Satellite Radio Expands
Our Guide to the Options As XM, Sirius Do Battle;
Cementing the Lead in Sports
Wall Street Journal, April 27, 2005
Kevin Melancon is already mapping out plans for a glorious summer lying on the beach in Southern California -- and listening to music from his favorite European clubs and disc jockeys.
The only obstacle: getting a satellite radio that beams the club music he favors straight to him on the sand at Santa Monica. Confronting a baffling array of receivers and service options on a recent visit to Best Buy, the 37-year-old part-time DJ walked out empty handed.
It is a predicament more people are facing as satellite radio picks up momentum and attempts to expand out of cars, and as manufacturers roll out receivers for listening at home or on the beach. Available since late 2001, satellite radio now has five million listeners; Tom Watts, an analyst at SG Cowen, believes that figure will jump to 24 million in three years.
The two rival satellite-radio services, Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., are quickly adding new equipment and features. XM released a portable, Walkman-like unit made by Delphi Inc. called the MyFi. It comes with a built-in Tivo-like device that can store as much as five hours of programming for playback later. Sirius says it plans to start selling its own portable player later this year or early next. It is touting a model, the Sportster, that can hook into a home stereo or a car radio, and like many models, is capable of alerting listeners if a favorite song is playing on another channel.
Both services have also been on a hiring binge that has produced a lineup with some bonafide stars -- as well as some shows that might well be described as having only niche appeal. Sirius has signed personalities including Howard Stern, Martha Stewart and Bill Bradley, the ex-Senator and former New York Knick, to host new shows. This month, XM launched a baseball show hosted by former Baltimore Orioles star Cal Ripken and his brother Billy. Earlier this year it added rapper Snoop Dogg.
Subscribers to either service pay a minimum of $100 for the radio, plus $12.95 a month for the programming. Each service offers more than 100 channels, catering to every possible niche -- electronic dance music, comedy, radio theater. Most satellite tuners come with a screen that displays the song artist and title, or the name of the news or talk show, so listeners always know what they're hearing.
Aside from having to choose between XM or Sirius (currently, the receivers can pick up signals from only one provider, not both) new customers must decide whether they want service that is beamed to a car, their home or a portable device.
Both companies are trying to beef up their equipment and programming. At the moment XM is the market leader with 3.7 million subscribers; its equipment is generally smaller and less expensive than Sirius's, chiefly because XM's engineering team has developed more sophisticated technology to grab the satellite signal and convert it into sound. Sirius is growing at a faster pace, though from a smaller base. The company quadrupled subscribers last year and now has 1.2 million. XM more than doubled subscribers last year.
In a bid to catch up, Sirius has been particularly aggressive hiring hosts, and also recently stole the Nascar racing franchise from XM, adding to its other sports programming (including all NFL and NBA games) and cementing its lead in sports.
On XM, former public-radio star Bob Edwards hosts a current-affairs program, and singer Tom Petty runs a music show. XM is also the exclusive Major League Baseball satellite broadcaster and will hang on to Nascar until 2007.
Both companies are aggressively pursuing niche broadcast markets: Sirius, for example, recently signed skateboarding champion Tony Hawk to do a show. To the companies, it doesn't matter how many people listen to each individual channel -- what matters is how many people subscribe to their overall service. Another example: classical music, which draws relatively few radio listeners in the U.S., and is losing stations every year on traditional airwaves. However, its fans are fiercely dedicated, and each satellite company offers three classical stations.
There are few resources for comparing the quality of shows on the two systems, although a few Web sites are starting to tackle the issue. The site radio.about.com3 offers a guide to each service, although some information is out of date. Orbitcast.com4 has an "XM versus Sirius" link where readers post comments.
There are a number of key differences between the programming each company provides. Generally, Sirius's philosophy is to lock up as much high-profile talent as it can, whereas XM's is to open its pursestrings only for certain big draws like Major League Baseball.
Because the signals come via satellite (as opposed to over the regular airwaves like traditional radio broadcasts) subscribers get the same coverage nationwide: Tune into one station in Maine, and you'll keep receiving it all the way to California. The satellite signal can sometimes be blocked by tall buildings in dense urban areas, although the companies have rolled out special technology that cuts down on the problem.
Occasionally, the services cut out, but typically for no more than a second or two. However, both will lose service in underground parking garages or lengthy tunnels.
While some cars now come with factory-installed satellite radios, new-car buyers don't usually get a choice of satellite-radio providers. The reason: It is difficult for car makers to install both Sirius and XM radios in a car, so instead they enter an agreement with one provider, and offer only its gear as a factory-installed option. For instance, buyers of new cars from General Motors Corp., Honda Motor Co., and starting from this autumn, Hyundai Motor Co., can expect XM radios built into some models. BMW AG and DaimlerChrysler AG, are offering Sirius radios built into some models.
Of course, it is possible to separately purchase and install a satellite radio in most any car. Most auto dealers offer this service for an extra fee, as do electronics retailers like Best Buy and Circuit City.
Prices for basic satellite-radio receivers at electronics retailers can range from $100 for a no-frills model (not including installation costs) to more than $1,000 for models that also include CD players, information screens, and other bells and whistles. Typically, the unit gets installed right in the dashboard -- replacing the current radio. (In-dash units like these also can tune into traditional AM and FM radio stations, too.)
There are also some slightly less costly options, including receivers that don't get permanently installed in the dashboard. Known as "plug & plays," they usually can be plugged into a car, a boombox or a home stereo.
Both companies also are also offering receivers designed to fit into traditional home-stereo shelves and not look out of place. Models including XM's Polk XRT 12 and Sirius's SR-H5550 usually start at about $250. Sometimes they require that an antenna be attached outside of the building. Both companies also have boomboxes, with prices starting around $170.
Consumers who can't decide which service they prefer might want to wait for a radio that can receive signals from either service -- though that will take a while. The Federal Communications Commission required the companies to develop such a receiver years ago, but engineers have run into technical roadblocks. Analysts estimate it won't hit store shelves until next year at the earliest.