WASHINGTON — Two companies have shelled out $173 million for the rights to broadcast CD-quality digital radio signals via satellite to every corner of the continental United States.
Satellite CD Radio Inc. of Washington bid $83 million and American Mobile Radio Corp. of Reston,Va., laid out $89.9 million for the rights to the digital radio satellite slot. With silver dollar-sized antennas, digital radios will be able to pick up dozens of channels of digital radio offering a range of services from music to data.
Both companies must now invest hundreds of millions of dollars in a satellite and programming to build their business. Digital radios will not be available for at least two years and will be significantly more expensive than regular radios. According to one estimate, a digital car radio will cost at least $250 more than a conventional radio, according to Satellite CD Radio CEO David Margolese. In addition, both companies expect to charge subscribers between $5 to $10 a month for the digital service.
While satellite radio’s future is still uncertain, Margolese had a lot to smile about Wednesday, when his company’s stock rose 77% to $13.12.
Wednesday’s auction is a defeat for broadcasters who have spent the last decade trying to derail the potential competition from satellite-delivered radio.
“We remain concerned that this new service threatens localism, the system on which the U.S. broadcasting system was built,” said National Assn. of Broadcasting spokesman Dennis Wharton.