SkyForum: Satcasters must fine-tune content

Analyst expects customer base to hit 40 mil by 2010

As the fledgling satellite radio industry races to woo a critical mass of new customers, the next battle will be for rivals to distinguish themselves — from traditional radio and from each other — with content, a panel of the sector’s leading lights said Tuesday.

The panel, convened at the SkyForum confab in Gotham’s Waldorf-Astoria hotel, said the technology used by the two main satcasters, XM and Sirius, is largely indistinguishable on the receiving end. What will set the two apart, they added, is unique programming.

“The consumer doesn’t give a damn where it’s coming from or how it got there, as long as it’s good,” said Sirius topper Joe Clayton, noting that TV watchers pay to get HBO or Showtime, even though they can watch network programming for free.

Clayton’s service has suffered from rollout delays over the past year, and only recently began a limited run in four U.S. cities. But he said Sirius is on track to add service in 18 states this month and 20 next month, and should be available nationwide by July 1.

XM chief Hugh Panero is in a somewhat better position, having rolled out across the U.S. several months ago and already signed up more than 76,000 subscribers. But both execs argued there’s room in the market for any startup that provides an alternative to the increasingly consolidated and homogenous world of terrestrial radio.

“They’re somewhat limited in that they’re basically a mass-market, ad-driven model,” Panero said, noting satcasters can cater to much more specialized tastes. Added Clayton: “We’re competing in an environment that’s still analog and hasn’t changed in 40 years; there’s a lot of opportunity there.”

Moderator James Marsh, an analyst at Robertson Stephens, said his firm expected a customer base of 40 million for satellite radio by 2010. In addition, he cited a CNN poll that found 78% of traditional radio listeners were unhappy with it.

Also represented on the panel were two execs who are trying to bring radio satcasting to markets outside the U.S. WorldSpace topper Noah Samara detailed his efforts to deploy satellite radio and other communications in the developing world, including a project in Kenyan schoolhouses that brings audio curriculum to students via satellite. Samara said the for-profit enterprise could be expanded all over Africa, a market he values at between $200 million and $300 million.

Meanwhile, Bruce Crockett of European satellite radio firm Global Radio said his company has the unlikely advantage of being considerably behind the Americans technologically, which allows him to learn from their mistakes for his service.

Crockett added that Europe offers the opportunity to apply specialized “zone beams” of language- and ethnicity-specific programs, which can help set the service apart from terrestrial services. On the downside, Europeans already have access to both digital and commercial-free radio services, thanks in part to government-subsidized efforts.

The stock prices of U.S. satellite radio providers on Wall Street have fluctuated wildly over the past year, as investors struggled to get a better handle on the companies’ growth prospects. XM shares edged up a penny to $11.51 Tuesday, while Sirius gained 5.7% to $4.49. Over the past year, XM’s shares have traded between $4.02 and a high of $20.68, while Sirius shares have traded slightly lower, with a $2.20 low and a $19.15 high.