XM Satellite Wins Baseball Deal

[Klaus]

XM Satellite Wins Baseball Deal

Pact Valued at $650 Million
Raises Stakes In Battle
With Sirius for Subscribers
By ANDY PASZTOR and STEFAN FATSIS
Staff Reporters of THE WALL STREET JOURNAL
October 20, 2004; Page B9

XM Satellite Radio Holdings Inc., raising the stakes in a rapidly escalating battle to lure subscribers, has signed a long-term broadcast deal with Major League Baseball costing $650 million over 11 years, according to industry officials.

The agreement seems designed to help XM regain public attention and marketing momentum against smaller rival Sirius Satellite Radio Inc., which this month signed a five-year, $500 million deal to add shock jock Howard Stern to its lineup starting in 2006. Sirius also has wide-ranging deals with several other major sports leagues.

The Sirius move to sign the popular Mr. Stern sent shock waves through the radio industry, and since then many investors and Wall Street analysts have been speculating that XM would opt for a high-profile response in a bid to grab back the spotlight. XM's bid for baseball was several times the amount Sirius offered, according to a person familiar with the details.

XM agreed to pay $470 million for eight years, and Major League Baseball has an option for three additional years for which XM would pay $60 million annually. XM and Major League Baseball declined to comment, though a news conference is slated for today.

With both satellite-radio concerns continuing to post losses and engaging in such brutal one-upsmanship, many on Wall Street have doubts about a big payback from the splashy programming deals.

XM, of Washington, has roughly 2.5 million subscribers, compared with about 700,000 for Sirius, and it has gained more traction with auto makers to install equipment at the factory. Until now, XM's main sports offerings have included auto racing and various college sports.

In addition to landing Mr. Stern, Sirius has signed deals for professional hockey, basketball and football games. This month, Sirius Chief Executive Joseph Clayton said the New York company also was "very interested in major-league baseball."

In aggressively outbidding its rival, XM may have made the same miscalculation it accused its rival of falling into less than a year ago. When Sirius announced its seven-year, roughly $220 million cash-and-stock deal with the National Football League amid much fanfare in December, an XM spokesman criticized the terms. "We felt the high expense didn't justify the return for our programming," XM said at the time. "The bottom line is this is a Hail Mary for them."

Now, Sirius officials are bound to point out with some glee that XM ended up paying twice as much to broadcast Major League Baseball. XM will need to attract large numbers of fans interested in hearing baseball games taking place outside their local markets, where every game already is broadcast on over-the-air radio.

One advantage: Teams such as the New York Yankees, Boston Red Sox and Los Angeles Dodgers have coast-to-coast fan bases. Also, the emergence of foreign stars such as Seattle Mariners outfielder Ichiro Suzuki of Japan will appeal to ethnic groups nationwide. However, industry officials say it could cost XM as much as $25,000 to transmit each game, a formidable number in baseball's 162-game season. It wasn't clear exactly how many games XM will carry under the deal.

[Klaus]

XM Satellite Wins Baseball Deal

Pact Valued at $650 Million
Raises Stakes In Battle
With Sirius for Subscribers
By ANDY PASZTOR and STEFAN FATSIS
Staff Reporters of THE WALL STREET JOURNAL
October 20, 2004; Page B9

XM Satellite Radio Holdings Inc., raising the stakes in a rapidly escalating battle to lure subscribers, has signed a long-term broadcast deal with Major League Baseball costing $650 million over 11 years, according to industry officials.

The agreement seems designed to help XM regain public attention and marketing momentum against smaller rival Sirius Satellite Radio Inc., which this month signed a five-year, $500 million deal to add shock jock Howard Stern to its lineup starting in 2006. Sirius also has wide-ranging deals with several other major sports leagues.

The Sirius move to sign the popular Mr. Stern sent shock waves through the radio industry, and since then many investors and Wall Street analysts have been speculating that XM would opt for a high-profile response in a bid to grab back the spotlight. XM's bid for baseball was several times the amount Sirius offered, according to a person familiar with the details.

XM agreed to pay $470 million for eight years, and Major League Baseball has an option for three additional years for which XM would pay $60 million annually. XM and Major League Baseball declined to comment, though a news conference is slated for today.

With both satellite-radio concerns continuing to post losses and engaging in such brutal one-upsmanship, many on Wall Street have doubts about a big payback from the splashy programming deals.

