Satellite radio broadcaster XM Satellite Radio Holdings Inc. Thursday said two lenders have agreed to provide $66 million in funding, and it announced cost cuts as its service expands to more key markets.
XM began the second phase of its roll-out on Thursday, launching its 100-channel music and news service in cities in the southern half of the United States, including Miami, Atlanta, Phoenix and Los Angeles.
Washington-based XM said Boeing Capital Services Corp. will provide $35 million in new debt financing, while Boeing Satellite Systems International Inc. will provide $31 million in restructured obligations.
The transaction is expected to close later in October.
The new financing and cost-cutting steps leave XM with enough funding until the second quarter of next year, and the company is already considering further deals to raise capital, XM President and Chief Executive Hugh Panero told Reuters.
Meanwhile, XM has started cutting costs through a more selective marketing campaign and by reducing the number of ground-based repeater stations which receive satellite radio signals and amplify them for listeners in cars and homes.
XM, which spent some $776 million building its network, now believes it “overbuilt” the repeater stations in some markets, Panero said.
While declining to provide exact figures, Panero said sales of its satellite radios have been good in the two test markets of San Diego and Dallas. He repeated the company’s projection that it will ship 100,000 units to retailers by the end of this year.
On Tuesday XM’s only competitor, Sirius Satellite Radio Inc. said its CEO had resigned and that it would delay the launch of its service until early next year.
Despite rules in both of their broadcasting licenses that require the competing services to eventually have interoperable radios that could receive either, Panero said XM is under no obligation to help Sirius, which blamed its delay on problems with the chipsets for its radios.
“Sirius obviously had some significant technical problems and management issues,” Panero said.
Shares in XM closed up 4 cents, or 0.5 percent, at $8.64, while Sirius fell 16 cents, or 5.2 percent, to $2.93, both on Nasdaq.