XM FALTERS: A Brief Analysis

Every music head’s favorite satellite provider XM posted much wider losses in recent SEC filings despite significant increases in it’s subscriber base.  Increased costs in hooking each subscriber was apparently to blame.  One member of the company’s board of directors apparently lobbied for major cost cutting as a way out and resigned when his suggestions were rejected.

While XM is certainly not down for the count yet, one has to wonder about their long  term outlook with  cells, wi-fi and wi-max soon making thousands of music streams accessible everywhere for free. Satellite radio’s business model has always been somewhat like cable’s counting on the long term subscriptions from many millions of subscribers to cover expensive upfront costs.  Won’t the cost of subscriber acquisition only rise and the rate of retention fall as competition increases?

XM’s SEC filings can be viewed here.