I've been a Miami Dolphins season ticket holder for ages. Now don't go emailing me to let me know that my NFL home team has had a laughably brutal off-season. Trust me, I know it. The last time the team won a Super Bowl, I was wearing diapers. The next time Miami wins it all, I may very well be back in diapers.
Well, over the weekend I got my annual supporter benefits package. Buried in the marketing material was an intriguing brochure from Sirius Satellite Radio (NASDAQ:SIRI). Naturally, the satellite radio upstart and football go hand in hand ever since Sirius agreed to pay $188 million in cash and another $32 million in stock for exclusive satellite radio broadcasting rights over the next seven years.
Playing up its football coverage as a pitch to the gridiron-giddy crowd almost makes sense. I say almost because while its aim is true, its target is bogus. Why do I need satellite radio coverage when as a season ticket holder I will be at half of the games? And if I live close enough to attend the home games, that means that I have free local radio coverage of the away games, too.
Sirius is conscious of its own awkwardness. The brochure pimps the benefit of tuning in while tailgating before the game or being stuck in traffic on the way home. Yet, again, the free local coverage is a clear hurdle to the Sirius toss. Am I really going to shell out $12.95 a month beyond paying for a satellite receiver when I can get the venerable Jim Mandich for free?
This doesn't mean that Sirius made a mistake in hooking up with the NFL. Rival XM Satellite Radio (NASDAQ:XMSR) would have obviously loved to carry the games. But did Sirius pay too much? In the near term? Absolutely.
With just more than 500,000 subscribers as of last month, paying what averages out to just more than $30 million a year for its NFL rights means that Sirius will need nearly five months of subscriber fees just to cover its football tab. The expectation is that the user count will explode in the coming years, dramatically reducing its average cost per user. This is an exciting high-growth industry in its infancy, so we can't write that notion off as ludicrous.
So is dangling NFL coverage the perfect bait? Since the deal was announced back in December, Sirius has gone on to add 220,000 new subscribers over the first six months of 2004. XM, on the other hand, has signed up 740,000 new listeners over the same two quarters. That's certainly not reassuring.
I'm sure that Sirius is targeting a more logical audience as well. Subscribers to DirecTV's (NYSE:DTV) Sunday Ticket and truck drivers who may be on the road on Sundays are a meatier fit than folks who root, root, root for the home team.
So perhaps my ad was intended only to establish the Sirius brand. The next time a football fan winds up buying a Ford (NYSE:F) or DaimlerChrysler (NYSE:DCX) car that comes Sirius-ready, pushing the service may be that much easier. So years from now, in the end, it may ultimately be Sirius that scores big. It's just that, right now, in a game of inches, the goalposts seem so far away.
Do you disagree with Rick's assessment that Sirius overpaid for the NFL game? Are you a satellite radio subscriber? What was it that made you choose one provider over the other? All this and more in the Sirius discussion board. Only on Fool.com.Longtime Fool contributor Rick Munarriz will cheer on his Dolphins, win or lose. Don't get him started on pigskin as he rambles plenty about his favorite team on Fanway's fantasy football site. He does not own shares in any of the companies mentioned in this story.
