XM Satellite Radio Secures $250 Million Investment

Strategic Insights -

XM Satellite Radio Inc., a subsidiary of American Mobile Satellite Corporation, has closed a major investment deal with Clear Channel Communications, DIRECTV, General Motors, and a private investment group. The $250 million investment will support the development of XM's digital-quality audio service, offering up to 100 channels of music, talk, news, sports, and entertainment formats. This new band of radio will be delivered directly from satellites, with General Motors exclusively distributing and marketing the service in its vehicles. The investment is a significant step forward for XM, which plans to offer subscribers a range of innovative formats for less than $10 a month.

Key Takeaways:

  • XM Satellite Radio closed a $250 million investment deal with Clear Channel Communications, DIRECTV, General Motors, and a private investment group.
  • The investment is comprised of $75 million each from Clear Channel and the private investment group, and $50 million each from General Motors and DIRECTV.
  • American Mobile Satellite Corporation acquired WorldSpace Inc.'s interest in XM as part of the deal.
  • XM plans to offer up to 100 channels of digital-quality audio service, with innovative formats such as music, talk, news, sports, and entertainment.
  • General Motors will exclusively distribute and market XM service in its vehicles, partnering with industry leaders Alpine, Delphi Delco, Pioneer, and Sharp to market AM/FM/XM radios.
  • XM's powerful satellites are being built by Hughes and Alcatel.
  • XM obtained one of only two satellite digital audio radio service (SDARS) licenses from the Federal Communications Commission in October 1997.

Statistics:

  • $250 million - the total amount of the investment deal
  • $75 million - the investment from Clear Channel Communications
  • $75 million - the investment from the private investment group
  • $50 million - the investment from General Motors
  • $50 million - the investment from DIRECTV
  • 100 - the number of channels of digital-quality audio service planned by XM
  • 2 - the number of satellite digital audio radio service (SDARS) licenses obtained by XM from the Federal Communications Commission

Sources:

  • XM Satellite Radio Inc. press release, PRNewswire, July 8
  • American Mobile Satellite Corporation (Nasdaq: SKYC)
  • Clear Channel Communications Inc. (NYSE: CCU)
  • DIRECTV, Inc., a unit of Hughes Electronics Corporation (NYSE: GMH)
  • The General Motors Corporation (NYSE: GM)
  • Columbia Capital
  • Telcom Ventures L.L.C.
  • Madison Dearborn Partners