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A satellite radio service company, providing music, news, talk, information, entertainment and sports programming for reception by vehicle, home and portable radios nationwide and over the Internet.
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NetscribeMedia (< 20) Submitted: 1/04/07 8:04 AM : Start Price: $15.20 XMSR.DL Score: -33.79
XM Radio is one of the biggest satellite radio companies in the USA, with 7.2 million subscribers. They have more than 170 digital channels of which nearly 70 are commercial free music channels. Its major competitor is Sirius Satellite Radio in an industry that is akin to a duopoly. Nearly 90% of XM’s revenues in 2006 are from subscribers while rest are being shared up by activation, merchandise, ad sales and others.The target market for XM Radio is the 230 million registered vehicles in the US and also the 110 million households. The 220 million terrestrial radio listeners are also expected to turn to satellite radio in the future. Revenues in 2006 have increased around 77% till September, but the large amount of operating expenses has resulted in net loss. But the company will take heart from the fact that there has been a substantial decline in net loss in 2006. XM Radio has strategic partnerships with GM, Honda, Toyota, Hyundai, Nissan, and Porsche which together represents 60% of the automobile industry. Honda has announced that it will be installing XM in 655,000 vehicles in 2007 year model which represents 44% market penetration, while GM intends to build 1.8 million XM installed vehicles next year. In some other interesting news Sirius has announced that it is interested in a merger with XM but there has been no response so far from XM. This merger could only work in favor of the two major market players as both of them will have to face stiff competition from Apple as more carmakers are installing Ipods in their models. The company has reiterated that it will reach 20 million subscribers by 2010 all of which suggests that XM will have a bullish year ahead of it. In the future, XM might want to consider penetration into the densely populated Asian and European markets.
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Matt8265 (89.04) Submitted: 1/04/07 8:31 PM
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All very accurate xpect the part of Asia and Europe when XM nor Siri are not licenced.My question.... if Sirius took 63% market shared for this year, why buy XM ?
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NetscribeMedia (< 20) Submitted: 4/16/07 7:33 AM
The radio broadcasting industry has been agog, ever since XM and SIRIUS announced plans for a prospective merger. XM would receive $4.7 billion worth of stock from Sirius as part of the deal and the resultant company would have an enterprise value of $13 billion. The merger, which is still awaiting the approval of the authorities, would create a monopoly in the radio broadcasting market. XM and Sirius are optimistic, while their competitors and other industry observers are wary of the motives behind such a merger. XM’s 2006 revenues increased 67.2% year-over-year to $933.4 million. This growth was mainly driven by the original equipment manufacturer segment. The company ended the year with 7.63 million subscribers, inclusive of 1.7 million net subscriber additions during the year. A relatively large increase in expenses, however, kept the company in the red. A 60% adjusted EBITDA loss decline in 2006 should nonetheless, be a cause for some comfort. The company expects 2007 subscriber growth in the range of 9 to 9.2 million. XM believes that, in the future, the OEM segment will be a bigger growth driver than its retail business. This has resulted in the shift of a larger portion of marketing initiatives to the OEM segment. XM has strategic relationships with General Motors, Honda, Toyota, Nissan, Hyundai and Porsche. Together, these companies represent 60% of the US OEM market. XM installed the next-generation satellite infrastructure in October which has since become fully operational. Broadening its platform to include a wider range of services including traffic, weather and navigation will be a major objective in 2007. XM recently announced the extension of its relationship with Toyota Motor Sales and American Honda Motor Company. These contracts will now extend to 2016 and 2017, respectively. General Motors and Honda are expected to produce 1.8 million and 0.6 million XM equipped vehicles respectively, in 2007. This year, Hyundai will equip 100% of its vehicles with XM. The SIRIUS merger is expected to be completed by the end of 2007. Consequently, XM radio will have an excellent year ahead of it.
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