Monday, March 28, 2005

For Dale Amelunke, buying his new satellite radio last Christmas was about one thing -- avoiding commercials.

"I hate having to listen to them," said the 39-year-old Pocahontas resident. "I like just turning to the radio and not having to worry about what people have on sale."

Apparently a growing number of people agree, with more and more listeners tuning out commercial radio in favor of satellite radio and its commercial-free format, large number of channels and deep playlists.

"I listen to the comedy channels," Amelunke said. "But it has anything you can think of -- country, news, talk radio, sports, rock 'n' roll, top 40. You name it, it's there."

New satellite radio subscriber Jeff Glenn, who also got the system for Christmas, agrees. Glenn travels a lot as district manager for U.S. Sen. Jim Talent.

"We cover 22 counties, and a big chunk of that is in Mark Twain National Forest," he said. "With regular radio, you don't pick up much. Sometimes you can hit the scan button and it never stops."

Not so with his XM satellite radio, where he can pick up the channels no matter where he's traveling because the signal is broadcast from a satellite in orbit at 22,000 miles.

"You never lose the station," he said. "Theoretically, I could drive from here to Memphis and pick up a Cardinals game or a Yankees game, or if you're a Cubs fan, God help you, you could even listen to that."

While there is an increasing number of people who agree with Glenn and Amelunke, the two satellite radio broadcasters XM and Sirius won't put traditional radio out of business anytime soon -- 94 percent of Americans still tune in to broadcast radio at least once a week.

Stationary targets

But the two companies have doubled their subscribers in the past year, to nearly 5 million. XM last reported a subscriber base of 3.2 million people, while Sirius last reported it had about 1.1 million subscribers.

"I think it's very much a threat to commercial radio," said Dr. Bruce Mims, a mass communication professor at Southeast Missouri State University, who teaches radio courses and is faculty adviser for the student radio station, KDMC.

Mims said it may not be a serious threat now. But it's going to be.

"Commercial radio has been criticized for its sameness for many years, even before satellite radio was even launched," Mims said. "A lot of people are connecting with this very eclectic kind of programming on both of these satellite radio services."

Mims said that commercial radio has its hands full keeping up with Internet radio, satellite radio and its newest competitor -- iPod broadcasting. Not to mention people listening to more and more music on their computers.

"If all you're going to be is a music jukebox, listeners have got way too many choices," he said. "I've always felt like, if you don't do something local and exclusive then people don't have any reason to tune you in."

That's something that satellite radio buyers seem to have figured out.

"It's hard to keep them in stock," said Trent Gray, a mobile electronics specialist with Stereo One in Cape Girardeau. "People who travel a lot like them. People also like that if you like a certain type of music, you can listen to it from here to California and stay on the same station."

Gray said prices range from $149 to $350 for the system, depending on accessories. Stereo One sells both XM and Sirius systems. He said the Sirius subscription is $12.99 a month and XM is $9.99 a month.

People pick which system they want depending upon which options they like better, Gray said.

"XM has baseball and Sirius is football," he said. "XM has the NASCAR station, so some people lean that way."

Some customers complain that reception fades in tunnels in the drive-through of fast-food restaurants. But Gray said he doesn't hear that too often.

"We've been selling them for a couple of years and I've only had one or two complaints about that," he said.

Regan Swan with JCS/Tel-Link, which contracts to sell XM Radios, said that he sells "quite a few" of the systems. But some people are still intimidated by the price, he said.

"A lot of people want them, not a lot of people want to pay for them," he said. "Some people think $350 is out of line, but I don't think so. This one comes with every possible scenario."

Swan has one in his vehicle and he loves it.

"I like that I don't have to listen to the DJs," he said. "The radio stations play the same thing every day, the same song every hour. You can only listen to Tim McGraw so many times."

Both XM and Sirius made splashes last week with announcements with auto manufacturers.

Last Wednesday, Hyundai Motor Co. said it would make equipment from XM Satellite Radio Holdings Inc. a standard feature in all the South Korean automaker's models. The same day, XM competitor Sirius Satellite Radio Inc. also announced deals to make its equipment available as an option on models from Land Rover and Jaguar, both owned by Ford Motor Co.

The XM-Hyundai deal marks the first time a major auto manufacturer has agreed to offer satellite radio right along with automatic windows and power steering.

"Eventually it will be on every model," said Tom Frey, general manager of Weiser Hyundai in Cape Girardeau. "By 2007, it will be on every model we have."

For now, Frey said, they plan to launch the new Sonata XG this fall, in which XM will be standard. Frey said the customer will get three months free service and then they can pay for the satellite radio service if they choose.

The moves are being made to expand the customer base. Both XM and Sirius have each shelled out millions on programming contracts with the likes of shock jock Howard Stern, NASCAR and Major League Baseball.

Experts have held to the view that each satellite radio provider needs about 10 million subscribers to break even. XM said the deal with Hyundai -- which is seen having a domino effect on other auto makers -- means XM radios will be in more than 500,000 Hyundai vehicles by 2007.

Investors liked what they heard last week about the XM agreement with Hyundai and Sirius' agreement with Land Rover and Jaguar. While both stocks subsequently rose on the Nasdaq exchange, both have fallen overall more than 25 percent since a peak in December. Both companies also recorded losses last year.

Still, the companies hope that the moves will switch that around. A new study is promising, saying that by the year 2010, XM and Sirius could combine for 35 million customers.


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