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Music Consumption Study
Howard Stern Conversion Update


For Immediate Release:

Wednesday June 20, 2007

Pool of Potential Active Stern Listeners Shrinking

In October 2004, with Howard Stern's announcement that he would be taking his radio show to Sirius satellite radio at the beginning of 2006, Bridge Ratings began its research into the potential impact of Stern's departure from terrestrial radio and whether his arrival at satellite radio would boost subscriptions for Sirius.

Time confirmed our findings and Stern's impact has surely been felt. CBS Radio saw not only morning ratings topple but full-year 2006 radio revenue for the CBS radio division and its former Stern stations in particular was significantly diminished by Stern's departure.

By the end of the first quarter of 2006, it became clear through out studies of then-current Stern listeners and his former terrestrial fans, that Howard's influence would increase total Sirius subscriptions and boost the company's brand. By mid-2006, with the "Stern effect" still somewhat present, Bridge Ratings began to see indications that the potential pool of potential Stern listeners was shrinking. Of Stern's approximately 12 million total weekly audience while on terrestrial radio, Bridge Ratings estimates that even now, about 2 million of them have subscribed to Sirius specifically because of Howard.

And of those 2 million Stern fans, we have recently found that while most Sirius subscribers have an average of 6 satellite radio channels they consistently listen to each week, Stern's listeners spend most of their time with Sirius (45%) listening to the Stern show and on average only 3 channels total.

Bridge Ratings continues to monitor the Stern market. We continue to ask a monthly sample of non-satellite radio listeners what the likelihood is of them subscribing to hear Stern on Sirius satellite or through the Sirius web stream. In the June results, 5% of 18-34 year olds said they were very likely to subscribe down from 6% in September of 2006. Meanwhile, 8% of 35-49 year olds said they were very likely to subscribe - an increase from 7% last fall.

Based on Bridge Ratings estimates 58% of Stern's core (heavy) terrestrial radio listener base followed him to Sirius satellite radio. This is an extreme conversion rate among Stern's most loyal fans. His core audience composed approximately 25% of his total national terrestrial audience. Using a 2005 national terrestrial audience of 12 million, 3.0 million listeners represented this heavy listener base(minimum 2 hours per day listening) group. 1.74 million of them subscribed to hear Stern on Sirius. The untapped segment of 1.3 million former heavy listeners still represents the greatest growth opportunity for Stern. While we believe it is unlikely that Stern will attract 100% of this former heavy listener base, it is very likely Sirius and Stern can attract an additional 600,000 of these fans based on three marketing scenarios that were presented to this potential audience during interview sessions in 2006 and again in May of 2007.

When comparing responses from the fall of 2006 to June 2007, fewer potential satellite radio subscribers are very likely or somewhat likely to subscribe to Howard Stern.

Viewing the potential of these marketing options over time is even more revealing. We presented these marketing options to our panel of core Stern listeners three times during the course of 2006. Marketing scenarios offered three different retail incentive programs created to attract potential Stern listeners, including a scenario with an introductory period of free subscription and free radio hardware.

The opportunity to attract former Stern core listeners was greatest during the first half of 2006. The pool of potential former terrestrial Stern listeners who would be inclined to subscribe to Sirius grows smaller each month without a targeted marketing plan to attract them. This study confirms that the proper promotional offer would attract an additional percentage of former Stern listeners who have as yet subscribed.

II. Music Consumption Report

How has use of MP3 devices, including iPods, affected radio listening and music purchases?

This month's study of radio listeners' music consumption answers this question. One-third of Americans and 36% of radio listeners own one of Apple's iPods. The iPod has an amazing 74 share of all MP3 devices sold. An additional 35 million MP3 portable devices are being used.


Listening to radio has been helped as much as hurt by consumer use of MP3 players.

The above chart shows trends among terrestrial, Internet and Satellite radio consumers who also use MP3 players. It shows the impact their MP3 player use has had on their radio listening comparing June 2007 with a year previous.

How to read: In June 2007, 20% of the terrestrial listeners in our panel* who also listen to an MP3 player for at least 1 hour a week said they were listening to terrestrial radio more than they were six months ago. This compares with 14% who indicated more listening in June of 2006.

25% of the terrestrial radio listeners indicated in this June study, that they were listening less than they were six months ago. This compares to 21% in June of 2006. Interesting to note that both "listening more" and "listening less" have increased since our last study. These increases have been at the expense of the "listening the same" response.

Internet Radio appears to be benefiting - not hurting - from MP3 player use with 27% of its listeners indicating they are listening more than they were six months ago.

Interestingly, satellite radio does not have significant change in listening among its MP3 player users.

III. Music Downloading

The impact of MP3 use on music downloading reveals similar results. Among AM/FM radio listeners who download and listen to MP3 players, 30% indicate they are downloading more than they were a year ago. 37% of Internet Radio listeners and 15% of Satellite radio consumers are downloading more as well. 71% of the satellite radio consumers in our sample say that their behavior has not changed.

In follow-up focus groups, a majority of satellite radio listeners (64%) agree with the following statement: "Listening to satellite radio generally replaces my need to download music via the internet."

The study also uncovered facets of music consumption by radio format. Different listeners purchase music differently and our client, a radio broadcaster with both terrestrial and Internet assets, was curious how each differed.

In the following overview chart, CHR/Top 40 listeners, for example, consume music at a much higher rate than most radio listeners. 34% of the CHR listeners we interviewed purchase their music on-line, only 12% purchase CD's anymore and 28% purchase both ways.

Trending the above data for the entire sample over time for music purchases online vs. CD illustrates the positive and negative tipping points.

We see 2007 as a point of divergence between online music sales and CD sales. The projection for 2010 points to a significant fall-off of CD sales, however because this chart is based on the total sample, the fall-off is not as significant as it is when looking at only 13-21 year olds for example.


*Sample 3407 total national radio listeners ages 13+ were interviewed between April 13 and June 1, 2007 for the music portion of this study. Sample error: +/- 1.7%.

*Former Howard Stern markets surveyed: Los Angeles, San Diego, Phoenix, Philadelphia, Boston, St. Louis, Las Vegas, Syracuse, Baltimore and Detroit. Additional former Stern listeners were mined across U.S. cities where Stern's terrestrial show had been canceled prior to January 1, 2006. 3200 listeners 18+ were used in the Howard Stern study.

Sample error: +/- 1.8%




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