Muzak Files for Bankruptcy

[Scott Greczkowski]

As I reported this weekend and in my MultiChannel News article on Monday, I was heaing a strong rumor that MUZAK was about to file for bankruptcy.

I believe this is part of the puzzle in the Echostar / Sirius XM deal. Remember Echostar uplinks many of the MUZAK channels. If Charlie buys out MUZAK and Sirius XM he is the largest commercial provider of music in the United States...

Here is a link to the MUZAK filing news...

Bankruptcy proves a sour note for Muzak | Business | Chron.com - Houston Chronicle

 

[riffjim4069]

I need some pleasant Muzak to calm my nerves...

Muzak should fine in the long-run, but I wouldn't invest my money in the service. Satellite Radio is a great idea, but there is no way I am going to pay subscription fees when I can listen to over-the-air AM/FM and HD radio at no charge.

 

[skottey]

I need some pleasant Muzak to calm my nerves...

Muzak should fine in the long-run, but I wouldn't invest my money in the service. Satellite Radio is a great idea, but there is no way I am going to pay subscription fees when I can listen to over-the-air AM/FM and HD radio at no charge.

Do you have cable or satellite TV?

Why pay for cable or satellite when you can get free OTA channels at no charge?

At the dawn of cable TV there were holdouts that said they would never pay for TV wired to their house. Most eventually did.

I agree with you that satellite radio has certainly lost its value lately and will get even worse as they populate the music stations with advertising, but there is a certain segment that will continue to pay, even with ads. The real question is will the retain enough subscribers and balance out with advertising dollars and make a profit.

 

[Foxbat]

Muzak was OTA back in the 1960s and 1970s. They used a subcarrier on a local FM station that required a special receiver to decode. Satellite offered more security and a larger range of music genres. When Echostar started DishNetwork, Charlie signed a deal with Muzak where E* would provide hardware and Dish customers would get Muzak channels.

Another good reason that Echostar and DishNetwork went their "separate" ways. Looks like Charlie is getting ready to become a Media Mogul with Muzak and Sirius/XM... Hmmm....

 

[bhelms]

"The day the Muzak died..." (Didn't someone already do a song about that...?? )

 

[topcats69]

Do you have cable or satellite TV?

Why pay for cable or satellite when you can get free OTA channels at no charge?

At the dawn of cable TV there were holdouts that said they would never pay for TV wired to their house. Most eventually did.

I agree with you that satellite radio has certainly lost its value lately and will get even worse as they populate the music stations with advertising, but there is a certain segment that will continue to pay, even with ads. The real question is will the retain enough subscribers and balance out with advertising dollars and make a profit.

that why I switched to slacker

 

[JosephB]

Another good reason that Echostar and DishNetwork went their "separate" ways. Looks like Charlie is getting ready to become a Media Mogul with Muzak and Sirius/XM... Hmmm....

I wouldn't exactly call him a media mogul even with both muzak and sirius xm. He's always pretty much had muzak, and while sirius xm will be a significant addition, he will need to show that he can effectively integrate all of these holdings he now has. He's getting a good start with Sling Media (though it appears he's run off the founders). He will need to take all of these assets, along with the 700mhz stuff he owns, and show that he can pull off an integrated, coherent strategy.

 

[Albie2]

I wouldn't exactly call him a media mogul even with both muzak and sirius xm. He's always pretty much had muzak, and while sirius xm will be a significant addition, he will need to show that he can effectively integrate all of these holdings he now has. He's getting a good start with Sling Media (though it appears he's run off the founders). He will need to take all of these assets, along with the 700mhz stuff he owns, and show that he can pull off an integrated, coherent strategy.

Who says he needs an integrated strategy with regards to sat radio? If he can get control of Sirius/XM and get the balance sheet cleaned up (Debt) Sat Radio can be quite profitable especially now there would be no head to head competition for content (think Howard, NFL, MLB, etc). Remember Sat radio brings in about $2Billion a year in sub fees.

 

[JosephB]

Who says he needs an integrated strategy with regards to sat radio? If he can get control of Sirius/XM and get the balance sheet cleaned up (Debt) Sat Radio can be quite profitable especially now there would be no head to head competition for content (think Howard, NFL, MLB, etc). Remember Sat radio brings in about $2Billion a year in sub fees.

I agree he is a shrewd business man, but I don't think he has a lick of media sense.

 

[riffjim4069]

Do you have cable or satellite TV?

Why pay for cable or satellite when you can get free OTA channels at no charge?

At the dawn of cable TV there were holdouts that said they would never pay for TV wired to their house. Most eventually did.

I agree with you that satellite radio has certainly lost its value lately and will get even worse as they populate the music stations with advertising, but there is a certain segment that will continue to pay, even with ads. The real question is will the retain enough subscribers and balance out with advertising dollars and make a profit.

Over the past 5-years we've had Cable, VOOM, Dish Network, StarChoice and now FiOS TV. 60-70% of our TV viewing is OTA, but we just gotta pay for 250+ channels in order to get the dozen cable channels we do watch. I lived without any TV for almost 8-years and we would probably be fine with OTA...but we can afford it so I don't worry about it.

While I have always been a gadget and electronics nut, satellite radio has never interested me in the least. However, my mother (who can't operate a DVR) has had satellite radio in all her vehicles for years, and my wife (who is perfectly happy in front of a 19" B&W TV) keeps asking for Sirius or XM radio. Go figure! I just don't get it...I could always find outstanding news, sports, weather and talk on local radio and on nationally syndicated radio. Additionally, I listened to the best music compilations imaginable when I used to commute 58-miles each way to work for more than seven years into DC...I made my own CDs and MP3 collections.

