This may be the holiday season that satellite radio began to show its promise.
The nation’s two major satellite radio providers reported brisk sales in recent weeks, helped by discounts in subscription rates and expanded product lines. Neither company is ready to release holiday sales figures, but Washington’s XM Satellite Radio Inc. expects to have 1.2 million subscribers by year’s end, compared with 347,000 subscribers a year ago.
The money-losing company hopes to break even by the end of the coming year or the first half of 2005.
New York-based Sirius Satellite Radio Inc. had a strong holiday season, spokesman Ron Rodrigues said. But it was not too tough to do better than last year. Last holiday season was the first full operating quarter for the public company. Although Rodrigues said sales figures will not be released until early January, “we were all very busy fourth quarter. And if that’s any indication of sales, then sales were good.”
The healthy season was welcome news for two companies that invested heavily in sending satellites aloft only to struggle initially to persuade people to pay for 24-hour radio broadcasts on about 100 channels as they would for cable or satellite television.
XM Radio executives said they made some headway this year by offering price breaks to subscribers who bought multiyear subscriptions. For example, the regular $9.99-a-month subscription rate falls to $8.29 a month when subscribers commit for two years, or $7.48 a month for a five-year package.
“The multiyear [subscription] was a very compelling thing,” said Allen Goldberg, a company spokesman. He said buyers can get refunds if they cancel early.
The company signed up its 1 millionth subscriber in October. “We have had such strong sales over Christmas, we’ll have many people activating right after Christmas, so we’ve got all our customer service people on high alert,” Goldberg said.
Electronics retailers said satellite radio was a big seller this year. “The popularity has grown this year,” said Bill Cimino, a spokesman for the electronics retailer Circuit City Stores Inc. The store sells both XM and Sirius. “We did see it was one of the strong products that grew in November.”
Typically, he said, customers had bought the radio service for themselves rather than as a gift, because the popular version has to be installed into a car, and because the service normally requires a monthly subscription fee. But now that there is a portable receiver, more customers bought it as a gift, and paid subscription fees running for a year or two, he said. The portable receiver can be moved from car to home to office, and costs about $150 to $200.
Since District-based XM was founded, the company has struggled to prove itself to Wall Street and to consumers.
It launched its service in September 2001, and teetered as it tried to find customers willing to pay $10 a month to listen to 100 basic radio channels, beamed from satellites. But soon, a wide variety of customers began to climb on the satellite radio bandwagon. A variety of channels target different musical tastes: heavy metal, show tunes, news, sports, bluegrass. The stations can be picked up from anywhere, freeing drivers from having to listen to repetitious AM/FM radio stations on long drives and commutes.
XM has raised enough money to remain afloat at least until the end 2004. Automakers this year started to offer XM service with their 2004 models, helping to boost stock. As the number of subscribers increase, so does the company’s hopes. Although XM does not expect to make a profit anytime soon, the company is “pretty much on target,” Goldberg said.
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