Hartmann: i.e. America's Radio Network - liberal talk radio

[eablair3]

interesting piece by Thom Hartmann, as usual. I know that i.e America's Talk Radio is on-line. But, I have yet to come across it over the airwaves. Does anyone know of any stations where it is broadcast over traditional airwaves and not the satellite network?

I think this is a real good thing. I just wonder how many stations are picking it up? Anyone know of any in California?
_________________


Published on Monday, August 11, 2003 by CommonDreams.org

Turn Your Radio On - The Unions' Answer to Right-Wing Static

by Thom Hartmann

"If America's largest and most conservative corporations can own and influence big chunks of the American media," some have asked, "then why not our most established and respected unions?"

It turns out that unions can get into the media business - and one already has, creating what has recently become America's only operational commercial liberal talk radio network, officially introduced to the industry this month with a prominent ad in Talkers Magazine.

KKBJ-AM Talk Radio 1360 discovered the union-owned network's liberal programming on a stormy night back in June when one of the Minnesota talk station's satellite receivers died. To avoid dead air, the station flipped to the program stream coming down on a second satellite receiver, tuned in to i.e. America Radio Network's 9 pm-midnight host, Mike Malloy. Malloy was in fine form, ranting about the "Bush crime family."

The next day, KKBJ's Chuck Sebastian got some feedback from listeners who had just heard their first bit of liberal programming on a station that otherwise carries mostly right-wingers. "One guy said that it was a breath of fresh air to finally get somebody who knows what he's talking about," Sebastian said. He added, "Another said it was 'nice to hear somebody with an opinion the opposite of Michael Savage's ranting and raving.'"

This revolution in talk radio has come about because four years ago the United Auto Workers union (UAW) acquired a struggling talk radio network from its owner in Florida. In the intervening years, they renamed it the "i.e. America Radio Network," moved it to Detroit, and invested in state-of-the-art studios, satellite uplinks, and internet stream servers.

The network brought in top-notch radio industry management, technical, and programming talent, and built an entire business week of high-quality left-leaning programming and an assortment of non-political weekend shows. The i.e. America Radio Network now feeds the ABC Starguide III satellite, which beams down a broadcast-quality signal that can be carried by virtually any radio station in North America - for free on a barter basis (of the 14 minutes in a broadcast hour, the local station can sell nine minutes and the network keeps five).

Over 115 stations across the nation have now taken them up on the offer. The i.e. America Radio Network has also joined with the Sirius Satellite Radio system (standard option on Ford/Chrysler/Mercedes/Jeep and many other cars) to providing live programming for "Sirius Left," stream 145.

Openly liberal/progressive in their programming, the i.e. America Radio Network is shaking up the world of talk radio, causing many in the industry (including an outspoken VP at Clear Channel) to openly question the conservative conventional wisdom that AM listeners only want to hear rants of the right-wing variety.

This is not, of course, news that right-wing radio talk show hosts want you to know

snip

http://www.commondreams.org/views03/0811-02.htm

[MattNC]

1. been wondering the same thing

i.e. America needs to put out a list of some of its affiliates.

I worry somewhat about the future of i.e. America though when AnShell Media launches. They've already had budget problems (re: Peter Werbe firing) and having a competitor like AnShell probably won't help matters.

[bookman]

2. I crave Progressive Radio

I'm an XM subscriber who is seriously thinking about switching to Sirius. It'll cost me about $200, but it may be worth it.

I have little hope of Progressive Radio here in Texas.

[Gloria]

3. Info on Sirius...VERY small subscriber base...I was shocked!

This is a blast from the Motley Fool, no link.......I was very surprised at the small base subscribing to Sirius....so, how many are listening to Radio Left on 145??

I don't know, I think Hartmann is being too optimistic. Mike Malloy is about 3 stations, Werbe is gone. I think IE America does OK with Doug Stephens and the Pet Shows and things like that...but Malloy is NOT on the air in the sense of having reached any critical mass and I wonder if Hartmann or the other afternoon liberal talk back show are, either!!


