100 channels, but where are the satellite radio subscribers?
Satellite radio is having severe growing pains as additional financing looks harder than when the two major companies started with some $1 billion each in funding according to this New York Times story (registration required):
"EchoStar launched its satellite television service in 1996 and didn't become profitable until this year," Mr. Stone said. "It's made a lot of money for shareholders, but there was a lot of pain first. The question for satellite radio is, `How long will investors be willing to endure the pain?' "
Mr. Jennings and his colleagues appear willing to wait at least another two years. Sirius's recapitalization plan provides enough cash for it to continue operating through the second quarter of 2004. Yet technical delays, like problems developing the special circuits needed for radios to pick up its signal, have put it far behind analysts' earlier estimates of 150,000 subscribers by the end of this year. The company finally started its national service in July, but it is only expected to have about 30,000 subscribers by Dec. 31. That is about half of what its executives predicted just a month ago.
For its part, XM has already signed up more than 200,000 subscribers and expects to nearly double that by year-end. But it has spent money even faster than Sirius. And without added financing, the company says it has only enough cash to operate into the first quarter of next year. XM's chief executive, Hugh Panero, said his company is in talks "with a number of private and strategic investors to raise additional capital."