Have You Noticed It's Costly To Run A Bunch Of Satellites? XM Has...

from the ain't-so-easy dept

From the very beginning of satellite radio, I was skeptical of its potential. While I admit I was wrong about the number of people it would appeal to, my bigger issue was with the cost structure of the business. Launching and maintaining satellite is extremely expensive. Just ask anyone who worked on Iridium or Teledesic. Even if you can sign up a lot of users, the capital costs are tremendous. If the costs of getting those subscribers is high, then it's a definite recipe for trouble. So far, Sirius and XM have been able to keep kicking, mainly through a ton of investment money and the promise of future potential profits -- stacked up against continued losses. It looks like a few are finally doing the math on all of this and realizing that the satellite radio business, as much as some people like it, may not be sustainable. XM posted wider than expected losses today, blaming higher than expected customer acquisition fees -- suggesting that, for all the good press, not as many people as expected have been rushing to sign up. Also, one of the company's directors resigned, citing a "crisis on the horizon," which is anything but inspiring.

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  1. identicon
    Kurt, 16 Feb 2006 @ 10:24pm

    don't knock till you try

    Looking thru the comments on your posting...I was skeptical of satellite radio as well. I recently bought a receiver for my car. Yes, I am the target: I sit in traffic 50 minutes each way going from downtown to the suburbs for work. I love music, but i grow tired of my collection (and that's an expensive and time-consuming habit -- adding 10 hrs of freshly discovered, legal music each week).

    Podcasting? Right. Sorry, that was enjoyable for about 13 minutes in 1997.

    There's a reason that folks listen to the pros - they are better. Where else can i get sports, bbc, and 4 varieties of live NPR?

    The detractors of the consumer value proposition of satellite radio should try it before they rag on it. You sound old and GOP, not like early adopters of technology.

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