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XM Satellite Radio (NASDAQ: XMSR (http://quotes.nasdaq.com/asp/SummaryQuote.asp?symbol=XMSR&selected=XMSR)) is a satellite radio service in the United States based in Washington, DC and controlled by News Corporation's DirecTV, General Motors, American Honda, Hughes Electronics, and several private investment groups.
XM provides pay-for-service radio, with commercial-free music channels, analogous to premium cable television. Their service includes 68 different music channels, 33 news, sports, talk and entertainment channels, two premium channels, and 21 regional traffic and weather channels.
As of December 2004, XM is the leader in subscriptions in its competition with Sirius Satellite Radio for the U.S. satellite radio market. XM was founded in 1992 as American Mobile Radio Corporation.
Services
XM-capable receivers cost $50200. Monthly service fees are $10 for the first receiver, and $7 each for up to four additional receivers on the same account. Premium service fees are $2 for premium talk programming featuring talk show hosts Opie and Anthony and $3 for adult programming. XM Satellite Radio makes the majority of its stations as well as a few others that are not available over the air available on the Internet. the Internet-only subscription fee is $8/month; those with an over-the-air account pay $4 monthly.
XM also provides data services such as weather information for pilots and weather spotters.
Timeline
- In October 1997 the company obtained one of only two satellite digital audio radio service licenses offered by the Federal Communications Commission.
- In June 1999, Clear Channel Communications, DirecTV, General Motors, and a private investment group invested $250 million in XM Radio convertible debt. Both Clear Channel and DIRECTV agreed to develop services for XM.
- In July 2000, American Honda joins several private investors in a $235 million preferred stock investment in the company.
- In 2001, XM service was launched, first in San Diego and Dallas/Fort Worth and then nationwide.
- In December 2002, revenues have been lower than expected, and the company obtains $200 million in news funds and $250 million in payment deferral from General Motors.
- As of July 2003 the company has nearly 700,000 subscribers.
- On August 11, 2004, XM's subscriber base broke the 2.5 million mark. The company has partnered with Acura, Audi, General Motors, Honda, Isuzu, Nissan, Toyota, Volkswagen, and SAAB to offer in-dash XM receivers on an OEM basis.
- Starting in 2005, XM will have exclusive satellite radio broadcast rights to all Major League Baseball games.
- On December 30, 2004, XM announced that it had 3.1 million subscribers.
Technology
XM provides digital programming directly from two satellites (nicknamed "Rock" and "Roll") in geostationary orbit above the equator, and a network of ground-based repeaters. The combination of two satellites and a ground-based repeater network is designed to provide gap-free coverage anywhere within the continental U.S. Unfortunately, both satellites are suffering from a generic design fault on the Boeing 702 series of satellites, which means that their lifetimes will be shortened to approximately six years instead of the design goal of 15 years). A third satellite will need to be launched in 2004 to ensure continuation of service, and procurement of a fourth will need to be advanced by several years. It is believed that XM was issued a credit by Boeing on the new spacecraft.
The XM signal uses 12.5 MHz of the S band: 2332.5 to 2345.0 MHz. XM has agreed to provide 128 kilobits per second of its bandwidth to OnStar Corporation for use with XM-enabled GM vehicles, regardless of whether their owners are XM subscribers. American Honda also retains the right to some of the company's bandwidth.
They transmit coded traffic information directly to navigation systems using TMC technology.
Audio channels on XM are digitally compressed using the aacPlus codec from Coding Technologies for most channels, and the AMBE codec from Digital Voice Systems for some voice channels.
Controlling interest
The company's May 2004 proxy statement (http://www.sec.gov/Archives/edgar/data/1091530/000119312504065990/ddef14a.htm) notes that four directors are subject to director designation agreements with GM, American Honda, the chairman, and the CEO. Four additional directors are investors, and two are not affiliated with any significant stockholders.
As of that statement, GM owned 8.6% of the Class A common stock (a voting percentage of less than 1%) and Honda owned 13% (with a voting percentage of 3.6%).
Until they unaminously agree otherwise, control of the company remains with the preferred shareholder and noteholders of the company, including Hughes Electronics, GM, Honda, and several private investment groups.
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