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Satellite Radio Hitting Airwaves

September 25, 2001

WASHINGTON (AP) _ Satellite radio hits the nation’s airwaves Tuesday, and the company providing the new subscription service is betting that the wide range of programming will be the biggest advance in radio since the onset of the FM band.

XM Satellite Radio will offer 100 channels of varied music and talk, with limited advertising on some and no commercials on more than 30 channels.

The company has 1.5 million songs in a digital library to aim at markets ranging from opera to Latin romance. It will cost $9.99 a month.

``We love radio. It’s a great medium, but it hasn’t seen any sort of technological innovation in 40 years,″ said Chance Patterson, XM vice president of corporate affairs.

There is a reggae channel called The Joint, a hard rock station called Bone Yard and 24 hours of disco on Chrome. Teens can discuss their problems on Babble On, while adults can tune into comedy, sports or news from a dozen sources, including The Associated Press.

Initially, XM will broadcast from its Washington studios to San Diego and Dallas. The company plans to expand nationwide in the coming months, as a competitor, New York-based Sirius Satellite Radio plans to come on line later this year.

XM and Sirius are betting listeners are so dissatisfied with the repetitive commercial format of mainstream radio stations that they will pay for digital music and talk they want.

The companies have ambitious goals of signing up more than 4 million subscribers each in the next four years to break even. Sirius will charge $12.95 monthly and offer more commercial-free programming.

``There are only two companies here and there are a lot of cars and trucks on the road,″ said Sirius spokeswoman Mindy Kramer. ``We think it’s going to be reminiscent of what happened when your neighbor down the street got cable and all of the sudden your eight or 10 channels weren’t good enough because there is so much more out there.″

Some analysts were doubtful the companies could get people to pay for radio. They have become even more skeptical since the Sept. 11 terrorist attacks drove down the markets.

XM originally planned to launch its service on Sept. 12, but pushed back the start because of the attacks.

``Given the recent tragedies at the World Trade Center and the prospect of war, it’s a tough economic environment to be trying to launch a new product,″ said Morgan Stanley Dean Witter analyst Vijay Jayant.

Jayant said success depends on how committed the automakers are to installing the satellite-receiving radios in their vehicles.

Programming is broadcast to satellites, which sends it to a radio receiver. The signal can get blocked by tall buildings, so ground transmitters will repeat the signal in urban areas. Some receivers can be used in both autos and in homes.

Mobile phone companies have opposed the ground transmitters because they think they could interfere with cell phone service. But last week, the Federal Communications Commission gave XM and Sirius temporary permission to use the transmitters until it develops rules for their use.

General Motors Corp., which has invested $120 million in XM, plans to offer the radios as a factory-installed option in some 2002 Cadillacs and in 20 models next year. The subscription can be included in the car’s financing.

Ford Motor Co. and DaimlerChrysler Corp. have partnered with Sirius and plan to offer the radios in 2003. Other automakers, including BMW and Porsche, are planning to install the radios at the factory.

Meanwhile, subscribers will have to retrofit their cars with $300 radios that can decode the satellite signal. Both companies will advertise heavily with top-name celebrities, although XM is removing scenes from one commercial that show Snoop Dogg and various items falling from the sky in New York.


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