- The Washington Times - Friday, November 22, 2002

Its name is XM, and it is in the vanguard of what may be a revolution in radio, especially in motor vehicles.
It is housed in a onetime printing plant, a few miles north of the U.S. Capitol, that has been transformed into a sparkling, state-of-the-art facility that contains no fewer than 80 radio studios.
Their output is beamed to two satellites in stationary orbits over the United States. They are named, appropriately, Rock and Roll. Rock covers the west; Roll takes care of the eastern half of the country. A backup satellite also is in orbit, just in case.
It's called satellite radio, and it means that if you have a receiver in your car, you can tune to a single station and drive all over the continental United States without losing the signal.
But you probably wouldn't want to concentrate on just one spot because XM Radio sends 101 channels of music and talk radio through its satellites to a small but growing number of subscribers.
There are more than 200,000 subscribers so far, but that is expected to ratchet up rapidly in the coming months because of the decision by giant General Motors Corp. to offer XM radios as factory-installed options in 25 of its 2003 car and truck models, including Saturn, Chevrolet, Pontiac, Oldsmobile, Buick, Cadillac, GMC and Saab.
In addition, the radios will be available on the Acura MDX, the Honda Accord and Pilot, all Infiniti models, the Nissan Pathfinder and new Murano, the Isuzu Axiom and Rodeo, as well as some Volkswagen and Audi models yet to be announced.
But you don't have to buy a new car to get XM Radio. The company recently announced the development of a new, portable unit called the Delphi XM SKYFi Radio that, with accessory packages, can be plugged into a car, a home stereo system, and even a boom box.
The basic radio costs $130. Accessory packages for the home and car, including the antenna and wiring, each cost $70, and the boom box unit is $100. All of them will be available in stores in time for Christmas giving.
There's a connection fee that ranges from $9.99 to $14.99, depending on how you sign up. Once connected, the XM satellite radio service costs $9.99 a month, billed to your credit card every three or six months. XM doesn't plan to get into paper billing.
The XM radio selection, mostly commercial free, covers the gamut of audio entertainment from uncut hip-hop to opera, from public affairs to sports talk. It is crafted to satisfy all but the tiniest minority of listeners. The signals are all digital, so the sound rivals that of a CD player or a glitch-free FM station.
Among the more popular offerings are the decades channels, which feature music from the 1940s, 1950s, 1960s, 1970s, 1980s and 1990s.
That's no surprise. Lee Abrams, a veteran radio hand who is XM's chief programming officer, says that the lifelong musical values of most people are formed between the ages of 16 and 20. With the six decades channels, XM has something to appeal to virtually every age group in the country.
Except for 40 channels that are picked up from elsewhere such as Bloomberg News and Business, NASCAR Racing and CNN Headline News, the XM Radio offerings are produced in-house. Each channel has its own staff of disc jockeys and production people, and the script changes daily. They put together 1,500 hours of live programming a week.
For example, one of the channels is called "Unsigned." It's for musical groups that do not have contracts with anyone. They come in and do their gigs in one of XM's performance studios, with the hope that the air time they get will lead to the promised land of a recording contract.
When program producers sit down to put together their scripts for the day, they can select from nearly 2 million musical recordings in XM Radio's database. Computers also keep track of what is played so that XM can send royalty payments to performing arts organizations for distribution to the artists and writers.
According to Mr. Abrams, every channel has a point of view. "We want fans, not listeners," he said.
XM Radio was incorporated as American Mobile Radio Corp. in 1992. It received its license from the Federal Communications Commission in 1997. So far, it has invested $1.8 billion, according to Chancellor Patterson, XM's vice president of corporate affairs. Among the investors have been General Motors and Honda.
Much of the money went into the three Boeing satellites, along with 800 repeater systems in urban areas that maintain and boost the satellite signals. In some cases, the repeaters work so well that the XM car radio signal doesn't get lost even in a tunnel. Part of that also is because of a 4.5-second memory buffer that is built into the XM receiver. XM passed its goal of 200,000 subscribers in September and expects to boost that number to 350,000 by year's end. The business plan calls for 4 million subscribers by the end of 2004 or early 2005, which is when XM expects to break even.
But there is a question of whether the company's cash will stretch. Recently, it laid off 80 of the 475 members of its staff and announced that it was negotiating to defer $200 million in payments to GM and raise an additional $200 million.
Hugh Panero, XM's chief executive, said that the company's long-term future still looked great. "Four years ago," he said, "people were asking, 'Would anyone pay for radio?' And clearly they are. Now we're in the process of getting together the last funding."
Mr. Patterson says the rationale for XM radio is to appeal to what he called the "disenfranchised radio listeners" who cannot find anything to their liking on commercial radio. Originally, he said, the expectation was that XM would appeal mainly to younger listeners. But he said a surprising number of older people also were subscribing. XM is not alone in the business. A competitor is New York-based Sirius, which has affiliations with DaimlerChrysler and Ford Motor Co. Sirius promises commercial-free satellite radio for a monthly fee of $12.99.
A great deal of satellite radio's appeal, of course, is its mobility. People who cover long distances and spend a great deal of time in their cars and trucks are likely to be most susceptible to XM's blandishments.
"We're turning people into car potatoes," Mr. Patterson said.


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