Apparently, there is a big difference between last month's dismissal of Don Imus at CBS (NYSE:CBS) and this week's suspension of The Opie & Anthony Show on XM Satellite Radio (NASDAQ:XMSR). While the firing of Imus was done mostly to appease angry sponsors, it is the XM sponsors that are bolting in response to the censoring of the station's morning-show stars.
Nashville Coffee is pulling its ads that ran on Radio Disney (Channel 115) and O&A's The Virus (Channel 202) on XM. The gourmet-coffee retailer didn't hold back on its website in explaining the move:
It is apparent that XM Radio is beholden to crybaby special interest groups who cannot separate humor from reality. It is also unfortunate that XM Radio executives don't have the guts to stand up for their on air talent.
I have contacted other XM Radio advertisers and have asked them to pull their advertising spots. It appears that many of them already are. Please be advised that spots cannot be pulled overnight. Some are already in the "hopper" and may air for the remainder of the week. Some other sponsors are doing the right thing and are pulling their spots. Please give them time to finish the cycle this week before you actively boycott their products. Thanks for your time.
A jaded observer would note that you have a mail-order company here that is seizing the opportunity to make a bigger splash, winning media publicity and street cred on the cheap. That is true, though it's indicative of the small pool of satellite-radio sponsors that knew what they were getting into when they paid to reach audiences on an "explicit language" channel.
No matter where you stand on the issue, you have to admit that it's an intriguing twist to see the boycott forming against the companies that are condoning XM's actions by sticking around, unlike last month's advertiser revolt at CBS. Wake up and smell the Nashville Coffee, XM.
XM had to see this coming. Whether it did or didn't, it just shot itself in the foot again. If there's a bright side to the injury, it's that a peg-legged XM won't have to worry about another shoe dropping because it wasn't going to fit anyway.
Parade of the defecting sponsors
Adult video and novelty store AdamEve.com may be the next show sponsor to go. It has written an O&A activist website -- PeopleAgainstCensorship.org -- to announce that it will back out if the show isn't back on the air by next week.
Don't bet your inflatable mail-order bride that it'll happen. XM has backed itself into a corner. If it did this to impress regulators who are threatening to block its merger with Sirius (NASDAQ:SIRI), it can't go weak now. It can't be the lenient parent who grounds a rambunctious child, only to hand over the car keys a few hours later.
XM was wrong to give the show a 30-day suspension, but it has to play the crummy cards that it dealt itself at this point.
There is really no way for XM to win here. Think about it. If the sponsors are defecting, and online anecdotes of subscriber cancellations in the tens of thousands are true, it won't make sense for XM to bring back the show next month. The damage is done. Sponsors and listeners aren't going to forget this episode and come running back in mid-June. They know that XM is now a censored-content provider, filling in what were once gray areas with thick chalk borders.
The reason why folks turn to XM for O&A or Sirius for Howard Stern is to hear the unleashed entertainment that never fit in at terrestrial radio. It will feel awkward at this point for XM to bring the show back, showing its true stripes as it jams a Taste-o-Meter into what will be perceived as a more shackled show.
And then Oprah says, "You lose a car, you lose a car, everybody loses a car!"
So who wins, exactly? Beats me. XM thought it was doing the right thing, but it turns out that it was the terrestrial thing. Strike one! Boycotters who are protesting the suspension may find their actions lead to the permanent dismissal of the show that they are trying to protect. Strike two! Struggling automakers like General Motors (NYSE:GM) on the XM side and Ford (NYSE:F) on the Sirius side see satellite radio as a royalty-producing accessory. But they may suffer from consumers who no longer buy the value proposition of satellite radio as preferable to terrestrial radio for talk content and an iPod jack for commercial-free music. Strike three!
Nobody wins, right? Actually, yes, there is at least one winner in all of this. Anyone up for some fresh-roasted Nashville Coffee?
XM Satellite Radio is a former Rule Breakers stock pick. Don't worry, the newsletter recommended that subscribers sell the stock last year, sparing investors a precipitous drop since then. A free 30-day subscription will take you right through the supposed end of the 30-day O&A suspension.
Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius, but he does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
