Sirius Satellite launches service in four U.S. cities
CHICAGO, Feb 14 (Reuters) - Satellite radio firm Sirius Satellite Radio Inc. (NasdaqNM:SIRI - news) on Thursday said it launched its service as expected in four cities -- Denver, Houston, Phoenix, and Jackson, Mississippi.
Sirius Satellite broadcasts 60 commercial-free music channels and 40 news and entertainment channels via its three satellites orbiting directly over the United States. It plans to complete its nationwide launch in August.
It competes with XM Satellite Radio Holdings Inc. (NasdaqNM:XMSR - news), which launched its service nationwide in November, and already claims 30,000 subscribers.
``We expect this launch to be very soft with limited advertising in those areas as well as limited product,'' Robert Peck, satellite analyst with Bear Stearns, said in a research note.
Peck said advertising will be limited to in-store displays and some local radio. Large television and movie theater ads will not begin until summer, he said.
According to analysts, Sirius is testing different marketing offers in the four cities. In Phoenix, it is offering free service for three months; in Denver, it is offering a $50 rebate; and in Jackson, it is offering a money back guarantee. It is offering no deal in Houston.
Sirius' service is available for a monthly subscription fee of $12.95.
Lehman Brothers' analyst William Kidd said management expects to maintain these four offers until April or May when it will decide on the most effective combination.
Kidd also said surveys of retailers in the four cities, showed that Sirius' receiver manufacturers such as Kenwood, Jensen, Clarion, and Panasonic will have products available at launch.
Sirius radios and service will be offered through electronics retailers Circuit City Stores (NYSE:CC - news) and Best Buy Co. Inc. (NYSE:BBY - news) as well as independent chains and Crutchfield, a catalog and Internet retailer.
``We believe confidence in Sirius will continue to build over the coming months, as more consumers and investors gain firsthand experience with Sirius' service and the company meets additional roll out milestones,'' Kidd said.
Shares of Sirius rose 20 cents, or 3 percent, at $7.24 on Nasdaq while shares of XM Satellite were off 8 cents, or 0.56 percent, at $14.32 on Nasdaq morning trade.
