Trading at $14.76 as of June 13, 2001
"Are we there yet?"
Bring back memories, Dad? Growing up, trekking across the roads that girdle the globe, I know I was an impatient tot. I think a lot of that boredom stemmed from the fact that despite your 8-track collection of Santana, Abba, and Frankie Valli, there was never really anything good on the radio. Or, if we managed to tune into a cool baseball game broadcast or that rare great station, we'd be in and out of its range faster than you can say "What speed limit sign, officer?"
The solution was obvious but not available back then. Now it's just months away. You see, last month, XM Satellite Radio
But you've never even heard of XM, right? Exactly. Neither has most of the world, much less the investing community. That's going to change once the service rolls out by summer's end. XM isn't going to face some gradual introduction either. It's a marketing machete, making a swift impact. New General Motors
XM isn't alone. Sirius Satellite Radio
Not to belittle Sirius, but XM has also emerged as the first-mover. Analysts are now expecting XM to land its first million subscribers by next year. That's a healthy start, but with plenty of room to grow when one considers that DIRECTV has 9.8 million subscribers for its mini-dish service -- and the televised world has hundreds of millions more paying up for cable or other satellite programming content. No one's going to hook a cable to their car radio!
So if more than two-thirds of the country has been converted from free TV to paying viewers, is radio next? Why not? The service is priced reasonably. At $9.95 a month (or $12.95 for Sirius -- which one would imagine gives XM room to bump up its own rate), it's a bargain in the entertainment arena. That's cheaper than a new music CD! It's also a third less than the average cable bill. Am I the only one who spends far more time driving and listening to the radio than in front of the TV? For this country's sake, I hope not.
XM is going to have an interesting future. The broadcasting and cable television industry is trading at 7.6 times trailing sales. Right now, XM is nearly valued at that mark based on what its first million subscribers will pay for service alone. That's without tacking on advertising revenue or direct marketing possibilities. That's without considering the next million subscribers -- or the million after that.
And they'll keep coming, you know. It's going to be the one major viral feel-good revolution. Bob carpools with Sally, who has XM Radio. Bob subscribes. Trucker unions fighting for XM Radio subsidies. A heated talk by the office water cooler over an XM Radio talk show topic sends more colleagues scrambling for service. You can picture it, can't you? You can see the future, can't you?
Are we there yet?
You know it, Dad. I love you a lot.
Rick Aristotle Munarriz thinks that the heart of rock and roll is still beating -- in Cleveland. He does own shares of XM Satellite Radio. Rick's stock holdings can be viewed online.
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