Karmazin Predicts Retail Parity For Sirius
By Amy Gilroy -- TWICE, 5/25/2005
New York — Sirius Satellite Radio said today it expects to reach a parity with XM Satellite Radio in retail market share this year, and that it hopes to receive approval to offer service in Canada by the summer.
In addition, the company said that its programming agenda is now complete. CEO Mel Karmazin told shareholders at a meeting today, “You can assume from time to time we will tweak [our programming], but there is nothing missing from our lineup.”
Karmazin said Sirius’ retail market share has risen from 33 percent in 2003, to 44 percent in 2004, with a large surge expected in the fourth quarter this year when “12 [million] to 18 million Howard Stern fans will realize that the only way to get him will be to buy a Sirius radio.”
Regarding Canada, Karmazin said the country is likely to allow three service providers including Sirius, XM and a local entity. The size of the market is about 10 percent of the United States, he said, adding that Sirius would set up about nine repeaters in Canada.
Reiterating that Sirius expects to become profitable by 2007, Karmazin said the company has brought its ad sales department in house, partly in anticipation of Howard Stern’s launch in January. Karmazin said Viacom announced shortly after Stern’s departure that he generated about $100 million in ad revenue, although Karmazin felt that figure was low.
Karmazin also continued to point to the future potential of satellite radio in general, noting there are over 200 million vehicles on the road, and 109 million households. He noted that for users without satellite radio, the average person spends 46 percent of his driving time listening to FM radio; 37 percent listening to CD, an iPod or other device; and 12 percent listening to AM radio. But users who purchase satellite radio spend 86 percent of their driving time listening to satellite radio, resulting in a drop in listening to other devices.
Karmazin also confirmed that Sirius will maintain the $12.95 monthly service fee for the near future.
In a separate announcement, XM will air for the first time the Indianapolis 500, on May 29.
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