XM and Sirius Get Busy


By Tom Jacobs
August 12, 2003

Have you tried satellite radio? If not, chances are someone you know has -- and oozes the zeal of the newly converted. I plead guilty. With XM Satellite Radio (Nasdaq: XMSR), baby, I've got religion. Whether in the car, at home, or on my PC here at Fool HQ, you'll find me loving my 100 options of music and news, blissfully mostly free of commercials.

I can have whatever I want -- all day Sinatra or music from any of my increasingly numerous decades. All ages, all tastes: from the rawest urban sounds to the sunniest reggae. I can even set my PC to alert me whenever an artist comes up -- anyone for Shelly Berman on a comedy channel?

The need for satellite radio has been obvious for years, ever since a few monoliths led by Clear Channel (NYSE: CCU) captured radio with boring standard formats and ads crowding out the music. Public radio was an alternative but could not be all things to all people. The market screamed for a high-quality product that would spare the decision-impaired (like me) from buying and managing CDs or skulking the world of file sharing -- neither of which delivers BBC World, thank you very much.

The answer
The FCC granted two licenses to visionary U.S. satellite radio providers, XM Satellite Radio and Sirius Satellite Radio (Nasdaq: SIRI). (Privately held Worldspace operates in Latin America, Europe, Africa, and Asia.) The two companies in turn raised the cash (and debt), deployed the system, and launched the service. Huge feats.

Okay, great. They built it. But will they come?

They came
Some months ago I spoke with a friend who frequently visits relatives in rural Pennsylvania. The county's average household income is $30,000, so these are people who must plan their spending carefully. She told me breathlessly that she had never seen anything like it. Everyone she knew there had satellite radio.

The ramping subscriber numbers bear her out. As of June 30, XM had just under 700,000 subscribers, and Sirius, which got a later start, 105,000 -- at $9.99 and $12.99 a month, respectively.

But they didn't come cheap. These businesses are capital intensive and are burning cash, so don't miss the huge red sign here screaming "SPECULATION." Neither company has turned a profit or generates free cash flow, and despite recent financings, a conservative investor would sniff that neither will become self-financing anytime soon.

Rule Breaker investing
Let's turn to the Rule Breaker strategy as a useful way of evaluating high-risk companies in brand new businesses. (In fact, our free online resources start with the Rule Breaking Investment Strategy in Brief, and David Gardner often offers up Rule Breakers in Motley Fool Stock Advisor.) Clearly, both XM and Sirius can identify with the launching point of the strategy:

Quintessential Rule Breaking companies have the potential to change the world. They are brand names, or have brand products that are familiar to virtually everybody. They have true sustainable advantages from brand and visionary management, not necessarily from technological advantage. Since they tend to be young companies, it's important to look through the windshield rather than the rear-view mirror of market history.

Talk about changing the world: We can thank both companies' visionary management for satellite radio's potential to turn traditional radio upside down. Let's see how they stack up against a few more characteristics of a Rule Breaker business:

* First mover and top dog in the industry
* Sustainable competitive advantage
* Strong consumer appeal

First mover
The Rule Breaker concept holds that if you are doing something new and changing the established order, it helps to be the first mover.

eBay (Nasdaq: EBAY) was the first in online auctions. It attracted competition from Yahoo! (Nasdaq: YHOO) and Amazon (Nasdaq: AMZN) and others such as uBid. There was a time when investors seriously debated the odds that one or another serious competitor might dethrone eBay in auctions. Not anymore. EBay had the first-mover advantage and built an insurmountable lead.

The first mover doesn't always win. Sometimes the second player benefits from the first's mistakes, especially when dealing with a complex technology. Sometimes no one wins, as investors in satellite phone providers Iridium and Globalstar learned. But, as a rule, if we are going to take this kind of risk, we prefer to stick with the leader.

