Paul Gluckman

Boeing is completing modifications on XM’s ground spare satellite, XM-3, and XM paid more than $100 million during the first quarter to prepare the bird for a 4th-quarter launch, XM said Mon. in a 10-Q report filed at the SEC.

XM Satellite Radio added 321,675 subscribers in its first quarter ended March 31, for 1,681,903 total, and expects to surpass 2 million this quarter, the company said Thurs. XM is making “solid” progress toward hitting or passing its 2.8 million year-end subscriber goal, CEO Hugh Panero told analysts. XM said at quarter’s end its subscribers represented 83% of all Sirius and XM satellite radio customers, virtually unchanged from the 84% share XM said it had at the end of 2003. The statements apparently were in response to Sirius claims of strong March share inroads in terms of retail radio sales. For the first time, XM quarterly revenue exceeded fixed expenses, $43 million vs. $37.1 million, but Wall St. seemed to take the company to task for its net loss widening in the quarter by 39% even as revenue tripled. XM shares closed nearly $2 lower in Thurs. trading. Other XM disclosures: (1) XM has had ongoing talks with DirecTV on an existing marketing alliance, but has no progress to report about new activities, Panero said, responding to a question. (2) XM has been involved in “in- depth” negotiations with insurers, trying to resolve claims involving the solar power degradation problem that has drastically reduced the useful life expectancy of its 2 orbiting satellites, Chmn. Gary Parsons said. Indecency rules that apply to free over-the-air radio “are appropriate in some cases,” but there’s “a different set of rules that apply to satellite subscription services,” Panero responded to an analyst questioner. With satellite radio, “we have people that choose to pay a subscription; we have the ability to block out channels; and we can offer things as a premium service,” Panero said. Given those attributes, satellite radio may be a more appropriate venue than free over-the-air radio for shock jocks like Howard Stern, he said.

Representatives of the Consumer Electronics Retailers Coalition (CERC) met with FCC staff April 28 to press their case again that mandatory uniform DTV labeling requirements were unnecessary, according to an ex parte filing at the Commission. A month earlier, CERC officials visited the FCC with evidence gleaned from visits to Best Buy, Circuit City and Tweeter stores in the Washington area to show the CE industry already was promoting DTV effectively to consumers and doing a good job educating the public about its benefits. In a the recent visit to the FCC, CERC came armed with hundreds of pages of photocopied newspaper ads, point-of-sale materials, Internet web pages and training manuals to support the claim that mandatory labeling rules would “detract” from “the voluntary efforts now under by consumer electronics manufacturers and retailers” to promote DTV, the ex parte said. In particular, the filing said, “the information available to consumers from the Internet, including from CERC members, is detailed and voluminous.” It quoted an unidentified CERC-member store manager, who helped compile the material for presentation to the FCC, as saying that consumers typically come into the store “with a sheaf of printouts from the Internet” when shopping for an HDTV receiver. CERC told the FCC staff its members were willing to work “proactively” with the Commission, manufacturers and program distributors “to continue to enhance and augment their promotional, educational and training efforts” as an alternative to mandatory labeling, the filing said. “CERC members will commit and offer to work with the Commission and others to provide the best available information to consumers with respect to the DTV transition and relevant products and services.”

Sirius is solidly “on pace” to meet its one million subscriber target by year-end, CEO Joseph Clayton said during a conference call with analysts. He said it added 90,602 subscribers in the first quarter, for 351,663 total. Sales performance in March was 2nd only to Dec. as Sirius’s best month; Jan. and Feb. were the 3rd and 4th best, respectively, Clayton said. Citing the latest available NPD data, Clayton said Sirius recorded a 41% Feb. retail market share in satellite radio -- and continued to hold the lead in the car head unit and receiver category, capturing over 60% share at retail. The company reported revenue of $9.3 million for the first quarter, compared to $1.3 million a year ago. Responding to an analyst question whether Sirius would consider hiring Howard Stern or other shock jocks, Clayton said “we're interested in any entertainer or performer who can help build our subscriber base. But there are limits in terms of what is acceptable to the American public and what the economics are.” On the indecency issue, Clayton said: “Whether it’s our gay and lesbian channel on one side of the dial or our Catholic church network on the other side, I maintain that you can find some Americans who will say either one of those is indecent. So I'm not about to define indecency, nor do I believe that that’s the government’s responsibility either.” With a subscription service, like Sirius, “people know what they're getting when they sign up.” Clayton said. “So there is a choice. This is not like free terrestrial radio or free television broadcasts. Those all being said, we have a certain ethics conduct that I think all broadcasters have to follow.”

