XM Loses to CC in court, Commercials Return to Music Channels (1 Viewer)

[Chris]

http://www.fool.com/News/mft/2006/mft06031026.htm


For those that don't know, Clear Channel, an investor in XM, fought XM in court for a violation of their origination deal. CC provided startup capital, etc. in exchange for set agreements in regards to programming.

Clear Channel sued XM, and has achieved victory in court.

As a result, XM will now have to allow Clear Channel to air advertising on the four programs it supplies: Sunny, Kiss, Mix and Nashville, and XM may not terminate thier agreement on these channels without penalities.

In the end, what this is really about is CC setting up XM so that XM can no longer proclaim "Commercial Free". Clear Channel would much prefer to remove that label where it can in order to minimize the differences between their terrestrial radio and satellite.

 

[Chris]

XM's official notice to subscribers:


XM To Expand Channel Lineup and Commercial-Free Music Programming

Dear XM Subscriber,

Over the past year, XM Satellite Radio has greatly expanded and enhanced its channel lineup with great music channels, more live sports play-by-play and other exclusive original programming. In just the last year, XM added over 15 channels for a total of more than 160 channels. Soon we will increase that number to more than 170 channels of programming - the most in satellite radio.

We know how popular our commercial-free music lineup is with our subscribers. On March 1 we added two new commercial-free music channels, Big Tracks (XM 49) and XM-Chill (XM 84), bringing our total number of commercial-free music channels to 69 - the most commercial-free music we have ever been able to offer and the most in satellite radio.

This spring we will add a variety of new, commercial-free music channels and exciting new formats, details for which we'll announce in the next month. Because of their early investment in XM, radio broadcasting company Clear Channel Communications provides programming for their music channels (KISS, MIX, Nashville and Sunny and a fifth music channel in development), as well as content for select talk channels. An arbitration panel recently ruled that Clear Channel has the right to include commercials on the music programming that it provides XM. As a result, these channels will start to carry commercials this spring. At the same time, XM will add new commercial-free music channels of its own so that subscribers will see no reduction in the total number of commercial-free music channels. We currently have 69 commercial-free music channels and that number will not change, even after Clear Channel starts to include commercials.

Our subscribers' satisfaction and loyalty is our number one priority. That's why we continue to enhance our programming lineup with the best in music, sports and talk. We recently announced the addition of a new channel, Oprah & Friends, which starting in September will complement our all-star talk and lifestyle programming lineup. In addition, music legend Bob Dylan will debut his historic and exclusive weekly show on XM starting in May. In sports, XM is proud to kick off our second season as the exclusive satellite radio home for Major League Baseball with play-by-play coverage of every team from the World Baseball Classic to the World Series.

We look forward to sharing with you the details of our expanded lineup.

Sincerely,

Eric Logan
Executive Vice President
Programming
XM Satellite Radio

 

[Ronald Epstein]

Yeah, it's a real shame that this had to happen.

It's no fault of XM radio. They entered a deal with
Clear Channel years ago and it is that company that is
forcing them to provide commercials on those channels.

Fortunately, I understand that their obligation may
be limited, and, that they have compensated by adding
three new music channels.

 

[WillG]

Yeah, kind of a bummer about this, but I wouldn't call it the end of the world either. I don't spend much time on those four stations anyway (I know others may though) Frankly, when I had XM before they went commercial free on music channels, I never minded the short ad breaks they took all that much. It was only a couple of minutes per hour and it's not like there weren't many other channels to check out when the one you were listening to went to break. Obviously, commercial free is much better though.

 

[Dick Knisely]

To me that just means fewer folks listening to the CC programming. Sounds self-defeating in the end.

 

[Al.Anderson]

I originally went with Sirius because XM had commercials - I hate commercials. If they went back I'd switch out. This situation is different though, it just a few channels for an externally driven reason.