XM, Sirius Combined Have 9.4 Million Subscribers

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NEW YORK ( -- Boom times in the satellite radio industry? News out of the Consumer Electronics Show this week that satellite radio is a 9.4 million person market between XM and Sirius should quiet the naysayers who claim “pay radio” is just a flash in the pan.

XM revealed at the show that it had surpassed 6.1 million subscribers and Sirius boasted about its 3.3 million. In addition, XM forecasts to have 9 million subscribers by the end of the year 2006 and Sirius projects 6 million. A year ago the combined satellite radio audience was 4.3 million.

Combination radio and MP3 players
The consumer electronics manufacturers were also unveiling a new swath of satellite radio-equipped receivers and portable devices. Pioneer and Samsung both showed combination XM Radio and MP3 players compatible with XM’s previously announced Napster partnership. In addition to storing MP3s ripped from CDs and recording XM broadcasts, listeners can “bookmark” songs they like for later download from Napster’s subscription-based digital music service.

Meanwhile high-end audio manufacturer Thomson said it had partnered with RCA and General Electric to create Sirius-compatible home stereo system.

Separately, Sirius yesterday gave shock jock Howard Stern 34 million shares of stock, according to Securities and Exchange Commission filings. The stock was worth about $220 million at today’s share price of $6.39 and given as a reward for helping the company meet a subscription target set when the company signed him to his five-year, $500 million deal in October 2004.

Closing the gap
Mr. Stern is a driver of Sirius’s growth at the retail level, where Sirius now accounts for about half of all satellite radio subscriptions sold, according to NPD Group. Merrill Lynch analyst Larraine Mancini suggested in a note to investors that Sirius is already closing the gap with XM, as both companies expect to net an increase of about 3 million subscriptions in 2006.

“It appears that the gap is closing,” she wrote. “This trend reinforces our belief that Sirius will eventually catch up with XM and the two will largely share the satellite radio market going forward."

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