Stern dollars

[Dan Strassberg]

Sirius is supposed to be paying $100 million a year for five years for the
costs of the show. That's half a BILLION over five years. Don't know how
much of this goes to Stern himself. However, Sirius is also saying that they
expect to get 1 million new subscribers as a result of Stern's presence. The
subscribers pay $13/month or $156/year to subscribe, so if they were all on
board by 1/1/2006--the date on which Stern's program is supposed to start
airing (spacing?) on Sirius--the subscription revenues would more than cover
the costs. Some people will undoubtedly subscribe BEFORE the program starts.
Their subscription fees will be gravy to Sirius. But my guess is that the
majority of new subscribers will trickle in over the five-year term of
Stern's contract. So Sirius may or may not break even on the deal UNLESS
they sell advertising. As I understand it, Sirius's music channels are
commercial free, but the talk channels carry commercials and Stern will be
on a talk channel. So how much ad revenue is Sirius likely to bring in over
five years from a program that (sooner or later) attracts 1 million
listeners per day from a desirable demographic? Is $0.50 per impression a
reasonable cost? Do 20 spots per hour constitute a reasonable commercial
load? Will the program air for four hours per day? If so, we have
20*$0.50*4*10^6 or $40 million per day (if my math is right). Assuming that
the program airs only five days per week, that comes to 260 days per year.
In other words, more than $10 BILLION per year. Sounds as if Sirius has made
one absolutely incredible deal! (Spend $100 million/year; get back $10
billion per year without even counting the subscription revenues.) How does
$10 billion/year stack up against the revenues from ALL of terrestrial
radio? Somebody please do a sanity check on this!

--
Dan Strassberg, dan.strassberg@att.net
eFax 707-215-6367

----- Original Message -----
From: SteveOrdinetz <steveord@bit-net.com>
To: <boston-radio-interest@bostonradio.org>
Sent: Saturday, October 09, 2004 7:43 AM
Subject: Re: Stern dollars


> Bill O'Neill wrote:
> >Persona aside, Stern is nothing if he is not loyal to those in his work
> >life.  He has maintained that his beef is with federal regulation.
>
> Does anyone really think that satellite radio (or tv for that matter) will
> be forever immune to federal regulation/content oversight?  THEN what'll
be
> his options?  Webcasting?
>
> As it is, it will be a looong time before his audience even comes close to
> what he has now once he goes on the bird.
>
>