Anthony Cumia Fired: Is This the Beginning of the End for SiriusXM?

SiriusXM (NASDAQ: SIRI  ) had serious problems even before it decided to fire Anthony Cumia, co-host of one of the few shows on the satellite radio service with a dedicated fan-base willing to pay to hear a particular program.

Satellite radio once provided programming that couldn't easily be duplicated easily elsewhere. Today, there's little to set it apart from its free competition. Taking away a host like Cumia only accentuates the fact that most of what SiriusXM sells subscriptions to is not exclusive content.

SiriusXM likely now faces a challenge to its continuing relevancy, even if it holds onto the handful of personalities it has exclusive rights to who bring in subscribers. That cupboard could become even emptier if Cumia's former co-hosts Greg "Opie" Hughes and Jim Norton follow him out the door when their contracts expire in October. Things would get far worse if Howard Stern -- the No. 1 subscription driver for SiriusXM -- retires or moves to another broadcast home when his deal ends in a year and a half. Firing Cumia for an off-air Twitter rant that might just accelerate the sinking of this ship.

Why is SiriusXM in trouble?

When Sirius and XM launched nationally as separate companies in 2002 their competition was local radio. Suddenly, listeners had a range of options based on what they liked -- rock, country, pop, jazz, opera, and even show tunes. The satellite companies also offered talk shows, sports (including games and talk), comedy, niche programs, and lots of stuff that had no place on local radio. Once the companies merged in 2008, SiriusXM had a broad range of music stations, rights to broadcast all the games for the major sports, and a small number of key personalities that lured in subscribers.

Even at the time of the merger, SiriusXM was still largely competing with local radio. Six years later, though, the company faces a very different landscape. Pandora  (NYSE: P  ) , Spotify, Apple's  (NASDAQ: AAPL  ) iTunes Radio, and other services make it easy for anyone to create music channels that are even more heavily tuned to their particular interests than satellite radio. The huge rise in the number of major personalities hosting podcasts has also reduced the need for SiriusXM as a provider of talk.

That leaves satellite radio's two main draws as sports game broadcasts and Stern along with Opie and whatever show he puts together in the wake of Anthony's firing.

Can satellite radio be saved?

Satellite radio used to have a major advantage in that it is installed in most new cars and it's relatively easy to have it added to vehicles that don't have it pre-installed. For years SiriusXM grew as new people were exposed to the service as they bought cars and received a free trial. For years it was also uncommon for vehicles to have an easy way to connect a smart phone, which gave satellite a strong advantage. That's definitely not the case now.

An ever increasing number of people can easily stream content over a smartphone and it won't be long until nearly everyone can simply plug in or connect over Bluetooth. That will kill any advantage SiriusXM has in music. No programmed channel could ever match what Pandora, Spotify, and the others offer for free. If someone subscribes to SiriusXM for music only they can buy a Mostly Music subscription for $9.99 a month, which gives them access to over 80 programmed channels. Sign up for Pandora One and you pay half as much -- $4.99 a month -- for music channels based on your specific taste. Once you have the ability to stream Pandora in your car there is essentially no reason for a music-only listener to pay more for satellite radio.

In the world of talk, while I'm sure some listeners subscribe to SiriusXM for hosts such as Covino & Rich, Jay Thomas, or Jason Ellis, the vast majority of talk fans have been drawn in for Stern and/or Opie & Anthony. That is clearly reflected in the fact that Stern is paid somewhere between $80 million and $100 million a year (though that number has never been confirmed) while Cumia and Hughes each had contracts paying around $3 million annually. Only Christopher "Mad Dog" Russo and maybe Dr. Laura Schlessinger make anywhere close to seven figures working for SiriusXM as talk show hosts and most make far less than that.

Stern just turned 60 and already only works three days a week so his time as an active host is winding down. Hughes seems unlikely to sign a new deal if SiriusXM even wants him. SiriusXM could try to land other exclusive talk show content, but attempts to bring on big names have all failed. A deal with Oprah Winfrey cost the company tens of millions for essentially nothing. The same was true of a partnership with Martha Stewart and a show hosted by Rosie O'Donnell. The deal with popular terrestrial radio host Dr. Laura showed that just because people listened to a host for free did not mean they are willing to pay to hear him or her. 

If it were easy to find the next Howard Stern or even the next Opie & Anthony then terrestrial radio would not still be struggling to find the next Stern eight years after he left. 

The end may not be near, but it's coming

That leaves SiriusXM with its sports franchises, which are valuable only to fans who don't live in the same town as their favorite team.

Basically Sirius has very little exclusive programming that can't be matched. Podcasting has many more big names across a much wider array of content than SiriusXM. Adam Carolla, Chris Jericho, The Nerdist Podcast, Marc Maron, and pretty much every working comedian have regular shows as do big names like Director Kevin Smith, ESPN's Bill Simmons, and many more.

