Wednesday, March 08, 2006

Sirius Math

Yes, I'm serious about my proposal to allow all NPR programs live, in real time, on satellite radio... but only if stations get to keep their current broadcast rights and get significant relief on programming fees.

This could be just the ticket to extending public radio's reach and improving public radio's financial health.

Here's one possible outcome after five years, assuming that Sirius generates 1.5 million NPR-driven subscriptions in year two and 1.85 million subscriptions in year five.*

- Stations would save $53 million per year in programming fees. Each full member station would pay an annual fee of around $20,000 to cover program-related services.

- NPR would average $74.5 million per year in programming revenue from Sirius and stations. In the fifth year, NPR would collect nearly $85 million. By comparison, NPR collected $58.5 million in programming fees in 2004.

- Sirius would net $86.5 million over those 5 years in additional subscription revenues. Sirius is taking the biggest risk here, not making any profit until the third or fourth year.

1.85 million annual subscriptions for Sirius is about 7% of public radio's current weekly Cume. Most of those listeners won't even leave the Cume because a satellite subscription is for just one radio. Sirius listeners will still use local radio.

Yes, this idea has its risks and the numbers might need some adjusting.

The potential reward is more money for NPR than if it sticks with the current business model, more money for stations to produce local programming and strengthen their own financial positions, and most important, more of the public served by public radio.

That makes it worth discussing.


* This model is based on Sirius' actual average subscription rates and acquisition costs from 2005 financial statements, found online at Sirius.com. Sirius' cost for NPR programming would average 38% its NPR-driven revenues. By comparison, Sirius spent 43% of its subscription revenues on programming in 2005.

2 Comments:

Anonymous Roger Johnson said...

John:

How would Sirius determine that a given subscription is "NPR-driven."

1:15 PM  
Blogger RadioSutton said...

Presumably using the same methodology they've used to track subscription growth due to Howard Stern.

11:10 PM  

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