The Satellite News Financial Ticker

Wall Street Analysis

By Paul Dykewicz, Senior Analyst/Senior Editor

Last week’s move by XM Satellite Radio [XMSR] to launch its own proprietary public radio station and to hire former National Public Radio (NPR) Morning Edition host Bob Edwards as a featured on-air personality are the latest reasons why the company has been a runaway success. XM addressed a weakness it had ever since rival Sirius Satellite Radio [SIRI] arranged an exclusive deal to become the only satellite radio service to offer National Public Radio.

The new channel is aimed at capturing public-radio fans by using NPR-like programming. It also wants to cash in on the fan following Edwards likely will bring after NPR’s recent controversial decision to demote him from his traditional role as morning host. Edwards’ new daily morning show will be the cornerstone of XM’s public-radio channel, XM officials said, and the move also gives XM marketing buzz that that doesn’t require additional advertising expenses for the company.

XM Public Radio will launch Sept. 1, featuring programming from Public Radio International (PRI); American Public Media (APM); and WBUR, Boston’s public radio station. XM also put Edwards’ photo on the top of its Web page last week to highlight the change.

XM also plans to begin offering five new local traffic and weather channels, beginning today, to reach its goal of providing the service to 21 metropolitan areas across the country. The latest markets to gain the service are Minneapolis, Seattle, San Diego, Atlanta and Miami.

Savvy programming decisions have become the norm at XM. However, no Wall Street analysts pounced on the developments last week to modify their typically favorable ratings on the company. A key issue about XM is not whether it is a good company on the rise, because it already has proved itself by meeting or exceeding the guidance it has given to Wall Street analysts every quarter since it began operating during fall 2001. The question is what the appropriate valuation should be for XM’s stock price? The lack of analysts citing last week’s news as a reason to upgrade the stock tells me that XM’s true valuation is a dicey issue. Investment firms appear to have recognized the need to track the company, because seven of them initiated coverage of the company with favorable ratings during the past two months.

Investors now will have more help from Wall Street in trying to value the company.

Paul Dykewicz is senior editor and senior analyst of Satellite News. He can be reached at 301/354-1769 or at [email protected].