channels has erased the necessity of these media distribution systems to HAVE TO CARRY the big 3. Comcast now has leverage in the media community. Charge more for NBC, we'll charge more for CBS. Charge more for CBS, we will deny you complete coverage of all the NBC stations and content. Disney bought ABC, Lifetime, ESPN and A&E for a reason. Collaboration of content. ABC, FOX, and CBS launched cable and "satellite only" shows to add content power, and create demand from its fans for their shows, and station formats. The battle is on.
Cox and ESPN were involved in a bitter contract dispute years ago. NBC and Time Warner just finally agreed on a deal. The move to the new distribution mediums is occurring, evolve or die and become irrelevant. The thought that one day a cable company, a simple delivery system company would be able to purchase NBC was unthinkable when cable first started. Liberty Media, (NASDAQ:LCAPA) owners of 40% of Sirius XM Radio (NASDAQ:SIRI), also tried to purchase NBC for its network of companies and media offerings. Now with the media fight going global, with Ondas Media, and Worldspace Inc. (OTC:WRSPQ), recently being acquired by Liberty Media, racing to provide satellite radio to the European market, and Liberty purchasing foreign cable companies and assets across the globe, the fight to provide the new age with its media is on.
Terrestrial radio’s battle with Sirius XM is a microcosm of the greater shift. After an independent study released yesterday attributed Sirius XM Radio with having 35 million listeners, growth for satellite radio itself is still in its infancy stage. Of those listeners, the study showed a tendency toward the educated and financially independent segment of the consumer base. Given the economic conditions of the past year - the fact they pulled such strong numbers is beyond impressive.
Radio is a medium of distribution, it is not entertainment. The content ie. the programming is where the entertainment exists. The format. Radio is the only competition for radio, and radio will always only be competition for radio. So now folks, if anyone wants to say satellite radio is going to be irrelevant, they have to say radio is going to be irrelevant. And that, my friends, is never going to happen. It's like saying Direct TV is doomed, but broadcast TV is healthy and strong. It’s just comical to even make that comparison.
Here’s the interesting part of the media industry's evolution. Let’s look at CBS for example. What was CBS? Well, it was a large company that enacted or provided a network of local stations, to carry its same content. The invention of the television required that someone actually broadcast content to the end user’s home. The technology is great, but one can’t stare at an empty screen, or be expected to shoot their own movies, news, sports, and television show coverage. So with distribution, came content. They had their own news teams, political coverage, and decided what the American people should be watching. There were only 3 major networks in the United States for Years. One would easily consider them, at the time, as among the most powerful companies in the world, if only for their influence in our daily lives and societal shifts. These "old media" companies affected votes, ideals, views, and decisions made by the most powerful nation in the world. There was power in media, there was power in the distribution of content to any home, car, or place of business. The fatal flaw however of terrestrial radio and broadcast TV was that their signal was not private, but public, and could be received by any device made by any company. Sirius XM has no such problems. They sell radios that they make money on, that receive their signal, that is private, and they charge you for the receiving of this signal. So the content is of course going to be amazing compared to what free can offer. You will never see a huge broadcast TV company begin and choose the broadcasted free based formats. They will sell their stations to cable and satellite TV companies, and on top of that offer commercials as well. Why limit your exposure? Why deal with 1000 individual stations, when you can deal your content through one company? The choice of the future will be clear.
When will Fox and CBS also seek the protection of a media distribution giant? Fox does not distribute its own content except via traditional broadcast avenues in the United States. Fox does not own satellite distribution, or cable distribution, nor does CBS. CBS has no access to the satellite radio market. They own their own CBS Radio Company, but it’s exactly like CBS television refusing to allow Direct TV to carry its content. Their content is available, but disjoined and inaccessible now to 35 million listeners and growing. The proof of the shift to superior content and less commercials is happening. Companies are going to seek ways of distributing their content, and companies like Sirius XM Radio offer them an excellent way to reach over 35 million sets of ears.
With the latest evolution of the electronic and digital age, media distribution is no longer in the hands of your fathers' television company. Sirius XM Radio, Direct TV, DISH Network, Apple, Microsoft, Google, Yahoo, Amazon, Liberty Media Corporation, Comcast, Cox Cable, Time Warner, and hundreds of new and old media companies have identified new ways to access the population rapidly. There is no longer a need to pay huge advertising dollars on terrestrial radio or broadcast TV as a media business model. In recent years internet advertising soared and subscription based business models began, offering a content delivery system for a fee every month. They just needed content. So they began offering people, companies, and other networks the opportunity to provide it. The big three were the key though. If you could get them to agree, you could sign customers. Of course, new revenue was too enticing to broadcast TV to ignore, and contracts were agreed upon. Enter Pandora’s Box. Soon the way you received the content, would be more important than the content itself. The switch was rather sudden actually, and the population took to cable and satellite TV like a sailor takes to beer on shore leave. The beautiful flawless picture was too good to ignore.
This same thing is true with Satellite Radio. Clear reception regardless of your location on the ground is impossible to ignore. Commercials are not why people listen to the radio. They do it to be entertained or informed. A commercial accomplishes none of these things. Hence terrestrial radio, like broadcast TV has a huge disadvantage. Their delivery is free and open for anyone. They have to charge advertising and run commercials to make money. They have to. Period. There is no other way for them to be able to afford content without running commercials. So if there is better content and less - if any - commercials, and has a better signal, of course people are going to take to the technology, and service. It’s just a matter of time. The old adage "I will never pay for TV" didn’t last long. My father was one of “those guys”. He was cheap, didn’t make much money, but he did enjoy television. When Dimension Cable, years ago, offered free hook up and a 30-day trial, my dad jumped at the chance to try it. He never went back. He was hooked. He rationalized the money as “such a huge quality of life upgrade”, that it was worth every penny to him. Same with satellite radio. The content is so superior, and such a better way of delivering it, common sense and rational consumers will be drawn to it, and it might take more time for the people who would “never pay for radio” to come around, but eventually, all radio lovers cannot ignore the value and quality compared to terrestrial radio, and its content offerings.
If I listen to one hour of talk radio content on AM radio, (people who do listen to it occasionally know what I’m talking about) I generally hear maybe 25 minutes of actual show content. There is definitely MORE advertising than entertainment. In a sense, aren’t you just listening to commercial radio, with a break occasionally for real content? Isn’t that what you are doing the majority of the time, what you are really doing? When you go to a football game, you spend 30 minutes at half time, and 1 hour playing the game. You wouldn’t say "I went to a halftime show" would you? No, you would say "I went to a football game." If you go to the movies, you don’t say "I went to eat popcorn", you say "I’m going to the movies."
So when you are listening to your favorite talk show on AM tomorrow, ask yourself, what am I really listening to?
Disclosure: Long Siri