XM: 100% Commercial-free music no more? There's a lot of questions being raised by a recent SEC filing by XM Satellite Radio in which the channel updates are brought up. In the Form 10-k, it's stated that there's been some behind-the-scenes arbitration between XM and Clear Channel. Here's an except from the March 3rd filing:
Channel updates. We regularly review and update our channel line up to revise our overall offerings. We will add the Oprah & Friends channel in September 2006. In the first half of 2006, we expect to add certain new channels, including additional commercial-free music channels, to slightly increase our total number of commercial-free music channels. In addition, commercial advertisements will resume on music programming currently provided to us by Clear Channel. Certain of these changes implement a settlement agreement and are in accordance with the preliminary decision of the arbitration panel for a dispute we had with Clear Channel relating to our respective rights and obligations under agreements entered into in connection with Clear Channel’s 1998 investment in us. From time to time, we make certain of the content we produce available for broadcast by others, including traditional AM/FM radio stations.
Now, as I understand it, there are four channels that contain 'music programming' by Clear Channel - Sunny, KISS, MIX, and Nashville - and as this reads, XM will be forced to include commercial advertisements on these channels.
A couple questions come to mind though: The term "resume" was used, which makes me wonder at what point in time there actually were commercials on any of these channels? (Answer: early 2004.) Or does the term "programming" indicate other channels that feature Clear Channel programming? Is the strange addition of WLW to the channel line-up satisfy this arbitration agreement?
Whatever it is, this is cause for concern in my opinion. Clear Channel could very well be trying to sabotage this up-and-coming competitor by eliminating the leading cause for leaving terrestrial.
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