Friday, February 17, 2006

XM & Sirius In Trouble?

From the very beginning of satellite radio, I was skeptical of its potential. While I admit I was wrong about the number of people it would appeal to, my bigger issue was with the cost structure of the business. Launching and maintaining satellite is extremely expensive. Just ask anyone who worked on Iridium or Teledesic. Even if you can sign up a lot of users, the capital costs are tremendous. If the costs of getting those subscribers is high, then it's a definite recipe for trouble. So far, Sirius and XM have been able to keep kicking, mainly through a ton of investment money and the promise of future potential profits -- stacked up against continued losses. It looks like a few are finally doing the math on all of this and realizing that the satellite radio business, as much as some people like it, may not be sustainable. XM posted wider than expected losses today, blaming higher than expected customer acquisition fees -- suggesting that, for all the good press, not as many people as expected have been rushing to sign up. Also, one of the company's directors resigned, citing a "crisis on the horizon," which is anything but inspiring.

My wife got me XM for my birthday and I love it. I listen to it about 95% of my time in the truck. With the Morning Line, Boortz and odd cd filling out the remainer of the time. It surprised me how much I do listen to it and I'ld hate to see it going away. We have 2 recievers right now and may get a 3rd.

posted by David at 4:27 AM :: Permalink ::

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