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Thursday, November 02, 2006

Another Insult To Satellite Radio


How much can XM and Sirius take? After assaults from the iPod, problems with the FCC, and slowing subscription growth rates, they ought to get a breather.

Even the cell phone companies want into the music business. But, now their content partners want more money.

The satellite radio players have a deal with the music industry that, after two years, is about to expire. Of course, the music men think that with XM and Sirius having more subscribers, they should pony up more dough.

Music companies want everyone to know that they offered Sirius and XM lower rates early on “to help them get off the ground”. But, from a financial standpoint, both companies are still “underground”. Last quarter, XM lost over $100 million on $228 million in revenue. Their balance sheet shows over $1.3 billion in long term debt. So, they can obviously afford to give the music industry more money.

Maybe the music industry should ask for a better deal from Apple’s iPod or the Microsoft Zune. The satellite radio folks are out of money.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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