Sirius Won’t Put Howard Stern Online Until Content is Secure
Sirius subscribers can get all the music channels online, plus Martha Stewart -- but no Howard Stern. Sirius paid Stern $500 million to desert terrestrial radio but the Internet will remain unSterned until security issues “are worked out,” CEO Mel Karmazin said Fri. Since Stern’s Jan. debut on Sirius, pirate copies of shows have sprouted on file-sharing networks, websites, and even open radio frequencies mere hours after the shock jock signs off. Sirius is noticing.
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Stern’s Sirius fans are clamoring for Internet access to the show, which Karmazin said both Sirius and Stern want to provide. Stern streams won’t cost Sirius more and will help Sirius tap ears outside vehicles -- as the satellite provider wants to do, particularly with wearable devices debuting this summer. But Sirius won’t put Stern online “until we can get the technical issues all worked out so we can be ensured of both the security and a good listener experience,” Karmazin told analysts during an earnings report Fri.
Observers note the irony of rebellious Stern carping at piracy. So far, Sirius’ bids to beat pirates mainly have been cease-and-desist letters threatening lawsuits and demanding Stern audio streams be removed. Juggling stances, Stern lauds listeners’ larcenous spirit, but also pleads with them to pay “42 cents a day” for legitimate access. Pumping up the irony, Sirius last month enlisted the FCC, a longtime Stern target, to act, telling the Enforcement Bureau of pirate radio stations rebroadcasting Stern in N.Y. and N.J.
Sirius had a breakthrough subscription quarter, thanks in part to Stern. Sirius managed for the first time to land more subscribers in a quarter than bigger rival XM. Subscriptions were 3.3 million by Dec. 31, with 1.1 million sign-ups in Q4 alone. Sirius traced the gain to the “Howard Stern migration” and the holidays. Yet even as subscriptions soared, Sirius Q4 losses deepened. Sirius said it lost $311.4 million, compared with losing $261.9 million the same quarter a year ago. But revenue rose to $80 million in the quarter from $25.2 million in the same quarter of 2004.
Fri. saw Wall Street studying Sirius, after XM rippled financial waters Thurs., saying an XM director quit over fears of impending financial “crisis.” XM said Pierce (Jack) Roberts, former head of Bear Stearns’ telecom investment banking group, left XM’s board due to concern XM spends too much recruiting subscribers.
Sirius had higher subscriber acquisition costs. For Q4, Sirius reported acquisition costs of $113 per subscriber, compared to $124 per in the year-ago quarter and XM’s $89 in Q4. Sirius officials attributed higher subscriber costs to subsidizing radio shipments and commissions, not to the Stern sales and marketing run-up. Sirius has eyes to hit the 6 million subscriber mark before year’s end. XM is aiming for 9 million.