The History of Satellite Radio
Digital Audio Radio Service (DARS) was established by the FCC in 1992 by establishing certain segments of radio frequency for satellite broadcast on radio.
An auction was subsequently held and two companies were awarded the license to use these frequencies. American Mobile Radio (later to become XM Radio) paid $93 million for their license, and CD Radio (later to become Sirius Satellite Radio) paid $89 million. These licenses are for 8 years. It is estimated that the entire cost of launching a satellite service is around $1.5 billion.
In the spring of 2001, XM Radio successfully launched its two broadcast satellites: "Rock" and "Roll". In September 2001, XM began the first US digital satellite radio service in two markets: Dallas/Ft.Worth and San Diego. Two months later, XM Radio was launched nationwide.
In February of 2002, Sirius launched its service in four markets: Denver, Houston, Phoenix, and Jackson, Miss. The nationwide rollout was complete during the summer of 2002.
In the months following their nationwide launch, each service has worked to generate subscribers. At the end of 2004, XM Radio reports over 3.2 million users, and Sirius reached the 1 million subscriber level.
On October 6, 2004, Sirius announced that they had signed radio personality Howard Stern to a long-term contract to broadcast exclusively on their service - for a reported $500 million. His shift to satellite radio is expected later in 2005 and has generated significant publicity for both Sirius as well as the industry as a whole.
XM Radio is traded on the NASDAQ (XMSR) with a current price of around $35, providing the company with a market cap of just over $7B. Sirius Satellite Radio is traded on the NASDAQ (SIRI) at a current price of around $7, giving the company a market cap of $9.5B.
For more information, check out our sections on XM Radio and Sirius.