I pay $18.99 a month for a SiriusXM subscription for Stern and Opie & Anthony. I listen to a little comedy, some Covino & Rich and a little sports talk. Now, the only reason I stay is Stern. That's a hefty price to pay for one guy who does 12 hours of programming maybe 45 weeks a year when I have unlimited data on my Sprint phone and already have a backlog of podcasts to listen to as well as a Pandora account.

That's just one subscriber's story, but it's not hard to imagine a ton of SiriusXM subscribers wondering why they continue to pay that bill.

Another industry in trouble
Like satellite radio, the cable industry is fading fast. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 


Read/Post Comments (18) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 15, 2014, at 11:06 AM, JamesRobertDobbs wrote:

    "Taking away a host like Cumia only accentuates the fact that most of what SiriusXM sells subscriptions to is not exclusive content."

    That statement makes absolutely no sense at all.

    SiriusXM has standards which the majority of its subscribers expect it to uphold. These standards are not exclusive of each other.

    Firing a host because he delivers racist comment on the radio in no way negates the fact that Sirius' content can be considered exclusive. Apples and oranges.

    Not sure what your agenda is here.

  • Report this Comment On July 15, 2014, at 11:07 AM, JamesRobertDobbs wrote:

    "Taking away a host like Cumia only accentuates the fact that most of what SiriusXM sells subscriptions to is not exclusive content."

    That statement makes absolutely no sense at all.

    SiriusXM has standards which the majority of its subscribers expect it to uphold. These standards are not exclusive of each other.

    Firing a host because he delivers racist comment on the radio in no way negates the fact that Sirius' content can be considered exclusive. Apples and oranges.

    Not sure what your agenda is here.

  • Report this Comment On July 15, 2014, at 1:22 PM, guyincornfield wrote:

    They didn't fire him for racist comments on the radio. They fired him because there were some worries about the tone of his TWEETS in which he spoke about violence towards the "woman" in question.

    The fact here is cutting Cumia loose weakens an already extremely weak lineup of "exclusive" content. Once Stern calls it quits, they have nothing left. A hardcore fan will pay the subscription fee for one show alone, but Sirus isn't showing any urgency or care at all to give that base anything else new.

  • Report this Comment On July 15, 2014, at 1:35 PM, TMFJCar wrote:

    @JamesRobertDobbs

    <<Firing a host because he delivers racist comment on the radio in no way negates the fact that Sirius' content can be considered exclusive. Apples and oranges.>>

    It wasn't on the radio; it was on Twitter. The funny thing was he'd probably been safe if it was on the radio -- that's what they are known for.

    And for the author

    <<I pay $18.99 a month for a SiriusXM subscription for Stern and Opie & Anthony. I listen to a little comedy, some Covino & Rich and a little sports talk. Now, the only reason I stay is Stern...That's just one subscriber's story, but it's not hard to imagine a ton of SiriusXM subscribers wondering why they continue to pay that bill.>>

    Post-merger, Great Recession revenue growth (since 2009 report), 11.3% per year -- so somebody's either paying more, more people are paying, or a combination of the above. Google projection bias.

  • Report this Comment On July 15, 2014, at 1:40 PM, TMFJCar wrote:

    ^Of course, we're all guilty of confirmation bias.

  • Report this Comment On July 15, 2014, at 2:50 PM, zorro6204 wrote:

    Not to defend Sirius, they've been totally inept, but this was a foregone conclusion. They inherited the OnA show from XM, and they hate it. They spent the minimum necessary to keep it going, and when it was obvious the three hosts were fed up and wouldn't renew this October, they starting tearing the show up, firing the only decent manager the show ever had at Sirius, Tim Sabean. Ant's rant - which is absolutely no different than many such outbursts on air at Sirius - or Opie or Jim Norton for that matter - was just an excuse to save some money before the October termination.

  • Report this Comment On July 15, 2014, at 2:52 PM, djplong wrote:

    This article is SO wrong s SO many places. I know of NOBODY paying $9.99/mo when there are $25/6month offers always being given out. Nothing you can't get free elsewhere? How about every single major pro and college sports game - NCAA, MLB, NFL, NBA, NHL and more. There's a vast library of exclusive content there - even more if you have their streaming as part of your package - if you look past shock jocks. Pandora? Spotify? In the car via Bluetooth on your phone? Yeah, right - as soon as everyone except Sprint users run up against their data caps. There's nothing wrong with the other streaming services - but not everyone is tech-minded (enough are, hopefully, to keep them in business). A service like SiriusXM passes the 'toaster test' - it's easy to use, like a 'regular' radio. Remember, XM had over 10 million subscribers withough Sirius. Sirius had millions before Stern. Stern doesn't exactly work a full week's work. When Stern retires, I wonder how many will notice?

  • Report this Comment On July 15, 2014, at 3:29 PM, maximax1 wrote:

    Who's Anthony Cumia?

