Sat radio nets seek exclusive content

Mar 12, 2001  •  Post A Comment

Looking to capitalize on the spoils of their innovative satellite radio platform, XM Satellite Radio and Sirius Satellite Radio are riding the crest of a wave of shakeouts in the media industry by signing their content providers to exclusive deals.
The broadcasters’ bold move signals a trend among the new wave of high-tech media purveyors who have grown so emboldened by the scarcity of their cutting-edge media platforms that they have taken the unprecedented step of signing content producers to exclusive contracts.
Under the terms of deals that XM Satellite Radio has inked with some of its audio content providers, those producers are barred from signing content pacts with XM’s archrival Sirius Satellite Radio.
XM has signed the restrictive deals with the Hispanic Broadcasting Corp., urban content broadcaster Radio One and NASCAR, according to Steven Gavenas, XM’s senior vice president of new business development.
NASCAR is working with XM to create the first-of-its-kind NASCAR Channel for the satellite radio service, which would broadcast news and features about the organization’s racing events.
Although XM has signed exclusive content deals, the company claims such deals are not at the core of its business strategy.
“We’re not really looking to do exclusive deals,” Mr. Gavenas said. “There’s plenty of room for two companies. We welcome the competition. There’s plenty of business for both of us.”
Mr. Gavenas would not specify whether XM’s arrangements with content providers who are backed by powerful media outlets, such as Bloomberg News, USA Today and the Discovery Channel, are exclusive. All three of those media companies are producing channels for XM’s radio network.
Sirius Satellite Radio has signed about one-third of its content partners to similar agreements, sources close to the company confirmed. National Public Radio, Public Radio International, World Radio Network and the Sci-Fi Channel are some of the producers who have agreed to exclusive terms with Sirius.
Producers have clamored to be included in the XM and Sirius programming slates because the satellite companies have created the first media platforms that promise dozens of audio channels targeting special-interest niches as part of a single subscription-fee-based service.
The radio services will also draw advertising revenue, but they hope to rely upon fewer blocks of back-to-back commercials than their analog radio counterparts.
XM and Sirius may sign fewer exclusive content deals going forward, satellite radio industry insiders suggest, because of a separate agreement that the two competitors are said to have come to terms on in February 2000.
Under that pact, the companies resolved to make their services interoperable and stipulated that neither company would sign exclusive content deals barring partners from working with the other in the future. XM has not signed any exclusive content agreements since that February 2000 pact, according to company officials.
Although most of the content partnerships XM and Sirius have formed to date have been with television and radio producers, XM officials say they are looking at the possibility of working with content producers who are broadcasting on the Internet.
Many market participants believe Internet radio sites may ultimately migrate to satellite radio platforms, given the consolidation and cutbacks happening in the dot-com business.
“We’re looking closely at Internet radio providers, but with a close eye to whether they’ll have the economic wherewithal to be around years from now,” XM’s Mr. Gavenas said.
Spinner, the Internet radio arm of media conglomerate AOL Time Warner, declined to comment on whether it was considering launching a companion satellite radio channel.
Radio Free Virgin, the Internet radio service funded by Virgin Records mogul Richard Branson, has looked at the possibility of entering the satellite radio arena, sources close to Radio Free Virgin said.
Sirius and XM plan to launch their services later this year. Both companies completed major financings this month. Sirius announced late last week that it established a $150 million credit facility through investment bank Lehman Brothers.