KARMAZIN: SIRIUS WILL BE A $60 MILLION AD MARKET

But Sirius Stumbles With Stern Podcast Promotion

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Editor's Note: This story and headline have been corrected. The original headline and story said it was a $600 million advertising market, not $60 million.

NEW YORK (AdAge.com) -- Sirius Satellite Radio -- a $60 million advertising market by the end of 2006.

That’s the prediction Sirius boss Mel Karmazin stood by as he addressed analysts yesterday at the Citigroup Media and Telecommunications Conference in Phoenix. His address came just a few hours after Howard Stern’s much publicized debut on Sirius.

Photo: AP
Mel Karmazin

Mr. Karmazin has given Wall Street guidance that 10% of Sirius’s revenue will eventually come from advertising. He told analysts that it could be even higher, but stopped short of giving formal guidance.

“We will probably in 2006 approach that 10%,” he said, later adding, “I believe advertising would be higher than 10%. But, I don’t really feel the need to have to guide anybody there, until we achieve that 10%.”

Yesterday Mr. Stern’s show was commercial-free but today’s aired six spots an hour from such marketers as Heineken and Vermont Teddy Bear. When Mr. Stern aired on terrestrial radio, Infinity Broadcasting, now CBS Radio, would sell up to 18 minutes of commercials an hour.

National platform
“At his peak Howard was only in 47% of the country before Citadel and before Clear Channel and a number of other broadcasters took him off the air,” Mr. Karmazin said. “Howard is now in a 100% of the country, so we are also able to offer these national advertisers a full platform. ... Howard is getting us a tremendous amount of attention and we are capitalizing on it. He was a big driver for us, but it’s also enabling us to sell our other commercial taking channels.”

Citigroup analyst Eileen Furukawa also asked Mr. Karmazin about satellite radio’s competition, such as the Motorola’s iRadio (introduced at last week’s Consumer Electronics Show in Las Vegas), or the radio industry’s HD Consortium or WiMax in cars, which could potentially open up an unlimited supply of audio from the Internet.

“Our principle strength is that we are a content company,” he said, “and that we want our content to follow you as a consumer whether you are in your car, you are walking around the streets, you are in your office, you are in your home. ... What you are interested in is not the unlimited amount of content that is available on the internet. ... Most people are still more interested in watching ‘Desperate Housewives’ last night than just a sundry of content that’s available … on the Internet.”

iTunes mistake
Despite Mr. Karmazin’s optimism about Mr. Stern, Sirius appears to have committed a marketing blunder in their promotion of his move to Sirius, violating one of podcast marketing’s commandments: Thou shalt not post an ad thinly disguised as a video podcast on iTunes.

The free podcast, titled “Countdown to 010906,” rose to No. 4 on iTunes podcast ranking today, surely fueled by the hype around Mr. Stern’s first day at Sirius. But it was greeted with a series of pans, a rarity for podcasts in iTunes top 10. The spot may have done more harm than good, as listeners called it “just a lame advertisement” and advised others “don’t waste your bandwidth.”

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