  • Report this Comment On July 15, 2014, at 3:50 PM, jackiefreitas wrote:

    @maximax1 He's the guy you took the time to read about. In the article,above. Or did you just go right to the comment section and post?? Stupid question

  • Report this Comment On July 15, 2014, at 3:58 PM, jackiefreitas wrote:

    @jamesrobertdobbs He didn't get fired for saying racist comments on the air. He's been saying not racist comments,but he DOES comment about how fed up he is with certain groups of people in the black community that rob,shoot,kill each other on a daily basis without impunity,for years on the show. The same people EVERYBODY is fed up with,including blacks,they just don't speak on it. He was fired because of Tweets that had nothing to do with Sirius. He was tweeting them because he was attacked unnecessarily by a black woman. The one thing that Anthony is so fed up with,HAPPENED TO HIM. He was pissed and understandably so.

  • Report this Comment On July 15, 2014, at 4:02 PM, maximax1 wrote:

    No - I'm a Sirius XM shareholder and took the time to read about the supposed demise of Sirius XM due to the firing of someone named Anthony Cumia who I have never listened to or heard of, but I'm sure will have a very successful podcast that apparently you and few thousand others will now listen to.

  • Report this Comment On July 15, 2014, at 4:13 PM, Section8ball wrote:

    It's been my theory that the people behind XM merged because they saw what was on the horizon. Instead on spending half a billion dollars on a shock jock, XM used their money on more cutting edge technology with better, smaller and even portable satellite radios. XM saw what other companies were doing at tech shows. I don't think it was a simple coincidence that the merger and the 1st iPhone happened in the same year. The XM heads took their payoff and bounced, leaving the talent to fend for themselves.

    SiriusXM will survive, for now. Howard Stern will stay and do minimal work for hundreds of millions a year (wig glue is expensive). But the company is a wounded animal, counting more on deals than customers. It's not a company that will be alive in the 2020s. Technology will pass them by because it's already happening.

  • Report this Comment On July 15, 2014, at 7:31 PM, Rooster220 wrote:

    SiriusXM is technically doing well but it isn't a company I'd be willing to bank on down the road. That goes for satellite radio in general.

    I hope the firing of Anthony Cumia opens folk's eyes and in the future becomes recognized as the incident that signalled the beginning of the end for satellite radio.

    If a company is willing to disrespect it's subscribers and fans of that particular radio show by destroying it in a knee jerk reaction to please blood hungry groups who aren't paying subscribers or even care about SiriusXM or the show at the end of the day, they shouldn't be in business.

  • Report this Comment On July 15, 2014, at 9:37 PM, Berryman300 wrote:

    The firing of Cumia made me reevaluate the value I'm getting for my subscription, so I think there may be something to this article. I listen to podcasts more and more. I can replicate any Sirius music channel on Pandora. I can listen to most sports teams on TuneIn radio.

    In my view satellite radio started becoming more and more like terrestrial radio some time ago. If that's where they're headed, why should I pay for it?

  • Report this Comment On July 15, 2014, at 10:38 PM, dozr wrote:

    keep seeing exclusive content while some of it is exclusive are a lot of you(commenters) meaning explicit content

  • Report this Comment On July 15, 2014, at 11:27 PM, ara1029 wrote:

    'Rooster220' : "SiriusXM is technically doing well but it isn't a company I'd be willing to bank on down the road. That goes for satellite radio in general. "

    Satellite radio in general? There is no other Satellite radio, in general. It's a monopoly since the XM merger.

    So what you really mean, is you don't care to invest in Satellite Radio, period.

    We don't need you anyway. Best of luck.

  • Report this Comment On July 16, 2014, at 12:05 AM, Rooster220 wrote:

    ara1029: I mean the future doesn't look good for SiriusXM and it doesn't look good for the whole concept of sat radio. Once SiriusXM goes under, I won't be running to buy into the next satellite radio brand that comes along after that.

    I did invest a little bit in Sirius a few years ago. No longer. Thank god. I'd rather douse my money in gasoline and light it on fire. Same result just quicker than investing in Satellite Radio.

  • Report this Comment On July 16, 2014, at 3:33 PM, danjaroth wrote:

    Hey Jamesrobertdobbs, he didn't get fired for something on the radio, he got fired for something on twitter. Also, your point about standards that Siriusxm has is exactly the reason why he shouldn't have been fired. Radio has become so bad because of the competition. Terrestrial radio these days only offers Country, mix music and sports talk. Anything out of that is on its way out and anything controversial, yet successful, is under way too much pressure for any red flags they may raise. That is why you would expect Siriusxm to uphold a standard of not being PC bullied, being that their subscribers pay for the service and are not subject for FCC violations. Why do you think HBO shows are so popular, because they can be controversial and not have to worry about it ruining their business. A bad stain on the Siriusxm brand

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