On the Radio: God Help Satellite Radio... just ask Mel

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Commentary By: Art Vuolo, Jr.

On The RadioIt is not a secret that my longtime moniker "Radio's Best Friend" was in serious, or should I say Sirius jeopardy in recent years due to my love of and support of satellite radio. But, now I have to tell the truth.

This one is kinda personal for me because I helped several people get jobs at XM Satellite Radio about eight years ago. I was against the merger between XM and Sirius at first, but the more I thought about it, and I have both, the more I felt that a combination of the best talent and content of both combined into one might make for a spectacular package for listeners nationwide. I forgot to factor into the equation that a sick economy and lack of funds might prevent that dream from becoming a reality, and that is almost as sad as the extreme cut-backs which cost nearly 80 staffers at (mostly) XM to be without a job. That is also not setting well with many XM subscribers.

Mel KarmazinFirst, allow me to clarify the financial situation by borrowing these words from noted radio consultant and former 97.1 FM PD (in the K-Rock days) John Gorman in Cleveland. He points out that Sirius XM satellite radio CEO Mel Karmazin got his merger through the Department of Justice and the Federal Communications Commission, but he may have to cut a Faustian bargain to keep Wall Street on his side. Either that or Mel knows something we mere mortals don't.

Mel was being Mel in his keynote interview at the Dow Jones and Nielsen-sponsored Media & Money conference in New York earlier this week. "We're probably one of the top 25 media companies today," said Mel of the Sirius-XM merger. "I think it's very clear that we will be the most successful company in the audio entertainment industry. I know certainly, as ranked by revenue, we'll be there soon. Now we just need to grow our free cash flow and demonstrate that."

Last month Mel told Wall Street that Sirius-XM will be down $350 million this year on revenue of $2.4 billion. Sirius-XM is saddled with $2.1 billion in debt. $1.1 billion of it has to be refinanced in 2009 and $300 million comes due in February. Just ask the stock market how the $700 billion bailout is helping it out. So how does Mel get his money? Reverse psychology. Faust? Luck? Hubris? All of the above? Try Mel Math and the automotive industry. Gorman hit the nail on the head with the dollars and (does it make) sense portion of the program.

The reason I like satellite radio is that it provides programming that is no longer available on regular terrestrial or free over-the-air radio. Since the almighty dollar controls all forms of media more so than ever before, it is no longer economically feasible to program for or appeal to an audience over the age of 55. That leaves me out and a lot of other people too.

Regardless what you may have read about this being a "merger" between Sirius and XM, believe me when I tell you that it is much more reminiscent of a (hostile) take over. XM has been over-taken by Sirius. Interestingly Sirius entered the market six months after XM and had consistently lagged behind XM in its number of subscribers, although the gap had narrowed in recent months. It reminded me of when relatively tiny Capital Cities (which once owned WJR) swallowed up ABC. News of that "merger" made the monologue on the Tonight Show with Johnny Carson back in 1985.

Well during this past week, and in the days ahead, it has finally reached the boiling point as a ton of blood began to flow out of the front door of XM's headquarters in Washington, DC. Sadly some of that blood came from many people who I know personally. Several of them are people whom I was directly or indirectly responsible for getting hired nearly a decade ago. What troubles me is the "business" portion of the radio business often overlooks to real reason why those of us who pay for radio do so.

The new "buzz word" in radio is the Portable People Meter (PPM) method of measuring audience and calculating the ratings of stations. Well, in satellite radio PPM could stand for the three most important factors; Personalities, Programming and Music. It's that first one that the "bean-counters" don't seem to care about, nor do they realize the power of the people, who are able to directly express their displeasure with their credit cards and checkbook.

A couple of weeks ago a couple of high-profile programmers were let go; Steve Kingston at XM and Scott Lindy (Senior VP of Country) at Sirius. That was a red flag to me and signaled the start of some additional painful cuts to come. Last Tuesday word began to leak out that numerous employees were going to be "laid off" in order to cut costs. The only problem was seemingly no one realized that some personalities should be retained in order to also retain listeners, a.k.a. subscribers. That's how they make the bulk of their revenue. Spots on satellite radio are limited to certain channels, mostly talk, news and sports rather than music venues which are primarily commercial-free.

Most of the casualties have come from the XM side of the room. Some of the familiar names of XM listeners who have either left the building or are on their way out include; Decades Channel Senior PD Kurt Gilcrest,(known on the 70's channel as HR), '50s Channel PD Ken Smith, '50s Channel Music Director Matt The Cat, '60s Channel PD Pat Clarke, '80s Channel MD/PM driver Kandy Klutch, Cross-Country PD Jessie Scott, Cafe PD Bill Evans and Soul Street PD Bobby Bennett. Other casualties include George Taylor Morris of Deep Tracks, John Clay of the '70s-On-7, Billy Zero and Tobi from XMU, Ethel's Erik Range and Fred's Rick Lambert, the alternative Lucy Channel's Bill Hutton. Also Soul Street MD Leigh Hamilton, Raw's Mz Kitti, Viva's Karla Rodriguez, The City's DJ Xclusive and Lisa Ivery.

Tom Taylor, from Internet trade Radio-Info.com said "notice that these people are all from the music-based services, the ones that Sirius XM can't sell spots on. Will Mel combine the similar XM and Sirius music lineups after November 5?" Taylor says "that would be directly in opposition to [his] repeated and vehement promises to keep the two voices separate and distinct for some time to come. But, Mel must find big cost savings. The terminated employees "found out in the worst possible way: one worker routinely signed onto the company's payroll system and saw that his final day of employment was listed as October 15. Word spread like a virus through the building." Damage control went into high gear, but the damage was already done.

