Satellite Radio Users to Reach 46.8-M by 2014 Says Kagan

MONTEREY, Calif., July 19, 2005/Satnews Daily/ — Growing consumer interest, low churn, new programming, and exclusive automotive agreements are projected to boost satellite radio subscriptions to 46.8 million and revenue to $7.6 billion by 2014, according to a new report from Kagan Research.

In its “Satellite Radio Outlook 2005,” Kagan projects continued success for the two major players, but expects they will soon face increased competitive pressure from emerging technologies.

“As wireless technology expands and access to free music web sites and on-demand services increases, satellite radio will lose potential customers to alternative sources in the battle for consumers' attention,” says Michael Buckley, Kagan analyst,  

Strong automotive partnerships offer some protection from competitive challenges, and Kagan estimates that by 2014, approximately 75% of new subscribers will come from the OEM connection, Kagan said.

Commitments by GM, Ford, and Chrysler suggest a favorable long-term outlook with the report offering a detailed look at these partnerships.

Observing the satellite radio industry, Kagan said:

·        XM will achieve positive cash flow by Q3 2007;

·        Sirius, with its second-mover disadvantage and higher programming expenses, is not expected to generate positive cash flow until 2008;

·        Once positive cash flow is achieved, Kagan forecasts a steady increase in EBITDA for both companies, with XM topping $2 billion and Sirius reaching $1.4 billion in 2014.