He became successful and wealthy selling advertising on AM and FM stations, but now that he’s running Sirius XM, Mel Karmazin claims the subscription radio model is better. In his quarterly conference call, Karmazin laid out his view of the radio industry today.
Karmazin doesn’t deny that terrestrial radio is far and away the dominant player in radio, with Clear Channel the biggest single company. And he notes the growth of streaming radio online, with Pandora as the biggest player. But the CEO says Clear Channel and Pandora don’t come close to Sirius XM when it comes to the money generated per user.
In short, AM and FM stations still get 79% of all listening and 80% of radio revenues, with Internet radio at 12% of listening and 5% of revenues and satellite radio (which Sirius XM has all to itself) at 9% of listening and 15% of revenues.
“We like our position in this market,” Karmazin said.
His math of money per user puts Clear Channel at $13.61 per year, Pandora $1.68 or $4.59 (depending on whether you go by registered users or regular users) and Sirius XM $141.00.
RBR-TVBR observation: Are they the same business? Not really. Sirius XM is to Clear Channel what HBO is to the CBS Network. Satellite radio isn’t ever going to challenge advertiser-supported radio for market share, but it is a very profitable business now that one company has the entire niche to itself.