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No satellite radio for iPod?
Mel Karmazin quotes Steve Jobs as saying there's no plan for satellite in the digital music player.
February 9, 2005: 2:06 PM EST
By Krysten Crawford, CNN/Money staff writer

NEW YORK (CNN/Money) - Mel Karmazin, the new CEO of Sirius Satellite Radio, said he's talked recently with Apple Computer about adding satellite radio to its popular iPod music player.

"I've spoken to (Apple CEO) Steve Jobs," said Karmazin, speaking Wednesday morning at a media conference in New York. He declined to elaborate, other than to say that the "current thinking" at Apple (up $0.40 to $81.30, Research) is that "they don't need to put a satellite radio in their box."

An Apple spokesman did not immediately have a comment.

For either Sirius (up $0.10 to $6.03, Research) or XM Satellite Radio Holdings, a deal with Apple would be huge. Apple has sold more than 10 million iPods, which have been used to download some 230 million songs.

Karmazin noted at the McGraw-Hill Companies' 2005 Media Summit that the future success of satellite radio depends on content and the ability to distribute it across multiple devices.

So far, Sirius and XM (up $0.08 to $31.26, Research) have concentrated on lining up deals with automobile makers to install satellite radios in future car models. XM, the bigger of the two with more than 3.2 million subscribers, has exclusive deals with General Motors Corp. and Honda Motor Co. Sirius, with more than a million subscribers, has struck deals with Ford Motor Co. and DaimlerChrysler.

Under terms of these deals, the satellite companies give the car makers a share of the monthly subscription fees generated by the factory-installed devices. Karmazin said Sirius also helps pay for the initial installation.

But cars and iPods aren't the only distribution options open to either Sirius and XM, both of which are aggressively exploring deals.

April Horace, a satellite radio analyst with Janco Partners, said the consensus among industry watchers is that satellite radio and the iPod would be "the killer app." Apple's apparent apathy aside, she said there are significant legal and technical hurdles to clear before satellite radio can be added to the iPod or any other MP3 player like it.

"Do I think (a satellite radio-MP3 player combo) is going to happen some day in the future? Absolutely," said Horace. But whether XM or Sirius nabs Apple or another MP3 maker like Sony or Virgin first is anybody's guess, she said.

Satellite radio is not commercial-free

In other news, Karmazin also discussed the advantages satellite radio has over traditional AM-FM radio, including dual revenue streams from subscriptions and advertising.

A recent J.P. Morgan survey found that satellite radio's biggest draw is the absence of ads.

But that's only true for music channels, not the talk shows or sports channels. Of Sirius' 120 channels, 55 air commercials. Karmazin pledged Wednesday that music programming will remain ad-free and said the company will continue to be "very sensitive" to the commercial loads.

One unresolved question: how many ads will be broadcast on "The Howard Stern Show," which is set to move from Viacom to Sirius in January 2006.

"I can assure you (the advertising) will be less" than what it currently is on terrestrial radio, said Karmazin.

Howard Stern, the shock jock, cut a five-year, $500 million deal last year to jump to Sirius and is now the company's marquee player.

Karmazin, whose ties to Stern go back to the 1980s, reiterated that Sirius would welcome the chance to bring Stern on board before January, but said the desire to see that happen diminish as his start date approaches.

Last year there was widespread speculation that Stern would leave Viacom unit Infinity Broadcasting earlier than planned. Viacom executives were upset about Stern's blatant on-air promotions for Sirius, a competitor.

Stern, on his morning talk show, has since toned down his references to his pending move.

As for Stern, Karmazin also shot down speculation that Sirius was constructing a ground-floor studio at its mid-town Manhattan headquarters so passers-by could watch the ribald radio star in action weekday mornings.

Stern, said Karmazin, "tends to not like to do his radio show in front of people."

Instead, Sirius will use the space as a retail store.  Top of page


Mel Karmazin
Sirius Satellite Radio Incorporated
XM Satellite Radio Holdings Incorporated
Apple Computer Incorporated
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