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Old 01-30-2005, 12:26 PM   #1
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Default Satellite radio gaining

By Bruce Spence
Record Staff Writer
Published Sunday, January 30, 2005

In the span of a year, retailers have seen satellite radio move from a "how does that work?" electronics product to one that's growing into more than a niche market that's here to stay.

Retailers report that sales have been steadily increasing, so much so that Circuit City, a national electronics retailer with a store in Stockton, has had managers put up satellite-radio promotional displays and products throughout each store, not just in the car-stereo section.

That's a result of a boom in satellite-radio equipment that now allows subscribers to tap into dozens of channels of music, sports, news talk/
entertainment and weather -- not just in their vehicles, but also for the home stereo, the boom box and the shirt pocket.

"It's a music or entertainment solution for everything now," said Circuit City corporate spokesman Steve Mullen. "It's moved past just being for the car."

Over the holiday season, satellite-radio equipment was such a hot item that there were occasional shortages, he said.

"It's definitely something that people are becoming aware of and thinking it's a good thing," he said. "More and more people are looking to this as an alternative to ground-based radio."

Tom Land, manager of Audio Express, 1014 W. Hammer Lane, said sales for satellite-radio gear have increased, because consumers have more choice in equipment.

Hooking up satellite radio doesn't require replacing an existing vehicle radio with a satellite-receptive radio, although that can be done for costs starting at about $250 to $300, he said.

As little as $150 will buy the three necessary pieces of hardware for converting a traditional car stereo system: a satellite-radio decoder box -- the satellite-radio equivalent of a cable- or satellite-TV cable box -- a special antenna and an FM modulator that sends the satellite programming into the car radio on a frequency not being tapped by regional broadcast radio stations, Land said.

A single plug-and-play unit also can be snapped into a docking unit for a vehicle, a home stereo or boom box, he said.

"A lot of people have been buying them the last couple of months," he said. "The word is getting out, and people are tired of the commercials (on standard broadcast radio)."

The consumer choices have burgeoned. Automakers are starting to offer satellite radio options on some models. A portable boom-box system can be bought for less than $100, a plug-and-play dock for a home or vehicle stereo for less than $50, a decoder for less than $70. ::: Advertisement :::

Nationally, sales mushroomed last year by nearly 31Ž2 times from 2003 as a variety of new satellite-radio products hit the market, said Steve Koenig, senior manager of industry analysis for the Consumer Electronics Association, based in Arlington, Va.

From January through November last year, 3.3 million satellite-radio units were sold, he said. (December figures aren't yet available.) That compares with 960,000 units sold in the first 11 months of 2003.

"2004 has definitely been a breakout year for satellite radio, and I expect this market to continue growing," he said.

The new technology choices aren't confusing consumers but instead are helping fuel the market, because consumers have more choices, he said.

Plus, the satellite radio market is maturing rapidly, and there are no longer concerns about whether the technology -- and the providers -- will survive, he said.

There have been media reports of merger talks between the two satellite-radio providers, Sirius and XM Radio, as the companies compete for subscribers while trying to bolster programming. But both companies, which have a combined monthly subscribership of about 4.5 million, have demonstrated they're here to stay, Koenig said.

Among retailers, satellite radio has emerged as hot market sector, he said.

"This is a category that has been a bright spot for everyone from the big-box retailers, like Circuit City and Best Buy, to the local car audio installer shops," he said.

There are no longer concerns about the long-term viability of either satellite-radio company and no prospects of another competitor entering that market, said Jimmy Schaeffler, senior multichannel analyst for The Carmel Group, a media research company that focuses on the media, computer and telecommunications industries.

There's not enough satellite-signal spectrum for a third competitor, he said, and it's also simply too expensive to build up such a satellite radio system.

He projects that total subscribership for both companies will hit 10 million this year.

"It's really what they have to do to keep moving forward at a solid clip," Schaeffler said.

Subscribers have been pretty happy, he said, and reliability of products and signals has been mostly solid. New programming, such as NFL games, has been attracting new customers, he said, as will future additions, such as Major League Baseball broadcasts.

Jesus Ambriz, a finance manager at Big Valley Ford in Stockton, has been an XM Radio subscriber since last spring. Not only do he and wife Jessica like the service for the variety of music channels, their kids enjoy it for the Disney songs they can get on the road.

"You hear the music you want to hear," he said, adding that, when the family is traveling together, kids get first pick.

"I like the sports channels, like ESPN Radio," he said. "That's really good."


* To reach reporter Bruce Spence, phone (209) 943-8581 or e-mail

It's a good value, he said.

Satellite radio
Here's a look at the basic music, sports and talk channel offerings from the two satellite radio companies:

* Sirius: Has 120 channels of radio, including 65 channels of commercial-free music, 22 channels of talk/entertainment and eight channels of sports, including NFL games and college sports. $12.95 per month. At the end of 2004, more than 1.1 million subscribers,

* XM Radio: Has 130 channels of radio, including 68 commercial-free music channels, 30 channels of talk/entertainment and 15 channels of sports, including NASCAR racing and college sports. $9.99 per month. XM has about 3.2 million subscribers
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