XM Satellite Radio plans to focus on automotive partnerships rather than chase weak retail market

By Jennifer Lanning Drey

Portland, Ore., Dec. 6 - XM Satellite Radio Holdings Inc. plans to counteract the softening satellite radio retail market by optimizing its partnerships with the automotive industry, Gary M. Parsons, XM's chairman, said Wednesday during a presentation at the UBS 34th Annual Global Media and Communications Conference.

"We are not going to chase a weak retail market with excessive discounting and excessive subscriber acquisition costs," he said.

"When it's going well, we will take advantage of it - when it's in a nice hot cycle. When it's weak, we're not going to chase it for growth at any cost."

Parsons' presentation followed an announcement made earlier this week by XM's competitor, Sirius Satellite Radio Inc., which lowered its year-end subscriber total projections to a range of 5.9 million to 6.1 million subscribers, down from its previous guidance of 6.3 million subscribers.

However, XM reports having more than 7 million subscribers, and with its focus shifted toward the new car market, expects to achieve positive cash flow in the fourth quarter, despite recognizing the industry slowdown.

Parsons also said Wednesday that Honda and General Motors are projecting installations of 2.5 million XM Satellite Radio units in 2007.

"This is a trajectory that is moving strongly in the direction that we want it to move," he said.

XM Satellite Radio is a Washington, D.C.-based satellite radio provider.

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