TELECOM Digest OnLine - Sorted: Satellite Radio Takes Off, Altering the Airwaves

Satellite Radio Takes Off, Altering the Airwaves

Monty Solomon (
Tue, 5 Apr 2005 15:12:17 -0400


Just a blink after the newly emergent titans of radio -- Clear Channel
Communications, Infinity Broadcasting and the like -- were being
accused of scrubbing diversity from radio and drowning listeners in
wall-to-wall commercials, the new medium of satellite radio is fast
emerging as an alternative. And broadcasters are fighting back.

The announcement on Friday by XM Satellite Radio -- the bigger of the
two satellite radio companies -- that it added more than 540,000
subscribers from January through March pushed the industry's customer
total past five million after fewer than three and a half years of
operation. Analysts call that remarkable growth for companies charging
more than $100 annually for a product that has been free for 80 years.

Total subscribers at XM and its competitor, Sirius Satellite Radio,
will probably surpass eight million by the end of year, making
satellite radio one of the fastest-growing technologies ever --
faster, for example, than cellphones.

To keep that growth soaring, XM and Sirius are furiously signing up
carmakers to offer satellite radio as a factory-installed option and
are paying tens of millions of dollars for exclusive programming. On
Sunday, XM began offering every locally broadcast regular-season and
playoff Major League Baseball game to a national audience, having
acquired the rights in a deal that could be worth up to $650 million
over 11 years. And Howard Stern is getting $500 million over five
years to leave Infinity and join Sirius next January. Each company
offers 120 or more channels of music, news, sports and talk.

Though satellite radio is still an unprofitable blip in the radio
universe, it is pushing commercial radio to change its sound.
Broadcasters are cutting commercials, adding hundreds of songs to
once-rigid playlists, introducing new formats and beefing up their
Internet offerings. A long-awaited move to digital radio could give
existing stations as many as five signals each, with which they could
introduce their own subscription services -- but with a local flavor
that satellite is hard pressed to match.

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