CBS’ strange deal with XM Satellite Radio for ayem hosts Opie & Anthony makes at least two things clear.
First, the universe of radio personalities able to drive a big rating is very small, so small CBS had to license one from satellite radio.
Second, the satcasters that spent huge coin to lock up premier radio talent may start looking beyond their subscribers to help pay the bill.
Last week CBS Radio dumped rocker David Lee Roth after a failed stint as a replacement for Howard Stern as morning drive host for its East Coast stations.
Monday, as rumored, it announced a deal to replace Roth with Gregg “Opie” Hughes and Anthony Cumia, the two jocks who had been kicked off CBS Radio two years ago for broadcasting a couple having sex in St. Patrick’s Cathedral.
Starting Wednesday, CBS will air “Opie & Anthony” in seven major markets once hosted by Roth: New York, Dallas, Philadelphia, Boston, Pittsburgh, Cleveland and West Palm Beach.
The two jocks inherit Roth’s stations while L.A.-based Adam Carolla and Cleveland-based “Rover,” who have shown more ratings promise, will continue to try to build an audience in Stern’s remaining former markets.
CBS will pay XM a license fee for three hours of the “Opie & Anthony” show, which will be censored when the content turns to the bawdy.
XM will air the uncensored version and retain exclusive rights to two additional hours of “Opie & Anthony” after the first three hours.
The deal allows duo to promote XM on CBS, a deal point that seems more bizarre in light of CBS’ suit against Stern, which alleged the jock used CBS air time to promote Sirius and to enrich himself.
CBS’ need to pay the fee to XM is obvious: Roth was a bust, and it needed to stop the ratings hemorrhage with a big name, and quickly.
“It’s very hard to be funny three hours a day seven days a week,” CBS Radio CEO Joel Hollander said. “There have been a lot of people who did it for the money and failed.”
XM’s motivation is a bit more complex. Satcaster signed “Opie & Anthony” out of exile after the St. Patrick’s stunt as a response to Sirius’ signing of Stern.
But after nearly two years on XM’s air, analysts noted “Opie & Anthony” isn’t driving subscriber additions anymore. In cutting the deal, XM was willing to sacrifice exclusivity to build a wider aud for the jocks, while taking a fresh revenue stream from CBS.
“They aren’t driving a lot of new subscriber growth, so the best way to raise awareness of the show is among the general broadcast audience,” said Tom Eagan, media analyst at Oppenheimer Research.
It’s a strategy that wouldn’t make much sense for Sirius and Stern because Stern is much better known than Opie & Anthony and wouldn’t gain much in the way of converts on terrestrial radio.
In addition to the tone of a censor, the “Opie & Anthony” show on CBS Radio will have more ads than the version on XM, another inconvenience the satcaster hopes will motivate devotees to subscribe.
Deal positions XM as a content syndicator and relieves some investor pressure on the company to reduce its programming expenses. Board member Jack Roberts resigned in February in protest over the programming costs the satcaster had undertaken.
“XM is under intense pressure not to pay for anything,” Stifel Nicholas analyst Kit Spring said.
For XM, which projects that it will have 9 million subscribers by the end of the year, more content deals could be in the offing. XM already syndicates host Bob Edwards to some public radio stations and for download at Audible.com.
“If you can make some money and expand the audience for talent, you take it all in and decide what’s best for the company to do,” XM Radio CEO Hugh Panero said.