XM, of Washington, has roughly 2.5 million subscribers, compared with about 700,000 for Sirius, and it has gained more traction with auto makers to install equipment at the factory. Until now, XM's main sports offerings have included auto racing and various college sports.

In addition to landing Mr. Stern, Sirius has signed deals for professional hockey, basketball and football games. This month, Sirius Chief Executive Joseph Clayton said the New York company also was "very interested in major-league baseball."

In aggressively outbidding its rival, XM may have made the same miscalculation it accused its rival of falling into less than a year ago. When Sirius announced its seven-year, roughly $220 million cash-and-stock deal with the National Football League amid much fanfare in December, an XM spokesman criticized the terms. "We felt the high expense didn't justify the return for our programming," XM said at the time. "The bottom line is this is a Hail Mary for them."

Now, Sirius officials are bound to point out with some glee that XM ended up paying twice as much to broadcast Major League Baseball. XM will need to attract large numbers of fans interested in hearing baseball games taking place outside their local markets, where every game already is broadcast on over-the-air radio.

One advantage: Teams such as the New York Yankees, Boston Red Sox and Los Angeles Dodgers have coast-to-coast fan bases. Also, the emergence of foreign stars such as Seattle Mariners outfielder Ichiro Suzuki of Japan will appeal to ethnic groups nationwide. However, industry officials say it could cost XM as much as $25,000 to transmit each game, a formidable number in baseball's 162-game season. It wasn't clear exactly how many games XM will carry under the deal.

[Klaus]

XM Satellite Wins Baseball Deal

Pact Valued at $650 Million
Raises Stakes In Battle
With Sirius for Subscribers
By ANDY PASZTOR and STEFAN FATSIS
Staff Reporters of THE WALL STREET JOURNAL
October 20, 2004; Page B9

XM Satellite Radio Holdings Inc., raising the stakes in a rapidly escalating battle to lure subscribers, has signed a long-term broadcast deal with Major League Baseball costing $650 million over 11 years, according to industry officials.

The agreement seems designed to help XM regain public attention and marketing momentum against smaller rival Sirius Satellite Radio Inc., which this month signed a five-year, $500 million deal to add shock jock Howard Stern to its lineup starting in 2006. Sirius also has wide-ranging deals with several other major sports leagues.

The Sirius move to sign the popular Mr. Stern sent shock waves through the radio industry, and since then many investors and Wall Street analysts have been speculating that XM would opt for a high-profile response in a bid to grab back the spotlight. XM's bid for baseball was several times the amount Sirius offered, according to a person familiar with the details.

XM agreed to pay $470 million for eight years, and Major League Baseball has an option for three additional years for which XM would pay $60 million annually. XM and Major League Baseball declined to comment, though a news conference is slated for today.

With both satellite-radio concerns continuing to post losses and engaging in such brutal one-upsmanship, many on Wall Street have doubts about a big payback from the splashy programming deals.

XM, of Washington, has roughly 2.5 million subscribers, compared with about 700,000 for Sirius, and it has gained more traction with auto makers to install equipment at the factory. Until now, XM's main sports offerings have included auto racing and various college sports.

In addition to landing Mr. Stern, Sirius has signed deals for professional hockey, basketball and football games. This month, Sirius Chief Executive Joseph Clayton said the New York company also was "very interested in major-league baseball."

In aggressively outbidding its rival, XM may have made the same miscalculation it accused its rival of falling into less than a year ago. When Sirius announced its seven-year, roughly $220 million cash-and-stock deal with the National Football League amid much fanfare in December, an XM spokesman criticized the terms. "We felt the high expense didn't justify the return for our programming," XM said at the time. "The bottom line is this is a Hail Mary for them."

Now, Sirius officials are bound to point out with some glee that XM ended up paying twice as much to broadcast Major League Baseball. XM will need to attract large numbers of fans interested in hearing baseball games taking place outside their local markets, where every game already is broadcast on over-the-air radio.

One advantage: Teams such as the New York Yankees, Boston Red Sox and Los Angeles Dodgers have coast-to-coast fan bases. Also, the emergence of foreign stars such as Seattle Mariners outfielder Ichiro Suzuki of Japan will appeal to ethnic groups nationwide. However, industry officials say it could cost XM as much as $25,000 to transmit each game, a formidable number in baseball's 162-game season. It wasn't clear exactly how many games XM will carry under the deal.

[ckhagman]

Sirius has a better deal. Baseball is boring on the radio. Hockey and Football can be listened on the radio without loosing interest.