- The Washington Times - Tuesday, April 2, 2002

XM Satellite Radio Inc. more than doubled its subscribers during the first quarter, the company said yesterday.
Data released by XM, based in the District, indicated consumers were adopting the service faster than the company expected.
XM added about 48,000 subscribers in the first quarter, bringing to 76,000 the number of people paying $9.99 a month to receive the satellite-radio signal. That exceeded XM's forecast by 6,000 subscribers.
"We were hopeful we could exceed 70,000 [subscribers], and we did. Between word of mouth and an effective ad campaign, we are starting to see more people join XM," company spokesman Chancellor Patterson said.
XM, which spent $99.8 million on sales and marketing last year, began beaming radio signals from a pair of satellites to radio receivers nationwide Nov. 12, and it ended the year with about 28,000 subscribers.
The unexpected boost comes at a good time for XM, which is looking for capital as well as customers. XM had a net loss last year of $284.4 million on revenue of $533,000. The company must raise $45 million to $60 million by the end of the year, according to documents filed with the Securities and Exchange Commission.
"Raising capital, given the right execution, should be realistic," said Vijay Jayant, satellite analyst at investment banker Morgan Stanley Dean Witter.
XM maintained its earlier prediction yesterday that it would have 350,000 subscribers by the end of the year, though it could update the figure after reporting first-quarter earnings later this month.
"I still think [350,000] is a little aggressive, but there has been a lot of pent-up demand for the service," said Ryan Jones, a media and entertainment analyst at the Yankee Group, a Boston research firm.
Mr. Jones predicts the company will have 200,000 subscribers by the end of the year.
"You just need time before people accept a new product," he said.
J. Armand Musey, satellite analyst at investment banker Salomon Smith Barney, predicts XM will end the year with 378,000 subscribers. That is largely because of XM's agreements with a raft of automakers to include its radios as optional equipment on new vehicles, he wrote in a research report yesterday.
Volkswagen of America Inc., Audi of America and Nissan North America are among the latest automobile companies to announce agreements with XM. Volkswagen and Audi each announced last week they signed nonexclusive agreements with XM and Sirius Satellite Radio, a New York firm and XM's only direct competitor, to offer the radios in 2003 model year vehicles.
Volkswagen and Audi sold a combined 423,000 automobiles in North America last year.
Nissan also will make the service available in some models in the 2003 model year.
XM has an exclusive agreement with General Motors Corp. to include its radios in GM vehicles over the next 12 years. The agreement began last year.
XM's subscriber numbers could benefit from a late entry to the satellite-radio market by Sirius, which has said it will begin offering service nationally by July 1.
"We are concentrating on executing our business plan. We don't really worry about what others are doing," Mr. Patterson said.
The Federal Communications Commission hasn't resolved an ongoing dispute between XM and Sirius and wireless-phone companies that want to limit their use of technology to boost the strength of satellite signals.
Shares of XM fell 67 cents, or 4.8 percent, closing at $13.10 a share on the Nasdaq Stock Market yesterday.
The company has 448 employees.

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