XM SATELLITE RADIO SUB-SCRIPTIONS PASS 4 MILLION

Saying it has achieved an unprecedented rate of growth for a new technology, XM Satellite Radio said yesterday that it now has over 4 million subscribers and now expects to have 5.5 million by the end of the year and as many as 20 million by 2010.

Commenting on the subscriber growth, which amounts to 33% in five months, XM CEO Hugh Panero said in a statement, "XM has continued to increase its subscriber base at an impressive rate since its launch. Our tremendous subscriber growth is a testament to XM's ever-increasing momentum.”

XM says it has reached the 4 million subscriber mark in less time than cable TV or online subscription services such as AOL. XM rival Sirius Satellite Radio currently has 1.45 million subscribers and hopes to end the year with 2.7 million.

Reaching 4 million subscribers at this point “is reinforcing the fact that people are embracing the technology and they are embracing it moreso than they have a lot of other technologies,” Panero told Reuters in an interview. And while XM hopes to keep customer acquisition costs in a range of $50 to $60, he says the company will offer deals—such as a giving away XM receivers—as needed to keep subscriptions growing.

“You do it prudently, but you have already created a space in your acquisition cost structure to be able to do it. We are building the foundation for a very profitable company going forward,” he said. Both XM and Sirius are currently operating at substantial losses.

Meanwhile, XM is in talks with cell phone companies about offering XM content on their services, as the phone companies look for more and more content to drive their businesses. According to Reuters, Sprint is already working on a cell-phone radio service, while Time Warner’s AOL is working on a wireless version of its Radio@AOL programming.

XM says a combined Satellite and cell-phone radio service could become available as soon as 2006 or 2007.