The Satellite Radio War Rages On

JUNE 6, 2006

How important is the "Howard Factor"?

According to the "2006 Technology Poll" report, from Jacobs Media, in the satellite radio wars between XM and Sirius, the momentum may be shifting toward Sirius.

"For Sirius, Howard was the difference maker," said Fred Jacobs of Jacobs Media. "More than any other reason, his show‘s move to satellite was the key factor in driving new subscribers. While most of his former listeners are staying with terrestrial radio stations, his presence on Sirius has been a defining difference."

Without question, Howard Stern has brought attention to satellite radio — and in a way that has benefited both XM and Sirius.

Based on subscription data released early this year from the two providers, XM was the lead in 2005, with 5.9 million subscribers versus 3.2 million for Sirius.

Jacobs Media, however, now claims there is currently a dead heat between Sirius and XM, both being tied at a 6% level among all respondents.

Could the "Howard Factor" be that potent?

For XM, the top reasons for signing up are the music channels, commercial-free programming, the belief that XM is good while traveling, based largely on the fact that the service came with the vehicles that respondents had purchased or leased.

Sirius subscribers, on the other hand, were heavily motivated by the arrival of Howard Stern. Overall, one-third of the respondents who now pay for Sirius list Stern as the key factor in their decision. Other reasons correspond to XM subscriber responses, including music channels and commercial-free programming.

"Howard has altered the hierarchy for Sirius, passing the music channels and commercial-free assets," said Mr. Jacobs.

The good news for both services is that the vast majority of satellite radio subscribers in the survey were pleased with XM and Sirius. Three quarters (75%) said they were satisfied or very satisfied with their respective services, while only 8% of respondents expressed dissatisfaction.

Nevertheless, compared to other new media such as Internet streaming, iPod ownership and usage and cell phone applications, satellite radio remains a medium that is still, as Jacobs Media characterizes it, "very embryonic."