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Sirius Satellite Radio, Inc.
By mobile | February 1, 2008
Sirius Satellite Radio, Inc. broadcasts more than 120 channels of digital audio via satellite to subscribers throughout the United States. The company's programming includes 65 channels of commercial-free music and 55 channels of news, sports, and talk. Its offerings range from a full-time National Football League (NFL) channel to an all-Elvis music station, and include "shock jock" Howard Stern, who signed a five-year contract to broadcast exclusively for the firm beginning in 2006. Sirius's broadcasts are beamed from three satellites to more than one million subscribers who pay a monthly fee of $12.95. The company also offers a subscription service for businesses that wish to play its music in stores and offices. Automakers including Ford, Chrysler, and BMW offer Sirius-ready radios as options, and retailers including Wal-Mart and Radio Shack sell similar units for home and boat use.
Beginnings
The roots of Sirius Satellite Radio date to 1990, when ex-NASA engineer Robert Briskman formed a company called Satellite CD Radio, Inc. in Washington, D.C. Briskman, the former chief of operations at Geostar, a satellite messaging company, had created technology that could be used to broadcast digital radio signals by satellite. He joined with several other ex-Geostar staffers to start the firm, and they found investors including David Margolese, a Canadian venture capitalist who had founded a pager company and then helped launch Canada's largest cellular telephone company. After investing $1 million in Satellite CD Radio, Margolese began working with the firm, and eventually was named its CEO.
The company's plan was to develop a digital radio service that would be broadcast with satellites to listeners with special receivers, earning its revenues from charging subscription fees. This type of broadcast had not yet been allocated radio bandwidth by the Federal Communications Commission (FCC), and the company faced many hurdles before it could begin to turn a profit.
In 1992 the company became known as CD Radio, Inc., and made Satellite CD Radio, Inc. its sole subsidiary. There were now several different companies seeking to create satellite radio networks, and in 1993 CD Radio bought one of them, Sky Highway Radio Corp., for $2 million.
By 1994 the company had spent $10 million on development costs, but had accumulated a deficit of $9.5 million. That year, the firm made an initial public offering of stock on the NASDAQ, raising close to $7.5 million. Its prospectus claimed that it would offer 30 channels of CD-quality, commercial-free music via "S-Band" radio receivers, which were not yet being made. Its monthly subscription price was projected to be less than $10. The cost of the company's ambitious plan to launch satellites and create programming was estimated at upward of $500 million.
Purchasing Bandwidth in 1997
The late 1990s saw CD Radio actively seeking more funding. In late 1998 Apollo Management L.P. bought $135 million worth of new stock shares and took an option to buy $65 million more within a year. The company's costs had been escalating, with its estimate for building its now three-satellite network standing at $965 million.
In early 1999 the firm filed suit against its sole rival, now known as XM Satellite Radio, alleging that the latter company had infringed on three of its eight patents. In May 1999 CD Radio's financing topped $1 billion when it sold $200 million worth of senior notes to investors. The company was now planning to offer 100 channels of programming, with a start date of late 2000 projected.
In November the firm was renamed Sirius Satellite Radio, after the brightest star in the night sky, and it moved into a new $38 million, 100,000-square-foot space in Manhattan that contained multiple broadcast studios, a music library, and a satellite tracking center. The ribbon-cutting party featured a performance by rocker Sting, who also had been signed by the firm as a consultant for its music channels.
Although the company's projected broadcasting debut was now on hold while technical problems were resolved, it was actively working on developing its content, signing up musicians and well-known disc jockeys to program its music stations, enlisting self-help experts for others, and reaching deals with content providers including National Public Radio and a distributor of classic radio shows from the 1930s and 1940s. The firm also was planning to spend $100 million on a promotional campaign to lure subscribers.
Topics: Satellite-Radio |
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