XM inks with Fox News for exclusive deal

By Paul Bond
XM Satellite Radio, which announced amid fanfare Wednesday that it narrowly missed its goal of 6 million subscribers by year's end, has unceremoniously become the exclusive satellite radio provider of Fox News content.

Although it sold enough radios to put it over the 6 million mark, XM said that not enough people activated their service to put it above that threshold. The company also said it will boast 9 million subs by the end of 2006.

Meanwhile, XM's exclusivity with Fox News comes courtesy of rival Sirius Satellite Radio's failure to come to terms with the network, despite an hourlong meeting between Fox News topper Roger Ailes and Sirius CEO Mel Karmazin, insiders said.

The previous Sirius-Fox News arrangement ended last year so Sirius stopped broadcasting the Fox News television simulcast before midnight on New Year's Eve and replaced it with CNN Headline News. Fox radio personalities Tony Snow and Alan Colmes, who were heard on channels separate from the Sirius feed of TV's Fox News Channel, already had been yanked in mid-December.

Satellite radio observers noted that XM scored a coup by renegotiating with Fox News under the assumption it essentially would be sharing content with Sirius. With Sirius out -- at least for now -- XM gets an important slate of content exclusively, though at an unexclusive rate. Fox News is about the third-most-listened-to channel among the more than 140 channels offered by XM, insiders said.

Terms of XM's new, multiyear deal with Fox News, inked late last year, have not been disclosed.

Observers speculated Wednesday that Sirius might have balked at a price hike from Fox News in order to conserve cash after signing Howard Stern to an exclusive deal for $500 million over five years.

They also speculated that XM received a sweetheart deal from Fox News because of XM's relationship with DirecTV, because both are controlled by Rupert Murdoch's News Corp., though Fox News Radio senior vp Kevin Magee rebuffed the notion.

"That's just nonsense," he said. "We never asked a penny more from Sirius than from XM," said Magee, adding that a deal still could be struck with Sirius. "They have my cell phone number, and I'm available to talk at a moment's notice."

Sirius did not return calls seeking comment.

"I have to tell you, anyone who thinks you can swap Fox News with CNN Headline News and no one will notice, is wrong," Magee said. "I personally got 500 e-mails about it."

As to its subscriber announcement, XM made it Wednesday at the Consumer Electronics Show in Las Vegas. The company, run by CEO Hugh Panero, said it ended the year with 5.93 million subscribers, but that once the radios purchased as holiday gifts were activated, it would send it beyond the 6 million mark.

Wall Street investors treated the addition of about 903,000 new subscribers during the fourth quarter as falling slightly short of guidance, and XM shares in after-hours trading sunk to $27.52, hovering above a 52-week high $26.16.

XM's fourth-quarter addition compared with Sirius' 830,000 new subs for the same frame. Wall Street analysts are poised to debate whether Stern, who officially begins with Sirius on Monday, was worth his hefty price tag.

Amateur pundits already were sounding off in chat rooms Wednesday. "Sirius kicked your *** and it ain't finished yet," one Sirius investor wrote to XM investors.

Also at CES, XM has been touting initiatives for delivering satellite TV to cars and has been showing off portable satellite radios that double as MP3 players.

Howard Stern to Get $220M in Sirius Stock
Jan 05 4:24 PM US/Eastern
NEW YORK

Sirius Satellite Radio Inc. will give Howard Stern 34 million shares of stock _ worth about $220 million at today's prices _ because the company has met agreed-upon targets for gaining new subscribers under its 2004 deal with the shock jock.
In a regulatory filing Thursday, Sirius said its subscriber count as of Dec. 31, 2005, exceeded the target it had agreed upon with Stern in October 2004, when it made a five-year deal with him.


At the time, Sirius said its deal with Stern would be worth about $100 million per year beginning in 2006. The 34.4 million shares were worth about $110 million then, but the stock has roughly doubled since then.
Stern begins his new show on Sirius on Jan. 9, having left his longtime employer Infinity Broadcasting, which has been renamed CBS Radio, a unit of CBS Corp.
Last month the former president of an accounting firm that Stern used pleaded guilty to insider trading in Sirius shares before the news of Stern's move to Sirius was made public. Gary D. Herwitz, 50, formerly of Mahoney Cohen & Co., faces up to 16 months in prison at his sentencing in March.
Sirius and its rival, the Washington, D.C.-based XM Satellite Radio Holdings Inc., have been spending heavily to line up programming and lure in subscribers to the paid radio services, which work around the country and carry more than 100 channels of commercial-free music as well as talk programming. Both services cost $12.95 per month and require special radio receivers.
New York-based Sirius didn't say what subscriber target it had agreed to with Stern, but it also announced Thursday that it finished 2005 with more than 3.3 million subscribers, compared with 1.1 million at the end of 2004. XM said Wednesday that it now has more than 6 million subscribers.
Shares of Sirius rose 7 cents, or 1.1 percent, to $6.43 in afternoon trading on the Nasdaq, while XM shares fell 51 cents, or 1.8 percent, to $27.33.