Satellite Radio News

Satellite radio services Sirius and XM both appear headed for a healthy future. The companies both report robust growth in new subscribers. Sweetheart deals with automakers and car rental agencies will expose ever-increasing numbers of consumers to the benefits of commercial-free music.

On August 5, New York City–based Sirius Satellite Radio announced that it had gained approximately 37,000 new subscribers in the second quarter and was on track to reach its goal of 300,000 total subscribers by year's end. Total subscribership was 105,186 at the end of the second quarter, Sirius president Joe Clayton said at an analysts’ conference. More than 80,000 "plug'n'play" Sirius receivers will have been shipped by the end of August, all of them Kenwood and Audiovox units, with production increasing to meet anticipated demand. Eclipse should have new Sirius equipment out soon. Other manufacturers are licensing Sirius technology, to be announced by the 2004 Consumer Electronics Show.

By September, Sirius receivers will be available in ten Ford Motor Company models. The service is already available as an option in Hertz rental cars. Exposure through rentals is credited with helping Sirius increase its subscribership by 55% in the second quarter of 2003, with revenue reaching $2.1 million, up from $70,000 recorded in the same period a year ago. The company is still in the red, with a second quarter operating loss of $109.8 million, compared with an operating loss of $89.9 million in the second quarter of last year.

Competitor XM Satellite Radio Holdings, Inc. has enjoyed a rise in the value of its stock on news of subscriber growth. On Friday August 8, XM closed up $1.40 at $11.92/share on the Nasdaq exchange. Both General Motors and Honda have expanded plans to install XM receivers in new vehicles. Factory-installed XM radios in Hondas should top 200,000 units in 2004; GM has nearly 500,000 installed already and should approach one million by March of next year, according to a report released the same day.

XM is projecting a total subscribership of between 1.25 million and 1.3 million by year's end. One new promotional gimmick is an affordable go-anywhere XM "Roady" radio aimed at the youth market. The Delphi-built Roady will come with several different backlit displays and a choice of detachable faceplates. Projected street price is $120. XM claims to have sufficient capital to sustain itself through the coming year, but the broadcaster needs to build and launch a new satellite. The company is rumored to have technical problems with its two existing Boeing 702 satellites and has been unable to collect on an insurance policy covering them. The problems aren't believed to be serious at this point, but they could worsen in time.

XM signed 209,178 new subscribers in the second quarter, ended June 30—7600 of them generated from exposure through the Avis car rental agency. The growth was a 43% increase over the first quarter and XM's best marketing performance to date. The company had 692,253 subscribers as of June 30.

A recent survey published by the Consumer Electronics Association (CEA) stated that 49% of consumers say they are "somewhat or very interested" in satellite radio. Of the women interviewed, 51% said they were interested in the format, as did 46% of the men.

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