XM SEEKING EXTENSION OF AUTHORITY FOR TERRESTRIAL REPEATERS
Special Temporary Authority (STA) to operate terrestrial repeaters in 60 U.S. markets expired Mon., XM Satellite Radio said in annual 10-K report filed with SEC Tues. XM filed for STA extension March 11 and under FCC rules can continue operating repeaters “pending a final determination of our extension request,” filing said.
Sign up for a free preview to unlock the rest of this article
Communications Daily is required reading for senior executives at top telecom corporations, law firms, lobbying organizations, associations and government agencies (including the FCC). Join them today!
XM’s 10-K said existing funds would be sufficient to support operations into 2002’s 4th quarter. But it estimated additional $40-$65 million financing would be needed through end of 2002 to cover broadcasting operations, sales and marketing expenses, general corporate expenses and “further development” of XM system. Company had 27,733 paid subscribers as of Dec. 31, having introduced service nationally Nov. 12, filing said. It described initial consumer response as “positive” and said adoption rate in first 60 days exceeded that of “any other consumer audio product introduced over the past 20 years.”
Company said management would continue to monitor impact of “progressive degradation problem” in solar array output power of its two 702-class satellites, based on information from supplier Boeing and first disclosed in 10-Q report for 3rd quarter. At present, it said, output power and broadcast signal strength of both satellites “are above minimum acceptable levels” and are expected to stay that way at least through 2005. Company said it believed it had adequate insurance coverage in event of partial or total loss of satellites, filing said. Issue is common to other 702-class birds, it said, and Boeing is “closely watching progression of the problem” by studying data from satellite in orbit 18 months longer than XM’s. It said it therefore was confident it would be able to launch additional satellites before solar power problem might cause broadcast signal strength to fall below acceptable levels. Spare satellite under construction is being modified to address solar array “anomaly,” XM said.
Other disclosures in SEC filing: (1) XM and Sirius Satellite Radio have agreed to negotiate in good faith to provide service to each other’s subscribers “in the event of a catastrophic failure” of either system. However, XM said it would take “several years” to develop truly interoperable radios capable of receiving both services. (2) Company recognized $131,000 of compensation expense in 2001 on Sony warrant exercisable for shares of XM Class A common stock, filing said. Warrant becomes vested when XM signs its millionth customer, and number of shares will be determined by percentage of Sony-branded XM radios sold at vesting date. Filing said if Sony achieved maximum performance target, warrant would be exercisable for 2% of total Class A shares outstanding, with exercise price equaling 105% of fair market value on vesting date.