Many of the names listed above will be missed, but three in particular could result in significant protests from the satcasters audience. Ken Smith and Matt (the Cat) Baldassarri were veterans from day one at XM's 50's on 5 channel. They were both enormously popular. Ken Smith played the music when they were current hits and always signed off with "I know...I was there." Matt is a young man in his early 30's with an amazing encyclopedic knowledge of 1950's early rock & roll music. He had just gotten married and upon returning from his honeymoon, received the word of his termination and proceeded to flawlessly do his final show last Wednesday. No over-the-air oldies stations play any 50's music. These guys will be missed.

The third fatality could cause the biggest "ripple effect" of all. It's Michigan-native and former Detroit and Toledo broadcaster Country Dan Dixon. Locally he worked at WDEE-AM (1500), CKLW-FM (93.9) and WCXI-AM (1130). After a dozen years down in Toledo at WTOD-AM (1560) and WKKO-FM (K-100 99.9) he was just what the doctor ordered for XM's classic country station known as XM 10 "America."

Dan has built up a huge following among the truckers across the nation as he does his show live each night from 8 p.m. till midnight, taking phoned requests and calling the truck drivers by their cleaver names known as "handles." Routinely you will hear him proclaim "this one's goin' out to moon-doggie from big mama as she's rollin' with us from Tucson to Tallahassee." He just got an e-mail from a listener who wasn't aware of his eminent departure who said, "I just want to say thanks so much for makin' my evenings a delight to work. I love kicking back and hitting the big road and listening to your tunes in the evening, so relaxing, a great way to end the day. Home is in central PA when I'm there. Been driving 28 years and you and XM are the best thing since I started. Thanks to you and all involved. God bless, Larry."

A listener here in Michigan who just learned of all these changes said "as of November 6th, this family will be doing a "CANCEL" of all our XM Radios...4 to be exact." One female trucker sent in an e-mail stating, "Why in the world are you canceling Country Dan ?? He is the truckers friend and thousands listen to him every week night....we all love him and respect him. Please don't cancel his show I got other friends that listen to him too and they are gonna complain about this. I knew when this merger happened we would lose some shows but geez why not some channels no one listens to? Why Country Dan?? Sandra."

You can offer your support to Dan, and Ken and Matt and others via e-mail. Dan's special e-mail address is: countrydandixon@aol.com, Ken Smith is at ken.smith@xmradio.com and Matt can now be reached via mattthecat@mattthecat.com.

At least someone had enough intelligence to retain two of the most popular personalities on the 60's channel, the creative and human road atlas, Phlash Phelps and high-energy fast talking Terry "Motor Mouth" Young. If they had been cut, the possible drop in subscriptions could have been catastrophic.

The one thing the combined Sirius XM needs is more subscribers. If the dismissal of "key" personalities, who are very popular. results in a noticeable loss of audience, CEO Mel Karmazin won't just be saying prayers, he'll be making novena's (that would be a LOT of prayers.) He must also be thinking about the 500 million dollars that his friend Howard Stern has cost Sirius. Stern is certainly a radio star, but is anyone worth that kind of money?

Insiders have indicated that the last day for jocks, who care to stay till the bitter end, will wrap-up in a couple of weeks, as the "new" combined music channels are expected to premier on Wednesday November 5th.

As a final example, let's look at the popular 60's channel. XM called it Sixties on 6 and Sirius calls theirs Sixties Vibrations. The question becomes will the two "survivor" jocks from XM, Phlash and Terry, be joined with the two marquee names from Sirius? They are Pat St. John and Jim Kerr, both of whom are Detroit area natives! Pat worked at CKLW right out of Southfield High School 's WSHJ-FM (88.3) and Jim Kerr worked in Ann Arbor, Ypsilanti and Howell's WHMI as well as a short stint under the name of Robin Stone at WKNR in it's final days. Both have been on New York City radio for more than 30 years! If all four make up the "new" 60's channel, it should be really great. This is the type of consolidation I was hoping the merged company would generate.

Someone needs to tell the people in the front offices that they need to start thinking about the listeners, the audience, the fans the people who pay the money. Interesting that the final day of this purging is also Election Day since all satellite radio subscribers can also vote, with their wallet.

 • • • • • • • • 

Art Vuolo has published the Radio Guide for more than 30 years and runs Vuolovideo.com. Contact him at artvuolo@aol.com.



Sirius needs to expand their playlists .

I expected the redundant music programmers to lose jobs. That's exactly what the merger promised. Smashing redundant music programming and playing the single survivor is the only way to save money. As for air talent, it is a real shame that any show with an audience will go away. But some must. Some may be brought back at discount rates. Business sucks, especially in late 2008.

Howard needs to take a pay cut, but he never will. He's already eating the fruit of his many years' labors - and if asked to take a pay cut he'd just retire.

Shedding "executives" is the way they need to go.

I am an XM fan (active listener) and haven't listened to terrestrial radio since 2003. I live in a rural area where most of Clear Channel's news and talk programming is not available, and the music choices here are limited at best. I think we all know what FM commercials are like, too. Satellite radio is truly a great thing for my family. I hope that Mel Karmazin doesn't ruin this, because we can't go back to listening to regular FM radio again. MP3 players don't magically produce new content for you, and internet radio is useless if you can't get a wifi signal wherever you are or if your employer blocks streaming. I felt that this merger would especially hurt rural customers like me, but I hope the future sees a stronger combined company in the end.






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This page contains a single entry by Mike Austerman published on October 17, 2008 2:14 PM.

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