Thursday, May 31, 2007

Auto Contracts To Drive Satellite Radio

Automotive contracts seen driving satellite radio
Wed May 30, 2007 2:38 PM ET, By Sue Zeidler, (Reuters)

Whether the two largest satellite radio companies merge or not, the future of the industry is riding on automotive contracts at a time when competition for in-car entertainment is increasing.
Sirius Satellite Radio Inc.'s bid to buy XM Satellite Radio Holdings Inc. for $4 billion would help the two companies cut losses, compete more effectively and turn profits faster, the companies have said. But they have also stipulated they don't need the deal to survive since they already have contracts in place to install millions of radios in new cars in coming years.
To date, neither satellite radio provider has yet made a profit. The companies have borrowed heavily to launch their businesses and establish costly contracts with celebrity personalities such as Oprah Winfrey and Martha Stewart, and sports franchises like Major League Baseball.
On a stand-alone basis, analysts project that Sirius will not post a profit until 2010 and XM not until 2011, according to average forecasts from Reuters Estimates....read more: here