Satellite Radio Subs Jump By Jon Iverson February 16, 2004 — Now is clearly crunch time for satellite radio. In the last year alone, over one million new subscribers have been added to front-runner XM Satellite Radio's service, bringing its total to approximately 1.4 million. The company projects that it will reach a total of 2.4 million subscribers by the end of 2004, thus ensuring its survival.

XM is still facing a challenge from its second-place rival, Sirius Satellite Radio, which announced last week that it is revising upward its estimate of the number of subscribers it will garner in 2004. Although it had projected 860,000 subscribers by the year's end, Sirius reports that it now anticipates hitting the magic one million subscriber number.

Key to hitting the new target are two retailing deals that Sirius announced last week. Beginning in mid-2004, RadioShack and dealers and distributors of EchoStar's DISH Network will market Sirius products and services. These agreements are projected to increase the company's product availability from its current level of over 6000 retail floors to more than 20,000 by the end of the year.

As a result of the new distribution deals, Sirius says that it forecasts 2004 revenues to exceed $70 million, up from the previous estimate of around $60 million. The company adds that it continues to expect to reach its cash-flow break-even point of two million subscribers by the end of 2005. Sirius' David Frear explains, "The positive impact expected from these alliances was not incorporated into our previous sales estimates."

In addition, Sirius, RadioShack, and DISH Network say they plan to work together to provide advertising and marketing support for their "satellite entertainment alliance." The three companies also intend to develop other marketing strategies to promote their alliance, including possible development of other product and service offerings.