The RIAA’s attempts through the FCC to promote digital content protections on in-band on-channel (IBOC) radio amounts to a bid for govt. “intervention to limit noncommercial home recording rights,” but “without having met even the most minimal burden of showing that an actionable problem exists,” CEA Pres. Gary Shapiro told RIAA Pres. Cary Sherman in an April 15 letter. RIAA is seeking IBOC copy protection to prevent recording digital music for redistribution via the Internet (CD April 19 p5). RIAA said it didn’t wish “to limit the ability of consumers to record over-the-air radio broadcasts, but Shapiro said the recording industry “apparently” wants “to force them to buy what they have received for free since the invention of radio. “Hundreds of thousands” of digital radios already have been sold in the U.K., “yet you offer no proof of harm to the recording industry,” Shapiro said. “Indeed, the various consumer recording practices your letter warns of could be easily accomplished today using commonplace analog radio data service (RDS) technology combined with the digitization of FM broadcasts, but there is no evidence this is occurring. The FCC docket is also devoid of any showing linking digital radio to the unauthorized peer-to-peer file sharing of music.” Rather than seeking federal mandates on IBOC content protection, the more “appropriate course would be to devise a technical proposal and work with the appropriate standards bodies,” Shapiro told Sherman. He cited the multi-industry Copy Protection Technical Working Group (CPTWG). But Shapiro said RIAA stopped attending CPTWG meetings after it devised the unsuccessful Secure Digital Music Initiative “and has not returned.” Shapiro said: “In fact, the CPTWG was meeting at the very moment you sent your letter, but to my knowledge no one from your organization was in attendance.”

Digital radio developer iBiquity could easily add content protections sought by the RIAA, but only if the industry agrees on what those protections should be, iBiquity CEO Robert Struble said in an interview. Struble also downplayed concerns that digital radio will be very useful in the near term for recording digital copies of music, which could be re-distributed via the Internet (WID April 16 p3).

Consumer electronics groups have told the FCC they believe any rulemaking on protecting in-band on-channel (IBOC) digital radio content from re-distribution over the Internet or from home copying would be “inappropriate and premature.” RIAA has claimed that music transmitted over in- band on-channel (IBOC) digital radio is unprotected from piracy and that “safeguards” could be implemented easily (CD April 12 p3).

Dolby Digital Plus, an upgrade technology claimed to offer twice the data efficiency of the existing Dolby Digital, will be introduced and demonstrated publicly for the first time at next week’s NAB show in Las Vegas, Dolby Labs told our affiliate Consumer Electronics Daily. “We've been working on Dolby Digital to make it further extendable,” as always was the intent when it was first commercialized almost 10 years ago, Craig Eggers, Dolby Labs dir. of consumer technology mktg., told us. The Advanced TV System Committee already has selected Dolby Digital Plus as a “candidate standard” for next-generation enhanced DTV. The technology, which is about 1-2 years away from being commercialized, could find itself in future applications at least as broad as those of Dolby Digital, which is installed in nearly 40 million homes, Eggers said. In addition to ATSC audio, applications will include cable and satellite delivery and for streaming interactivity in next-generation optical discs. Advanced video codecs such as H.264 and others are designed to address the need for more efficient video data transmission through the limited-bandwidth “pipeline” than currently is possible with MPEG-2, Eggers said. “If there are going to be new efficiencies in video, we have to work on new efficiencies in audio, and we've been doing that.” Dolby Digital Plus will enable broadcasters to transmit 5.1-channel HDTV digital audio at 192 kbps -- half the current data transfer rate of 384 kbps, Eggers said. Over-the-air 2- channel HDTV audio also would transfer data at half the current 192 kbps rate, as would stereo DVD recorders, he said. “The issue with Dolby Digital Plus is we're bringing these new efficiencies to the marketplace,” but at no risk to backward compatibility with legacy Dolby Digital products, Eggers said. “We recognize that there’s 40 million AV receivers out there in the universe” with Dolby Digital, he said. “We recognize we have an obligation to the consumer when we introduce anything new around the Dolby Digital format, as receivers go.” For the consumer, the transition to Dolby Digital Plus will be “seamless,” Eggers said. He said typically, a Dolby Digital Plus signal would be streamed to a set-top box, then outconverted and sent through a SPDIF output to an AV receiver as a standard Dolby Digital signal.

The FCC at its open meeting Thurs. (April 15) will consider a further notice on rule changes for radio stations that broadcast digital audio using in-band on-channel (IBOC) technology. We're told that among the range of IBOC issues that the Commission is likely take up are AM nighttime service and NPR’s Tomorrow Radio project for adding a supplemental audio program to the iBiquity Digital HD Radio system. But many are speculating the FCC also will consider proposals advocated by the RIAA to establish broadcast flag- like content protection to digital radio.

“Local circumstances” in Berlin made for a hard shutoff of analog TV service there last Aug. with “minimal disruption,” the NCTA told the FCC in an ex parte filing. But it’s highly uncertain whether those “unique circumstances exist even elsewhere in Germany” to support a similarly abrupt transition to digital TV, and they certainly “do not exist in the United States,” the NCTA said.