Wednesday, May 24, 2006

The Stern Effect - Phase 2

May 24, 2006

The "Stern Effect" is an oft discussed subject that centers around whether or not Howard Stern will bring subscribers to Sirius Satellite Radio. Many people have recently cited that the "Stern Effect" was beginning to wear off by pointing to slight declines in NPD percentages since January when Stern launched. Those declines were fully expected. The launch month would by nature bring a huge influx of initial followers.

Before today, we here at SSG had felt that Phase Two of the "Stern Effect" would commence when on-line listening becomes available in June of this year. The ability for Stern fans to listen on line has the potential to bring on another wave of subscribers to Sirius satellite Radio. While this second wave would not be as big as the first, it would likely be very noticeable. We now title the on-line listening capability phase 3.

Phase 2 happened today. XM satellite radio, citing weaker than expected retail sales lowered their 2006 subscriber guidance from 9,000,000 to 8500,000. A reduction of half a million subs. Combine that with Sirius raising guidance from 6,000,000 to 6,200,000 and you get a 700,000 subscriber swing. VERY SUBSTANTIAL.

What caused this swing? The product offerings are still the same as three weeks ago for Sirius, meanwhile XM has launched their new MP3 capable line. At this moment XM has the newest hardware selection on the shelve. The price of the services remains identical as well.

Has there been a dramatic shift in consumer demand? Yes there has. Did Howard Stern influence that shift? Most likely he is the biggest factor involved.

What we see here with this latest guidance shift is a confirmation of "The Stern Effect". It will be very interesting to watch what happens with on-line listening capability.

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Satellite Standard Group has several articles about Howard Stern, including the original "Stern Effect" article. Also look for interviews with personalities such as Maryanne From Brooklyn, Brent and Manson from the Bubba the Love Sponge Show, and other intersting aspects that relate to Stern as well as Sirius. Check out the whole site HERE, and feel free to explore.

5/24/2006 04:28:00 PM

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