XM to Increase Monthly Fees

In an unexpected move, XM Satellite Radio increased its monthly access fee to $12.95 per month, in line with its competitor SIRIUS. The change will take effect April 2; however, the company said customers who sign up for a prepaid plan before that date would be able to lock in the old $9.99 rate from anywhere between one to five years.

While the new rate is nearly $3 more, XM sweetened the deal for its users. All basic customers will now have access to XM Radio Online, formerly a $3.99 per month premium service. XM Online allows customers to listen to programming over a broadband connection.

Also joining the basic lineup is High Voltage, Opie and Anthony's XM channel.

"XM's growth to date demonstrates that the potential for satellite radio is far greater than anyone anticipated," XM CEO Hugh Panero said. "This new pricing approach will help fund future technology development, enable us to offer more attractively-priced radios and maintain our programming excellence." Panero also reiterated the company's forecast of 20 million subscribers by 2010.

Monday's move could be seen as part of a plan to bring XM into profitability. In a mid-month conference call for investors, Panero told the group he expects cash flow break-even by 2006. The company is also spending less to acquire customers, at $100 down from $137 at the end of 2003.