Thursday, November 16, 2006

New Players in Satellite Radio

Satellite beware! There’s a new satellite radio startup company sneaking up on the industry from behind lately, called Canada Satellite Radio (CSR). CSR is one of two satellite radio providers in Canada that started service over a year ago. CSR is the provider of XM Canada, and the other Canadian provider is Sirius Canada, the direct competitor of XM. CSR’s mission statement is that it is “seeking to become the market leader in providing subscription-based satellite radio entertainment to the Canadian market.” Though it is still too early to tell, this mission could become somewhat of a losing battle real fast. CSR recently reported that it lost $102.7-million in its first fiscal year. Executives at Canada Satellite Radio attribute the $100 million loss to massive startup costs including the launch of a satellite, marketing costs and satellite receiver sales promotions.

What’s notable is that if CSR does eventually gain it’s footing, it could potentially become the third leading satellite provider in the world. Considering XM Canada is provided in partnership through CSR, the Canadian company at least has some solid training wheels to help get it going. Comparatively, XM reported 76,242 total subscribers after its first fiscal quarter in business. CSR has recently reported gaining over 120,000 subscribers within its first year. Considering the satellite radio market is slowing down, as providers try to scrape up every last subscriber they can, CSR isn’t really doing that poor of a job (subscription wise).

I would just like to point out that, regardless of the financials it’s nice to start seeing some diversity within the satellite world. Granted, there are extreme startup costs, as CSR has shown, only two companies (XM and Sirius) orchestrate the satellite radio world right now. Increased competition in general, will mean slower-rising prices, and better quality service. It feels as if currently, the world is being taken advantage of by only having two major satellite radio companies. WorldSpace, a startup “international” satellite radio company in the eastern part of the world has also entered the industry, but shows little promise as it continues to lose around $30 million each quarter.

Most businesses aren’t as risky as satellite radio. For instance, typical businesses aren’t required to launch multi-million dollar satellites into orbit just to get started. However, money is made where the risk is high, which makes the entire satellite radio concept such a big gamble. In fact, so far neither XM nor Sirius has broken even after being in operation for about five years now. This only shows what’s in store for CSR down the road, so I hope they’re prepared.

As for me, I think I’ll stick to opening up a small pizza shop.


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