(Ironically, Sirius should have been first out of the gate, but chipset problems with Lucent (NYSE: LU) delayed the launch of its national service until July 1, 2002, nine months after XM.)

Nifty products
XM was the first to offer a unit that you transfer from car to home to boombox, as well as a version for PCs. Sirius is just now -- and through the fall -- offering second generation products such as plug and play models, while XM moves ahead to the third generation. Its lower-priced Roady for cars, aimed at Generation Y, arrives in September, and XM's new microantenna is smaller than the new one from Sirius.

Both companies have key deals with major car companies to provide factory and dealer installed options for service -- XM with General Motors (NYSE: GM), Honda and Toyota, among others, and Sirius with Ford (NYSE: F), DaimlerChrysler (NYSE: DCX) and BMW. But XM wins here too. GM has already manufactured half a million XM-equipped vehicles and projects 1 million by next March; Sirius won't release figures for its partners who are just now getting started.

A Rule Breaker doesn't play catch up. You want to be first, especially in a subscription-based business. Once a customer starts paying for one service, there's major resistance to switching. Millions endure high fees for AOL rather than go through the hassle of changing providers, and you would be amazed at how many people maintain expensive landline telephone calling plans for the very same reason. Add the investment in satellite radio hardware, and you see why first is best.

The closer? XM says its subscriber churn is close to 1%, while Sirius says 1.5%. In satellite radio, once you get 'em, you got 'em.

Top dog
The first mover will usually become top dog, but we want the leader of the pack not only by position, but strength. With 21 months of service for XM and a year for Sirius, we've got some initial numbers to tell us whether first mover XM is kicking sand in Sirius' face.

Interestingly, the market awards Sirius the top spot with a $1.48 market capitalization that's 15% higher than XM's $1.29 billion. But revenues and subscriber growth tell a different story:

REVENUE GROWTH
XM SIRIUS
Quarter Sequential Sequential
Ending Revenues Growth Revenues Growth
06/03 18.3 mil. 40% $2.1 mil. 24%
03/03 13.1 46% 1.6 56%
12/02 9.0 61% 0.7 --
09/02 5.6 47% 0.0 --
06/02 3.8 111% 0.07 --
03/02 1.8 260% 0.03 --
12/01 0.5 -- 0.0 --

SUBSCRIBER GROWTH
XM SIRIUS
Quarter Sequential Sequential
Ending Subs. Change Subs. Change
06/03 692,253 43% 105,186 55%
03/03 483,075 39% 68,000 127%
12/02 347,000 72% 30,000
09/02 201,500 48% --
06/02 136,500 80% --
03/02 76,000 171% --
12/01 28,000 --

No question here that XM is the top dog, locking in more subscribers sooner. With 146,000, 136,000 and 209,000 net new subs for the last three quarters, XM is on track to reach its goal of 1.2 million by year-end. Sirius's catch-up product introductions may help it reach its own target of 300,000, but XM wins here.

Other business criteria
Both companies boast visionary management. Ditto, sustainable competitive advantage. After all, there are but two U.S. satellite spectrum licenses, and even if one company fails, the barriers to entry for a replacement would likely be prohibitive. Finally, while satellite radio has strong consumer appeal, XM's higher subscriber numbers suggest it has the lead in brand awareness.

Reward for the risk?
As a Rule Breaker, XM gets the nod -- so far. But there's more. XM's satellite "issue" is a wild card. The Boeing (NYSE: BA) 702 satellite is degrading faster than anticipated, and XM has two of them. XM will launch its spare at the end of next year and contract for another. Both companies face the pesky matter of financing. Each improved in the last year, but challenges remain.

Please tune in tomorrow when we'll get, uh, serious about cash burn and all those delightful ingredients in the satellite soup that determine what real chance these companies have to survive and become self-financing. And if they do, what kind of reward may investors expect after their tightrope walk.

Don't miss it. Until then, stay Foolish -- and join the conversations on our XM or Sirius Satellite Radio discussion boards!