XM SATELLITE RADIO TO ROLL OUT NATIONALLY IN NOV.

Pres.-CEO Hugh Panero said announcement on XM’s commercial availability marked “a watershed event for radio.” Given “historic” announcement, he said, it was fitting that news conference was held at Museum of TV & Radio. He said introduction of satellite DARS and specifically commercial rollout of XM “will change radio the way cable and DBS changed television.”

Debut activities will be supported by $100 million ad and promotional blitz that will include $45 million in crucial 4th quarter, Panero said. Keystone of national ad campaign will be 60-sec. commercial to be shown in 300 movie theaters for one month starting Aug. 10. Commercial will be repeated for 2nd one-month showing in Oct. Emphasizing commercial’s wide reach, Panero said it would be shown on 19,000 screens nationally in each one-month period. By comparison, he said, hit movie Jurassic Park III was available on only 3,400 screens in its debut weekend. Seven derivative 30-sec. spots targeted to enthusiasts of various music genres will appear on broadcast and cable TV during ramp-up period. Spots were created by TBWA/Chiat/Day ad agency and based on XM corporate theme, “Radio to the power of X.” B.B. King, David Bowie and Snoop Dogg are among artists featured in commercials.

Panero estimated that XM receivers would be available in 5,000 storefronts when national rollout reached peak in Nov. and built momentum toward holiday selling season. He estimated 50,000-60,000 XM receivers would be sold by year-end, which he said would represent high end of range of analysts’ projections of 25,000-75,000. Vast majority will be aftermarket radios from suppliers such as Alpine, Pioneer, Sony. Panero said GM, which is 12% owner of XM, plans to install unspecified quantities of OEM receivers in Cadillacs starting this year, with more car models to be added in 2002. He said XM’s receiver partners had collective capacity to produce 50,000 receivers monthly and could ramp up quickly to 80,000 per month if demand warranted.

Lee Abrams, chief programming officer, said service would feature 71 music channels, 30 of which would be commercial-free. Abrams, veteran of early days of FM, said programming would break mold of traditional radio with individual channels promoting particular “point of view, without compromise.” Remaining channels encompass news, sports, weather and comedy programming, with at least 2 targeted for children. Company used news conference to announce its latest programming agreements with E! Entertainment Network, Fox News, CNN Headline News.

Panero said XM revenues at start would be 90% generated from subscriptions, rest from advertising. He said that within 5 years, ratio could evolve to 60-40 in favor of subscriptions.

Responding to questioner, he said purpose of rolling out in steps was to gain experience in individual markets before “we flip the switch” and go national. He said company also wanted to build momentum toward Christmas when consumer electronics industry does huge portion of its annual business. He said gradual ramp-up also would give consumers and retailers better ability to grow accustomed to new product and service such as XM. He acknowledged that company’s buildout of terrestrial repeaters also might be factor. He said network ultimately would number about 1,200 repeaters nationally, with about 400-500 now completed and 600 in “different phases” of installation. However, he expressed confidence that all would be completed by national introduction in Nov.

XM rival Sirius Satellite Radio hasn’t yet specified actual launch date and has downscaled projected 4th-quarter selling activities to point of estimating that fewer than 20,000 receivers would be sold by year-end. However, Sirius Senior Vp Doug Wilsterman, reacting to XM announcement, said his company’s introduction will be “a nationwide coast-to-coast service,” not “a city-by-city rollout” as is being mounted by XM. “We think it’s important to deliver on the fundamental promise of satellite radio,” Wilsterman said, including “uninterrupted” coast-to-coast signal and digital-quality commercial-free music. He said all 50 of Sirius’ music channels would be commercial-free in comparison with fewer than half of XM’s. Wilsterman said company also continued to believe Sirius $12.95 monthly subscription fee wouldn’t put it at competitive disadvantage to XM’s $9.99 because research showed $3 differential had little “material” impact on consumer decision to buy.