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XM Radio Takes another Hit
The folks at XM are suffering: The Wall Street Journal reports on the larger second quarter loss announced yesterday, and a cut in the estimate of new subscribers in future quarters. XM lost $232m (including $105m in charges), while revenue grew to $228m. In the same quarter a year ago, the firm lost nearly $150m on $125m in revenue, so this is actually a much larger set of expenses despite increased revenue.
In early 2006, they forecast 9m subscribers by year's end, but now are looking at 7.7 to 8.2m. They have just crossed 7m paying customers. Apparently, some XM radios may work outside of FCC regulations, and the company has had to remove these radio from retailers.
XM and Sirius are relevant to the HD Radio market, because the word has been that satellite was so far ahead of terrestrial digital radio, that HD would be too little, too late, especially with the over one year of delay in seeing multiple, affordable desktop HD Radio receivers hit the consumer channels.
It would appear that perhaps it just costs too darned much to get paying subscribers for a very expensive to operate satellite service. As HD Radio receivers start appearing in quantities of, say, a million on the market, we'll then see whether XM and Sirius can actively compete against free radio at digital quality. It's going to be interesting. With losses of this scale, XM can't operate indefinitely. Their future should be spelled out by the end of the year.
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