I certainly don't have anything against satellite radio but, like you pointed out, satellite radio is expensive and I just don't think they can attract enough customers to keep things in orbit. I personally don't feel they do enough to differentiate their service from FM/HD Radio and their are plenty of other ways to download or subscribe to quality music services.

 

[Claude Greiner]

Muzak has been on its way out ever since Sirius and XM decided to roll out their service since they are not competitive.

They first of all charge a few hundred dollars for the installation and then want $30+ per month for the service. With Sirius and XM, at the most there is about $100 for an outside antenna kit, and then the service is around $12/mo.

If they go away thats fine with me, I have gotten screwed by them too many times when I went to setup a commercial DISH account for TV and was told I could't because the customer already subscribed to Muzak and was considered a previous customer and would not qualify for new customer promotions and commissions. Try explaining to a customer they can't get Free equipment because they have a Muzak account, which really has nothing to do with Dish besides use the same equipment.

 

[bhelms]

Put me in the ho-hmm about sat. radio group. I drive about 45 mins a day total and the local talk radio suits me fine for that short duration. I rarely take any lengthy trips or travel out of market where I need to channel surf. When the radio doesn't suit, the CD changer is always loaded and ready to take over. I don't listen to anything at work now and at home the other forms of entertainment are all I need. I worked with a guy for a while who always had his XM playing on the jobsites. I wasn't impressed either way. I just used my headphones and listened to the local stuff. I don't think I'd adopt sat. radio at this point even if it had no subscription cost. If I were to buy a new vehicle with a receiver and a free year of service that could change. But that's certainly no reason (in my mind) to purchase a vehicle. No-doubt some make the investment to keep Stern and others in their lives. I don't feel that way about any personality, but that's just me.

I'm a techno nut to a large extent and an early adopter of many things. For some reason sat. radio never caught on for me, particularly with the monthly fee.

What is the penetration rate? How much churn is there? $2B per year revenue seems significant, but what does it cost the providers to stay in business?

 

[Jamey K]

I always wondered what the musicians, who played on Muzak, looked like. Where they in tuxes? Jeans? And what about that damn flute player? He was all over everything!

 

[ikki]

The problem with Sirius / XM Radio is they refuse to change.

I can’t speak so much for Muzak because providing music to stores and other commercial entities is different then selling it to a home consumer.

That being said, if I was in charge at Sirius / XM Radio the first thing I would do is rethink things.

• Make smaller packages and make them cheap (Sports Only / Music Only / News Only. Etc.) and when I say cheap I mean like 1 or 2 dollars a month.
• Form partnerships with the big names in terrestrial radio. WNBC, WABC, WCCO, WCBS any one willing to pay. Offer to lease them a channel, or more, with the following understanding. The channel has to be FTA. Sirius / XM Radio simply needs to figure out how much a “channel” should be worth in order to be profitable while being able to give away the service. Land based broadcasters would like it because they could offer coast to cost coverage. Think of the die hard people that listen to WCCO AM on .830 AM. During the night it is coast to cost. But in the day its only like 250 miles.

 

[jrbdmb]

• Make smaller packages and make them cheap (Sports Only / Music Only / News Only. Etc.) and when I say cheap I mean like 1 or 2 dollars a month.

A customer paying $1 or $2 a month isn't going to cover the overhead billing / customer service / tech support costs, not to mention the fixed costs of the satellites and cost of programming.

 

[wolrah]

They first of all charge a few hundred dollars for the installation and then want $30+ per month for the service. With Sirius and XM, at the most there is about $100 for an outside antenna kit, and then the service is around $12/mo.

There's a major difference here, and that is licensing. You are not allowed to play standard commercial music from any source, be it MP3, CD, terrestrial radio, satellite, etc. without paying fees to BMI, ASCAP, etc. or using a service which pays the proper fees for you and charges accordingly. This is where Muzak comes in.

Sirius has an offering called Sirius Music for Business which includes the licensing and starts at $28/mo. These packages are what you should be comparing with, not the personal use plans.

edit: Sirius' Business FAQ explains it quite well:

Why do I have to pay more for a business subscription?
Use of music in a business requires the payment of royalties to ASCAP, BMI and SESAC, the organizations that represent the music copyright holders. These royalties are included in a commercial subscription. For more information on these royalties please visit www.ascap.com, www.bmi.com and www.sesac.com.

Do I have to pay for music licenses when I have already paid for the DJ, band or purchased the records, discs or tapes to be played in my establishment?
The Copyright Law of the United States, states that the owner or operator of the establishment where the music is being played is responsible for obtaining the required authorization. The compensation you provide to a performer such as a DJ or band does not relieve you of this obligation. When you purchase a record, tape, compact disc, DVD or similar product you are granted the authorization for a non-public performance, such as in your home or car. There is no public performance right attached to the sale of these products and if you decide to play this music in your establishment you are required to obtain authorization from the copyright owner or their representative.

 

[navychop]

I wonder what a 19" B&W TV set is worth today? Would it increase in value, like early TVs and radios?

 

[truckracer]

I do have a sub to sirius/xm with two radios. One radio is on my ZX-10R Ninja, the other radio is in my truck (one of those little radar detector looking SV1's). I do not subscribe to tv services of any kind. I have digital over the air /HD, FTA satellite only.
couldn't be happier. I was in the same situation where the few channels i did want, I had to sub to a huge package that cost more than the few channels i wanted was really worth IMO.

I do however hope that muzak and sirius/xm does not go out of business. They are a great asset to our country's commercial free music delivery for homes, businesses. Its kind of nice to drive from Charleston, WV to Nashville, TN and not have to search for a radio station. Plus I enjoy the lack of commercials (for now) until they add them one day.

 

[harshness]

Is there any relationship between DISH Music and MUZAK?