By Laura Petrecca, USA TODAY
Howard Stern vs. Opie & Anthony. Martha vs. Oprah. Pro football vs. baseball.
Satellite-radio rivals Sirius (SIRI)and XM (XMSR) are toe-to-toe on the programming front — each using big-name content to lure more customers. But while subscriber growth is vital to each firm's survival, they also are facing off in other arenas where they see potential dollar signs to add revenue to subscription fees.
Sirius and XM each said in earnings calls last week that they're mining new revenue streams to augment the monthly fees they get from subscribers. Ad sales, weather and other data distribution and selling music content through devices such as cellphones aren't bringing in big bucks yet, but with both companies still deep in the red, every cash opportunity counts.
Last week, XM "which has more than 6 million subscribers, ended the fourth quarter with a loss of $268 million" and Sirius "which has more than 3 million subscribers, posted a $311 million loss for the fourth quarter" both posted broad fourth-quarter losses and disclosed sky-high subscriber acquisition and programming costs. XM, which has more than 6 million subscribers, ended the quarter with a loss of $268 million. Sirius, which has more than 3 million subscribers, posted a $311 million loss for the same period. (Full story). Both say they are mostly done with big programming deals, are watching costs and promise operational profits by the close of 2006.
Each still is relying mainly on subscriber growth to get into the black. For 2005, XM's subscriber revenue accounted for $503 million of its total $558 million in revenue. Sirius got $224 million of $242 million in revenue from subscribers.
But the satellite giants also are diversifying.
"We're still in the very beginning of a new service. There's going to be a lot more than just radio (shows)," says Hoefer & Arnett analyst April Horace.
Revenue sources the companies hope to exploit:
•Ad sales. While XM and Sirius offer commercial-free music channels, they're also ramping up ad sales for talk, news and sports stations.
Selling more ad time is a natural progression as each company creates channels around celebrities, such as Sirius' Stern deal and XM's Oprah Winfrey pact. For 2005, ad sales contributed about 2% of revenue for Sirius, about 3.5% for XM.
In a conference call on earnings on Friday, CEO Mel Karmazin said Sirius "will continue to expand our sales staff in 2006 as advertising will be an important part of our business."
He said he expects ad sales to approach 10% of revenue within the next couple of years. So far in 2006, Sirius has booked more than $6 million in ad revenue — already topping its take for full-year 2005.
Kagan Research predicts that combined ad revenue for XM and Sirius will reach $945 million by 2015.
•Data service sales. XM and Sirius are both offering non-entertainment data via their satellites.
XM has been particularly aggressive. It now serves up, for example, local traffic information — such as warnings about construction congestion and accidents — through navigation screens installed on some new cars as well as on higher-end XM radio receivers.
XM is developing a service to provide maps of available parking spaces in lots across the country.
XMWX offers weather data, mainly for boaters and pilots, through separate devices just for those services.
XM has about 19,000 subscribers willing to pay extra for these data services. XMWX costs $30 a month for basic service and $50 for a premium service. The traffic service alone costs $10 a month, $4 when bundled with an XM satellite-radio subscription.
Sirius said earlier this month that it would launch an in-flight weather data service and a marine service, as well. No prices have been announced.
"It's those kinds of data services that are in their early stages but have opportunities for both companies to increase their (average revenue per user) beyond the core subscriber base," Horace says.
•Selling content through non-radio channels. In September, Sirius signed a deal with Sprint to provide mobile-phone users with access to 20 of its music channels for $6.95 month. Sirius will gain revenue — the companies have not disclosed financial details.
For its part, XM offers a music-distribution product for non-subscribers to get its services via its website for $6.95 a month. It also is seeking revenue through content deals with third parties. Last year, it announced that it would partner with AOL to launch a co-branded music service online. It also distributes more than 25 of its audio channels on DirecTV.
http://www.usatoday.com/tech/news/2006-02-19-satellite-radio_x.htm#compare
scroll down to bottom of posted link for how XM and Sirius compare
Howard Stern vs. Opie & Anthony. Martha vs. Oprah. Pro football vs. baseball.
