MERGER OR NO, SATELLITE RADIO HAS “ISSUES”

As we continue to dig into the results of Tech Poll IV, one of the most interesting findings shows that satellite radio subscribership may not greatly increase as a result of the pending merger between XM and Sirius. Moreover, the commitment among current subscribers to stay with either service is weak, especially if it came pre-installed in their vehicles.

The radio industry, led by the NAB, has been aggressive in fighting against the merger. And while we agree that satellite radio poses a threat to traditional AM/FM radio, there’s nothing in the data that indicates that either service has significant momentum.  In fact, there are signs that they have to fight to maintain the customer base that they already have.

While details of how the proposed merger may impact pricing and packaging are still to be determined, most non-subscribers (the types of people that XM and Sirius are targeting) don’t feel it will have any sway to motivate them to sign up.

Overall, half say the merger will not make a difference, while one-third don’t have enough information about it to make a judgment. While one in ten is optimistic about the merger, an additional 6% don’t think it will be a positive. Only current XM and Sirius subscribers are upbeat about the coming together of the two satellite radio companies.

But the bigger issue is that many current subscribers are not committed to continuing with either XM or Sirius. We found a dirty little secret in the data: if satellite radio came with the car or truck you purchased, or you received it as a gift, your inclination to continue the subscription is much shakier. In other words, subscription rates have been supported by giving away free samples or as part of a package. When it’s time to start writing checks, it’s hard for satellite radio to retain customers.

Overall, only four in ten current XM and Sirius subscribers made the decision to subscribe to satellite radio on their own. For one-third, it was pre-installed in their vehicles, while one-fifth received satellite radio as a gift. And for 7%, XM or Sirius came with their satellite television package.

*Among Satellite Radio Subscribers 

For those who made the choice to subscribe, two-thirds say they will absolutely continue with the service through 2008. But, only four in ten of those who ended up with satellite radio simply because it was pre-installed in their vehicles say they’ll continue to pay through the end of the year. And nearly a third of them indicate they’ll likely discontinue or aren’t sure about the status of their subscription. That’s not what you want to see from a subscriber base that’s been difficult to build and monetize to begin with.

*Among Satellite Radio Subscribers 

Similarly, those who received XM or Sirius as a gift aren’t especially committed either. Less than half say they will “absolutely” continue with satellite radio through this year.

Overall, satellite radio growth in this survey is up only marginally from year-to-year, from 12-13% for the entire sample. And this year, fewer non-subscribers express a strong likelihood they’ll sign up sometime in 2008. This is the lowest level since this poll began in 2005.

*Among Those Who Do Not Currently Subscribe To Any Satellite Radio Service 

About The Jacobs Media Tech Survey IV

Jacobs Media’s Technology Web Poll IV is the largest such study of its kind, fielded in late February/early March 2008, among more than 27,000 respondents across 69 different Rock-formatted stations. It is the fourth annual poll in this series, conducted among Rock radio listeners who are predominantly members of station email clubs. Participating stations represent Mainstream/Active Rock, Classic Rock, and Alternative outlets in markets around the U.S.

This is a web poll, and cannot replicate all radio listeners or even all Rock radio listeners. As with all Internet-based research projects of this kind, the results reflect only those who chose to participate in the survey, and do not necessarily represent the views of all Rock radio listeners in the country. Still, the 69 radio stations that invited their listeners to take the survey are a broad cross-section of Rock stations, from large and small markets, as well as those that play the newest Rock music and those that play only Classic Rock.

For more information, contact:
Fred Jacobs
Paul Jacobs
248-353-9030