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WT: Sports find home on satellite radio


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Sports find home on satellite radio


By Eric Fisher

For all the breathless talk about sports on the Internet, high-definition television and even cell phones, a century-old medium is quietly being embraced.

Almost unnoticed, radio has become a key buzzword among team and league executives, but it's not the traditional AM and FM formats capturing industry attention. Rather, satellite radio is quickly emerging as a potent force for both content distribution and fan development.

The two leading satellite radio companies, District-based XM Radio and New York-based Sirius, have made sports a primary staple of their programming diets. XM features a dedicated NASCAR channel, as well as national programming from ESPN, ESPNews, Fox Sports and the Sporting News.

Sirius counters with two channels of ESPN, as well as live NBA and NHL game action. Its key holding, however, is a seven-year, $220 million deal with the NFL to create a 24-hour NFL channel, as well as air every regular season game with both home and away team broadcasts.

The market currently is quite small for both companies. XM boasts 1.68 million customers, and Sirius about 350,000. But a powerful combination of factors — including the pre-installation of satellite radios in dozens of leading car brands, ever-worsening traffic in most metro areas and the increasing ability to use satellite radio in the home — makes the medium poised for astronomical growth.

XM expects to balloon to 20 million customers, each paying at least $9.99 per month, by 2010. Sirius projects 2 million subscribers by the end of the next year, and like XM, more than 15 million by the end of the decade. Sirius is currently a bit more expensive than XM, with its base package costing $12.95 per month.

"People come to us for a lot of reasons, but the NFL and high-profile sports programming like it is without question a killer [application] for us," said Jeremy Coleman, Sirius vice president of talk and entertainment programming. Coleman formerly was program director of Washington's WJFK-FM. "Anecdotally, we're already finding the effect of our name being connected to the NFL to be rather stunning. I obviously saw the huge difference WJFK had with the Redskins. This is the same thing, only a larger scale."

Not surprisingly, NASCAR and the NFL have raced past their rival leagues in exploiting satellite radio. NASCAR Radio has been on XM for two years, featuring live race coverage, daily news and talk shows, classic races and "The Pit Reporters," which replicates ESPN's popular "The Sports Reporters" in the obvious racing context. Some of XM's largest listener call volume across its more than 120 channels comes from NASCAR Radio.

"We want to be relevant on every medium that matters, and this is one that definitely matters," said Jeffrey Pollack, NASCAR managing director of broadcasting and new media. "NASCAR Radio became an institution for us almost overnight. Our fans are listening to it, obviously. But so are the drivers, the crew chiefs, the mechanics. It's a true destination."

The NFL, meanwhile, has been working with Sirius for only a few months. But if its NFL Network on satellite and digital cable TV is any indication, the radio venture will be noticed quickly. Sirius devoted 12 hours of coverage to the NFL Draft last month, bringing in Phil Simms as lead analyst. The 24-hour NFL radio channel, set to start this summer, will combine original programming, content deriving from individual team markets, and audio simulcasts of the NFL Network.

"This is another important way to serve our out-of-market fan," said Chris Russo, NFL senior vice president of new media and publishing. The NFL says as much as 70 percent of its fans root for a team other than the one closest to their home. "We've obviously made TV a big part of how we connect with our fans. But not everyone can get in front of TV. Radio is still a wonderful medium and a great opportunity for us."

Both companies are posting heavy financial losses; XM to the tune of $584.5 million in 2003, and Sirius $226.2 million. Sirius even flirted with bankruptcy early last year before restructuring its debt. Critics also contend a lack of local programming on both services could be a permanent crutch.

But investor confidence remains strong, not only because of the heightened sports offerings, but low levels of debt and projections to break even next year. Shares of XM have more than doubled in value in the last year, and Sirius more than tripled.

"When you think about all the cars out there, all the boats, all the RVs, it's a huge market. It's a potential market of 350 million units, just in the U.S." said Jim Collins, Sirius vice president. "We only need 2 million of them to break even, XM 3 million or so. This is not a question of if but when."

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