April 19, 2008 / 5:54 AM / 9 years ago

Music biz wary of satellite radio merger

<p>A woman walks past the waiting area of the XM Satellite Radio building after the U.S. Justice Department approved that Sirius Satellite Radio's $4.59 billion purchase of rival XM Satellite Radio would be given antitrust clearance in Washington, March 25, 2008. There's only one Howard Stern, but music formats offered by satellite radio broadcasters Sirius and XM frequently overlap.Larry Downing</p>

NASHVILLE (Billboard) - There's only one Howard Stern, but music formats offered by satellite radio broadcasters Sirius and XM frequently overlap.

So a long-gestating merger of the two companies -- expected to be approved by the Federal Communications Commission in the next few weeks -- would initially mean duplication of content. But radio industry insiders anticipate that much of that redundancy will be eliminated once the deal is finalized.

Some have speculated that reducing redundant formats could enable record labels to better target their promotion resources toward one station. But in general, most of the label promotion representatives polled by Billboard -- especially those specializing in niche formats -- think fewer stations means fewer promotion opportunities.

"It's great that their combined (channels) will have a larger audience but it's also at the expense of the exposure," Virgin Records VP of promotion Dave Reynolds says. "It takes away 50% of my chance of being exposed correctly."

Brad Paul, senior VP of promotion at Rounder Records -- a label whose bluegrass releases benefit from the 24/7 national exposure they get from Sirius and XM -- doesn't like the idea of one less national outlet. "If the argument were being made that it's a good thing because I could economize my effort, heck, I'm not about economizing my efforts, I'm about having opportunities to get these artists' music exposed to as many listeners as possible.

"Both networks offer different ways to feature and launch a new project," Paul says. "I feel good about having both those options to go to."

Sirius and XM, with a potential combined audience of more than 17 million subscribers, have downplayed consolidation of channels, instead focusing on a la carte plans and packages that will allow subscribers to maintain their subscriptions with one service while choosing from the best of the other. But in any such consolidation, duplication of services is often the first thing to go when companies are looking to cut costs.

Stern aside, the most popular streams on both XM and Sirius are music channels, according to Arbitron. The top channel on Sirius after Stern, who draws 1.2 million listeners, is Sirius Hits 1 with 653,000 listeners, while the top station on XM is Top 20 on 20 with 1 million. Both streams focus on today's hits.

"It's very rare to find a station like Sirius Hits 1 or XM 20 on 20 that will put in a new song and play it 21, 28, 35 times a week right off the bat," Virgin's Reynolds says. "That's really exposing a record."

While few executives that Billboard talked to could cite a specific case of Sirius or XM breaking an act, several cited satellite as a significant promotional platform. "Satellite radio definitely had a lot to do with Sean Kingston's career," Koch Entertainment VP of urban promotion Shadow Stokes says.

Rap stations XM Raw and Sirius' Shady 45 have helped break a number of hip-hop acts, he adds, citing Sheek Louch, AZ and Yung Berg.

Stokes says that losing one of satellite's primary urban channels -- XM has the City and Sirius has Hot Jamz -- would be like losing a local station, albeit one with national reach. Both channels' playlists are factored into Billboard's R&B airplay chart. "You're talking about losing 40-50 spins," he says. "If you lose a piece of audience, that's always bad whether you're talking about a terrestrial station or a satellite station."

Koch Records VP of radio and video promotion Chuck Oliner says such niche acts as metal bands will suffer. "Constriction is never a good thing, especially in our industry and in today's marketplace," he says, citing Otep and In Flames as bands that have benefited from satellite radio.

"These are bands that don't get a lot of commercial radio play," Oliner says. "They don't fit into the active rock format (and) they're on the harder-edge side of the metal format. For bands like that, Sirius Octane and XM Squizz are important stations for us."

After recently losing smooth jazz stations in New York, Houston, Denver and Washington, D.C., Oliner, who also works with that genre, says he's not looking forward to fewer choices on satellite too. "This is another niche format where the audience is going to find another place to hear their music and the satellites offer us that kind of exposure," he says. "Ideally you'd love to have that other outlet, besides the Internet, where fans can go to hear their music."

But Kevin Herring, VP of promotion for Nashville-based Lyric Street Records, says losing XM's Highway 16 channel or Sirius' New Country channel wouldn't have much of an effect on his label's promotion efforts. "Anytime there's less current outlets, it affects us, but I don't see it having an overarching effect on what we do or how we do it," he says.

Sony BMG Nashville VP of marketing Tom Baldrica says his label group has long supported both satellite services and is also not pleased with the possibility of consolidation. "One of those stations goes and it's like losing a major-market radio station," he says. "And it's a major-market radio station that's speaking to the people that value and love the music more than most. I'm not happy about that at all."


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