Radio Service Reports Widening Losses Following Launch Delays

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CHICAGO ( -- Six weeks after launching its service in four markets, Sirius Satellite Radio said its subscription-based, digital-quality radio service will be available nationally July 1, one quarter ahead of schedule.

The news of an accelerated nationwide rollout -- originally set for the third quarter -- is a welcome shift for the company, whose two launch delays last year put it several months behind rival XM Satellite Radio Holdings.

Good news, bad news
The news helped put a positive spin on a conference call with analysts in which the company announced net loss for 2001 increased to $235.8 million from $134.7 million the previous year, with net loss per share for the year up to $5.30 from $4.72 in 2000, due to subscriber-acquisition and other launch-related costs.

Sirius, which launched

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its 100-channel service for $12.95 per month in Denver, Houston, Phoenix and Jackson, Miss., Feb. 14, plans to extend its service to 39 states in the next 60 days, President-CEO Joseph Clayton said in the call to analysts and investors Wednesday.

Although Sirius would not reveal media spending or specific marketing rollout plans, the company had said the integrated push would use the umbrella theme "You'll never want to leave your car." The ad campaign will include traditional media but rely heavily on sponsorships and events, including Nascar, which Mr. Clayton said will be a major part of the national advertising effort.

The marketing push, through Interpublic Group of Cos.' McCann-Erickson WorldWide, New York, will appear in the second half of the year.

The company reported no revenue last year, since the service did not launch until February. Sirius had $331 million in cash and marketable securities at the end of 2001, and today has a cash balance of more than $400 million, which will fund it through the second quarter of 2003, Chief Financial Officer John Scelfo said during the call.

3,500 stores by June
Sirius radios are currently available in 200 retail locations including Best Buy and Circuit City, and will be on the shelves of 3,500 stores by the end of June and 4,500 stores by year-end.

Earlier this year, rival XM, whose similar 100-channel service costs $9.99 per month, inked a joint marketing deal with investor DirecTV to boost XM's subscriber base by leveraging the satellite-TV company's existing customers.

Mr. Clayton said the company has discussed co-marketing agreements with strategic partners, although he would not reveal details.

But in the long term, Sirius and XM expect the bulk of subscribers to come from vehicle-installed radios. Sirius has exclusive partnerships with BMW of North America, DaimlerChrysler and Ford Motor Co., and expects radios to be available in most BMW models in the second half of this year. Details about the DaimlerChrysler vehicle mix and timing will be announced soon.

Nissan joins roster
In addition, Sirius and XM today announced a co-distribution agreement with Nissan North America that will make satellite radios available this fall in Infiniti Q45, G35 and I35 luxury sedans and Nissan Pathfinder and Murano sports-utility vehicles.

The two companies also have shared partnerships with Volkswagen of America and its Audi of America unit, as well as Porsche Cars North America.

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