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Merger or No, Satellite Radio Has Issues

Satellite radio subscribership likely won’t increase much as a result of the pending merger of XM and Sirius, and the willingness of subscribers to stay with either is iffy, especially if the service came pre-installed in vehicles, according to a study by Jacobs Media.

Below are some findings from the web-based poll of respondents from 69 Rock-formatted station listeners across the US.

Effect of Merger

Half of non-subscribers (people whom XM and Sirius are targeting) say the merger would have no effect on them:

• One-third say they don’t have enough information to make a judgment.
• One in ten is optimistic about the merger, and 6% say it won’t be a positive.
• Only current XM and Sirius subscribers are somewhat positive 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,” said Jacobs Media President Fred Jacobs. “Here’s the dirty little secret: If it came with the car or truck you purchased, or you received it as a gift, your inclination to continue the subscription is shaky.”

Source of Satellite Subscription

• Just four in ten 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.
• For 7%, XM or Sirius was part of a satellite TV package.

Likelihood to Renew Subscription

Overall, two-thirds of subscribers who chose XM and/or Sirius on their own say they will “absolutely” continue with the service through 2008.

“Here’s the rub: Only four in ten of those whose vehicle came installed with satellite radio say they’ll absolutely stay with the service. And nearly a third indicate they’ll likely discontinue or aren’t sure about the status of their subscription,” Jacobs added. “Clearly, there’s a lot of churn happening, putting pressure on satellite radio to sell new subscriptions just to stay even.”

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

Of the two services, Sirius has the greater momentum and strongest satisfaction scores.

New Subscriptions

Fewer non-subscribers express a strong likelihood they’ll sign up sometime in 2008, the lowest level of interest since the poll began, in 2005.

Among those who have not bought either service, 5% say they are very likely to subscribe to XM or Sirius this year, with the latter having a slight edge.

That proportion is down from 9% in the 2007 study, and 12% in 2006.

About the study: Jacobs Media’s Technology Web Poll IV was fielded in late February/early March 2008 among more than 27,000 respondents across 69 Rock-formatted stations. It is the fourth annual poll in the 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 US. The web-based poll is not representative of all radio listeners or even all Rock radio listeners; 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.