XM and Sirius Satellite Radio Losses Growing

Aug 6th, 2006 | By | Category: Audio Podcasting, General, Podcasting Research

Losses are growing at the two leaders in satellite radio, XM and Sirius.

Sirius lost $237.8 million for the period compared with a loss of $177.6 million during second quarter of 2005. XM Satellite Radio on July 27 reported a second-quarter loss of $231.7 million, up from losses of $148.8 million a year ago.

One of the biggest issues for both companies is subscriber acquisition cost, or the money each company spends to get a single subscriber to sign up for the service. Sirius’s acquisition costs dropped to $131 in second quarter from $160 in the year-ago period. XM’s, meanwhile, rose to $64 in second quarter, compared with $50 in the year-ago period.

A threat that may prove to be even greater, though, is the explosion of free audio content on the Internet. Some radio experts are sceptical about the chances of new radio technologies competing with Internet audio. There are already more podcasters than radio stations in the world, and podcasts offer on-demand playback and device independence.

Even with the losses, investors appear to be encouraged by a growth in the overall market. Sirius’s net subscriber additions outpaced XM’s during the quarter, 600,460 to 398,012. XM has a total of 6.9 million subscribers to Sirius’s 4.6 million. By comparison, podcasters currently reach an estimated audience of 10 million podcast listeners.Sirius’ CEO, was bullish on advertising as a second revenue stream. “We have approximately $22 million on the books this morning,” he told analysts. “That compares to finishing all of last year at slightly over $6 million.”

via Ad Age

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