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Radio

All prices are in U.S. dollars and I don’t think the prices should go up!

XM, Sirius open to raising radio service prices
NEW YORK (Reuters) – Both U.S. satellite radio providers envision a time when they will raise the monthly fee subscribers pay for their services, but no increase is planned in the near term, executives said on Wednesday.
Speaking at separate investor conferences in New York, executives from XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. said it is more likely that in time they will increase subscription fees rather than lower them from the current standard of $13 a month.
“When you think about where we can go with our pricing, we have plenty of flexibility, but to date we have kept our pricing low to continue to drive subscriber growth,” Joseph Euteneuer, XM’s chief financial officer, said at a UBS investment conference in New York.
XM most recently raised its price, boosting its monthly fee by 30 percent early in 2005. Both services offer discounts for multiple subscriptions and advance payment.
XM Chairman Gary Parsons noted that when the price hike was initiated some of the discounted rates for multiple accounts were unaffected, and that any new rate increase might be targeted at “family plan” rates.
Sirius Satellite Radio has held its price steady for several years and Chief Executive Officer Mel Karmazin, speaking at a Credit Suisse investor conference, said that it has added significant amount of programming during that time.
Shock jock Howard Stern started a five-year, $500 million pact with Sirius this year.
Karmazin suggested that Sirius would not resist a move to a higher price before XM, if the time were right.
“We think there is an opportunity to increase our pricing,” Karmazin said. “When we were at $12.95, our competitor was at $9.95, and very wisely they raised their price to $12.95.”
“In that period of time we got the NFL, Nascar, Howard Stern. So we think there is a history of us being the premium priced content company,” he said.
Higher fees would boost revenue for both money-losing companies, whose popularity remains solid — Sirius alone expects to nearly double its subscriber totals this year.
But a rate hike could sour those who still think of traditional radio as free and already pay monthly fees to services like subscription music services and cable or satellite television.
Moreover, satellite radio faces competition from a growing number of entertainment options that can occupy consumers’ time and money, such as iPods and video game consoles.
Karmazin said price change is inevitable, including the possibility that the radios themselves could one day be free, should the market demand such a scenario. Satellite radio devices range from less than $50 to more than $300 in cost.
“We certainly have the ability to reduce prices. If down the line free radios become common place, our costs are coming down to where it is absolutely possible.” he said. “The pricing points today (of radios) is not stopping somebody from buying satellite radio.”