Christmas surge gives boost to satellite radio

Satellite radio subscribers in the US are expected to reach more than 15m this year, up from little more than 9m in 2005, according to projections from XM Satellite Radio and Sirius Satellite Radio.

The forecast follows strong sales of satellite radio services during the year-end holiday season. XM, which is the largest satellite radio company in the US, said it sold more radios as Christmas gifts than ever before, and reached 6m subscribers last year, an 84 per cent increase from 2004.

Sirius, its smaller competitor, reached 3.3m subscribers by the end of the year, more than anticipated and a 2.2m increase on the year. In recent months there has been growth in interest in its services ahead of the launch of shock jock Howard Stern’s shows next week.

“The momentum provided by Howard Stern’s upcoming debut on Sirius this month, and increasing availability of the hot S50 portable in the retail channel, suggests continued strength in the first quarter,” said Craig Moffett, analyst at Sanford Bernstein.

Sirius said it expected to have 6m subscribers by the end of the year. “Satellite radio is very hot and is continuing on pace to be one of the fastest growing products in consumer electronics history,” said Mel Karmazin, chief executive of Sirius.

Satellite radio’s growth in part reflects its focus on providing advertising-free music content, a popular feature with listeners.

Relative to the total audience for traditional radio the proportion of satellite listeners is quite low. However, both XM and Sirius have deals with car manufacturers, which install their services in new cars.

Satellite services are trying to push into other markets, with XM this week launching new handheld devices by Pioneer and Samsung, which combine satellite radios with MP3 music players.

The increased focus on non-music content, such as the signing of Mr Stern, is an effort to develop new advertising revenue streams. Mr Stern, left Viacom’s
Infinity Broadcasting last year. Sirius will pay him $500m over five years and on Thursday also handed over 34.4m shares worth about $220m.