Satellite-radio rivals Sirius (SIRI)and XM (XMSR) are toe-to-toe on the programming front — each using big-name content to lure more customers. But while subscriber growth is vital to each firm's survival, they also are facing off in other arenas where they see potential dollar signs to add revenue to subscription fees.
Sirius and XM each said in earnings calls last week that they're mining new revenue streams to augment the monthly fees they get from subscribers. Ad sales, weather and other data distribution and selling music content through devices such as cellphones aren't bringing in big bucks yet, but with both companies still deep in the red, every cash opportunity counts.
Last week, XM "which has more than 6 million subscribers, ended the fourth quarter with a loss of $268 million" and Sirius "which has more than 3 million subscribers, posted a $311 million loss for the fourth quarter" both posted broad fourth-quarter losses and disclosed sky-high subscriber acquisition and programming costs. XM, which has more than 6 million subscribers, ended the quarter with a loss of $268 million. Sirius, which has more than 3 million subscribers, posted a $311 million loss for the same period. (Full story). Both say they are mostly done with big programming deals, are watching costs and promise operational profits by the close of 2006.
Each still is relying mainly on subscriber growth to get into the black. For 2005, XM's subscriber revenue accounted for $503 million of its total $558 million in revenue. Sirius got $224 million of $242 million in revenue from subscribers.
But the satellite giants also are diversifying.
"We're still in the very beginning of a new service. There's going to be a lot more than just radio (shows)," says Hoefer & Arnett analyst April Horace.
Revenue sources the companies hope to exploit:
•Ad sales. While XM and Sirius offer commercial-free music channels, they're also ramping up ad sales for talk, news and sports stations.
Selling more ad time is a natural progression as each company creates channels around celebrities, such as Sirius' Stern deal and XM's Oprah Winfrey pact. For 2005, ad sales contributed about 2% of revenue for Sirius, about 3.5% for XM.
In a conference call on earnings on Friday, CEO Mel Karmazin said Sirius "will continue to expand our sales staff in 2006 as advertising will be an important part of our business."
He said he expects ad sales to approach 10% of revenue within the next couple of years. So far in 2006, Sirius has booked more than $6 million in ad revenue — already topping its take for full-year 2005.
Kagan Research predicts that combined ad revenue for XM and Sirius will reach $945 million by 2015.
•Data service sales. XM and Sirius are both offering non-entertainment data via their satellites.
XM has been particularly aggressive. It now serves up, for example, local traffic information — such as warnings about construction congestion and accidents — through navigation screens installed on some new cars as well as on higher-end XM radio receivers.
XM is developing a service to provide maps of available parking spaces in lots across the country.
XMWX offers weather data, mainly for boaters and pilots, through separate devices just for those services.
XM has about 19,000 subscribers willing to pay extra for these data services. XMWX costs $30 a month for basic service and $50 for a premium service. The traffic service alone costs $10 a month, $4 when bundled with an XM satellite-radio subscription.
Sirius said earlier this month that it would launch an in-flight weather data service and a marine service, as well. No prices have been announced.
"It's those kinds of data services that are in their early stages but have opportunities for both companies to increase their (average revenue per user) beyond the core subscriber base," Horace says.
•Selling content through non-radio channels. In September, Sirius signed a deal with Sprint to provide mobile-phone users with access to 20 of its music channels for $6.95 month. Sirius will gain revenue — the companies have not disclosed financial details.
For its part, XM offers a music-distribution product for non-subscribers to get its services via its website for $6.95 a month. It also is seeking revenue through content deals with third parties. Last year, it announced that it would partner with AOL to launch a co-branded music service online. It also distributes more than 25 of its audio channels on DirecTV.
http://www.usatoday.com/tech/news/2006-02-19-satellite-radio_x.htm#compare
scroll down to bottom of posted link for how XM and Sirius compare
