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Karmazin Hints Of Sirius XM 2.0 Features

9/23/2010 09:00:00 AM Eastern

NEWPORT BEACH, CALIF. — Sirius XM CEO Mel
Karmazin provided a few hints about the first Sirius XM
2.0 radios during an investor conference, here, hosted
by Bank of America.

Karmazin said the new radios will be available in the
aftermarket in the fourth quarter of next year, offering
subscribers “more content and more functionality” to
“provide more stickiness.”

Although he didn’t divulge details, Karmazin likened
the launch of 2.0 to cable TV’s evolution from offering
basic service to on-demand content and pause and skip
capabilities.

From automakers, “the reaction is great,” he continued,
but “it’s a question of how quickly they can get it
out.” It usually takes three years for a new technology
to become a factory-installed technology, he explained.

Karmazin also said that the rising number of vehicles
equipped at the factory with iPod/iPhone connections
isn’t cutting into satellite-radio subscriptions.

Referring to competition from iPods and other portable
devices in the car, Karmazin said there “has not been
any impact” on the conversion rate from trial to paid subscriptions
in vehicles with both factory-installed satellite
radio and factory-installed iPod/MP3 player connections
compared to new cars with only satellite radio.

He also pointed out that people who have satellite radio
in the car spend far more time listening to satellite radio
than to other content source when they’re on the move.
Karmazin pointed to an Arbitron study of consumers, conducted
in October and November of 2009. It found subscribers
spend 71 percent of their time listening to satellite
radio and only 17 percent to terrestrial radio, 7 percent to
CDs, and 5 percent to such mobile devices as cellphones.

In other comments, Karmazin said the household penetration
rate of satellite radio is about 15 percent of 110
million homes, indicating plenty of potential for growth.
He noted that 85 percent of gross adds come from subscriptions
in new vehicles.

According to Karmazin, 60 percent of new cars sold in
the U.S. are equipped with satellite radio. Opportunities
to reactivate the subscriptions of factory radios in used
cars will represent a “tremendous opportunity” in about
five years because of the growing penetration of factoryinstalled
satellite radio.

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