Satelite Radio Case Study

In 2001, Satellite Radio was new technology that many felt would revolutionize the way we listen to radio. It was the first major advancement in radio since FM emerged in the 1960’s. Satellite radio is a radio service broadcast digitally-encoded audio to Earth-based receivers, either directly from an orbiting satellite, or from the satellite to the receiver via terrestrial repeater station. Receiver radios were primarily in cars but could be in households, offices or carried as portable devices. Sirius Satellite Radio was founded by Martine Rothblatt, David Margolese and Robert Briskman in 1990 and the company petitioned the Federal Communications Commission (FCC) for the use of S-band frequencies that the FCC later decided to allocate to digital audio broadcasting. In 1992, Rothblatt resigned as CEO and Margolese took over as chairman and CEO and later changed the name to CD Radio and spent the following five (5) years lobbying the FCC to allow satellite radio to be deployed. In 1997, CD Radio obtained regulatory clearance and not long after the FCC also sold a license to XM Satellite Radio formerly known as American Mobile Radio Corporation. In 1999, CD Radio changed their name to Sirius Satellite Radio to avoid associating itself with the soon to be outdated CD technology. Although Sirius was established first, XM actually launched their first broadcast on September 25 2001, nearly four (4) months before Sirius. Sirius first broadcast was on February 14, 2002 to only a few cities but expanded to the rest of the US by July 2002. Both companies combined spent over $3 billion to develop satellite technology, build and launch the satellites and for various other business expenses. Both Sirius and XM offer commercial free music stations, as well as talk, news and sports. With the ability to offer so many different channels, satellite radio has a wide variety of programming and huge potential user base. However, suppliers have all the bargaining power