[BC] Research from Mars

[Bill Sepmeier]

SkyFILES: Exclusive! Research from Mars
by Michael Hopkins

Lots of research and analysis come across the desks of Media Business 
Corp editors every day.

Some of the research is good. Some of the research is not so good. 
And some of the research is - well - interesting.

Take the latest from American Media Services, which suggests 
satellite radio isn't going to be that big of a deal.

According to the firm's survey findings, 69 percent of respondents 
say they are "not at all likely" considering a satellite radio 
purchase. Also, AMS' data suggests 86 percent of survey respondents 
are not likely to consider purchasing satellite radio just because of 
Howard Stern's move to Sirius.

We could poke holes throughout AMS' research all day and night, but 
we also should point out that the firm is another crony for the 
broadcast industry. AMS calls itself a full-service radio brokerage, 
and boasts that its developmental division leads the country in 
successfully implementing station upgrades by moving them into larger 
markets, dramatically increasing their value. The firm says that 
since its founding in 1997, it has increased the value of 21 stations 
across the country by $205.1 million.

But the research - as one-sided as it is - also misses the point.

Not every American radio listener is going to buy satellite radio. 
But millions of U.S. consumers will purchase one of the services - 
either Sirius or XM. And more and more listeners will get satellite 
radio if traditional radio doesn't innovate, which includes making 
the eventual switch to an all-digital format. Some, but not all, 
stations are doing just that in order to compete with their satellite 
radio nemesis.

Look at the forecasts: SG Cowen predicts the DARS business will top 
15 million customers by the close of 2006. The market could 
dramatically grow, the firm says, eventually nearing 40 million by 
the end of 2010. Even bigger numbers are expected after that year, 
according to SG Cowen numbers.

So ... how valuable will traditional radio stations be after 
satellite radio tops the 40 million customer mark?


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