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Old 03-08-2006, 08:10 PM   #1
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Default Clear Channel Makes XM Air Ads on Their Music Stations

The Wall Street Journal reported the following:

XM Satellite Radio Holdings Inc. soon will no longer be able to brag that its music programming is commercial free.

Within the next few weeks, four music stations on XM that are programmed by Clear Channel Communications Inc. will start carrying advertising, under terms of a recently negotiated settlement between Clear Channel and XM.

The dispute arose in early 2004, when XM decided to make its music channels commercial free. Previously, XM had run small amounts of advertising. Clear Channel, which provides XM with talk programming as well as music programming, wanted to stick with the commercials. The companies entered arbitration, with a panel ultimately deciding in favor of Clear Channel regarding its right to provide commercials on Clear Channel-programmed stations.

The decision comes as a blow to XM, which for two years has positioned its commercial-free music as an alternative to the ad-laden programming on commercial radio. By contrast, Clear Channel, which has been fighting off competition not just from satellite but other media such as iPods and many Internet radio stations, now has one less commercial-free rival to worry about.

"We are pleased overall with the agreement and the programming Clear Channel provides us with," said XM Chairman Gary Parsons. Clear Channel didn't respond to requests for comment.

The commercials won't start immediately, giving XM a chance to ramp up more music channels so it can still claim to be the leader in commercial-free music on satellite. XM now has 69 music stations, and plans to add four more, so it will still have 69 commercial-free music stations. Rival Sirius Satellite Radio Inc. has 68 music channels, which are commercial free.

XM has just six million listeners, compared with hundreds of millions for traditional radio, but is expanding fast. Analysts believe the company, and its partners, could one day generate significant revenue from advertising.

Clear Channel programs a current-hits station; a second hits station that draws songs from the past few years; a light-music station; and a country station for XM. It was an early investor in the company, paying $75 million in 1999 for convertible debt that represented a 19% stake. Through dilution and stock sales, that stake is now 3.2%.

XM and its rival Sirius run advertising on their talk stations.
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Old 03-08-2006, 08:12 PM   #2
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Clear Channel Makes XM Air Ads on Their Music Stations
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