XM/Sirius will both survive

[Q45tech]

""XM Satellite Radio hit its target for subscribers in the third quarter and said it's on track to meet its year-end estimates, but the company has bigger issues to contend with. The tally--201,500 subscribers as of the third quarter, with an expected 350,000 by Dec. 31--may be encouraging, but analysts said XM Satellite Radio and its only competitor, Sirius Satellite Radio, need to stave off growing amounts of debt from building their radio networks--and remain in business. Both companies, which sell satellite radios and programming, say they need to have four million subscribers each to become profitable. XM, launched in 1998, and Sirius Satellite, which debuted in July, say they are in financial jeopardy. XM Satellite Radio told the Securities and Exchange Commission (SEC) that it might run out of money by the first quarter of 2003 and discontinue operations. Sirius Satellite reported to the SEC in mid-August that it needs to raise $300 million by mid-2003 or it might file for bankruptcy protections.

"(XM and Sirius will) make an awfully good business once they've gone bankrupt and come out with lower debt loads," said analyst Will Strauss of Forward Concepts, a consulting company that specializes in the wireless industry, in reaction to Tuesday's XM announcement.

The company is expecting a new flush of subscribers in December, when it begins to sell a portable satellite radio called SkyFi and when the 400,000 GM cars with XM satellite receivers as an option start hitting showroom floors, XM Satellite said.

Satellite radios use a constellation of orbiting satellites instead of the land-based antennae used by all FM/AM radio stations. But unlike traditional radio stations, satellite radio companies charge monthly subscriptions. For example, XM charges $10 for programming, and Sirius charges $13.

XM Satellite said it hit its projections for the fourth straight quarter despite an unusually soft consumer-electronics business that quarter.

Sirius Satellite had about 8,000 subscribers as of its third quarter--about 10,000 less than it expected. The company plans to give an update on its subscriber numbers in November.""

[Mayhem_J30]

that's the life in today's technology market. banks won't back you based on revenue anymore just profit...even if they know it looks like a winner. people are just still scared to invest.will both survive, probably neither. i think a 3rd party will eventually take what both have twist it around to make cheaper operations and just blow up after that.

[jmatas]

I have a feeling that in 8-10 years, the satellite radio functions in the new Infinitis will be about as useful as the car phone connection in mine.

[maxnix]

What I find weird is you are asked to pay for listening to commercials. If all channels were guaranteed to be commercial free forever, I would probably be the first one to enroll.

[greg_atlanta]

What I find weird is you are asked to pay for listening to commercials. If all channels were guaranteed to be commercial free forever, I would probably be the first one to enroll.

That may explain why XM is in better shape than Sirius -- ads are another revenue source.

I don't plan to get a new car for at least two years, so I'll just wait and see....

It might be a good idea for automakers to make the service STANDARD in stock stereos (I'm sure the hardware doesn't cost much) -- or a no cost option.

[Mayhem_J30]

i thought only some of the channels had commercials.think of XM as the cable of radio. cable networks still have commercials. sponsorship is the biggest money maker of almost any entertainment business. magazines, newspaper, tv, radio, and even your local softball field.

[maxnix]

Mine has no commercials on any of the channels. Satellite radio shouldn't either.

Maybe they won't either after they recycle through bankruptcy.

[theTony]

I have been trying to decide whether or not to get an XM receiver in my car ever since I got it. My cousin has it in his new Toyota Tundra and he loves it. I just heard that Sears is offering thier employees basically free equipment for XM just as an incentive. I wonder if this came about from the recent news on the satellite radio industry. I for one think satellite radio is a great idea. I may wait just a little bit longer now before I splurge and get it. I'd like to see what will happen early next year with it.

[aemikeg]

I've got an XM setup in one of my cars. The content is great: Lots of news and talk. My fav is CNET radio. I listen to the Jazz stations which are pretty good, fidelity and content wise. Much better than local radio. About 30 percent are commercial free but with the cross-channel promos that are running I don't feel like they're commercial free. Sound quality varies from channel to channel. I think they use varying degrees of compression based on the potential of the medium. $10 per month is a decent value for the service. I wish they could come up with a way to lower the cost of equipment. After all, we don't pay the full price for our Dish, Direct TV or cable stuff, cell phones or anything else that has a contract with it, XM should be the same way.