XM Satellite Radio Scores $650 Home Run

22 October 2004

The 'magic' of baseball is coming to XM Satellite Radio listeners from next season.

The US-based station has signed a $650 million (€501m, £348m) contract with Major League Baseball to broadcast live games, including the World Series.

XM ceo Hugh Panero describes the deal as a 'crown jewel' saying: "Baseball is a sport ideally suited for radio, given its natural pace and the ability to vividly describe each play. Baseball on the radio is magical."

A specially-created MLB channel will include coverage of games and archived material, available to XM's 2.5 million subscribers as part of the regular $9.99 package. The deal will run until 2012, with a further three year option.

XM's move into major sports coverage comes after rival Sirius bid $220m to cover the National Football League and lured shock jock Howard Stern with a five year $500m deal.

The baseball contract will also appeal to the big US carmakers who have invested heavily both in Sirius and XM. Satellite radio in cars can receive one or other station but not both – so the battle to win the heart and minds of the automotive industry is a fierce one.

However, satellite radio's race to attract talent with big payouts coupled with the relative paucity of subscribers may eventually burst the financial bubble.

Says Niraj Gupta, cable and satellite radio analyst at Citigroup Smith Barney: "XM will have to compete for talent with Sirius and with non-satellite radio operators. If this persists, and results in a bidding war for branded talent, it could meaningfully increase programming costs and negatively impact operating margins."

Data sourced from Adweek (USA); additional content by WARC staff