• by Erik Sass  @eriksass1, March 10, 2006

XM Satellite Radio Thursday announced plans carrying advertising on four channels programmed by radio giant Clear Channel Communications. The decision is a setback for XM, which has promoted its content as commercial-free. Meanwhile, Sirius Satellite, which also issued an annual report detailing financial difficulties, announced programming it hopes will draw more listeners from key market sectors.

Although the company struggled against accepting commercials in arbitration, XM's announcement seems to be in line with hints--made after its financial statement--that it would soon adopt more advertising. XM has suffered from high costs for acquiring new subscribers, with an expenditure of $196.5 million proving largely fruitless in the face of Howard Stern's high-profile move to Sirius in January of this year. Accepting advertisements may offset some of these costs, or allow XM to offer cheaper subscriptions, or both--but also undermines the company's commitment to "ad-free" programming (in reality, some XM channels carry advertising already).

XM's move to adopt advertising may also be intended to shore up investor confidence in the company, which was shaken by the departure of director Pierce Roberts Jr., disclosed in the annual filing. Roberts struck an ominous note in his resignation, writing that: "Given the current course and speed there is, in my view, a significant chance of a crisis on the horizon. Even absent a crisis, I believe that XM will inevitably serve its shareholders poorly without major changes now."

Clear Channel, which owns 3.2 percent of XM's stock, programs a current hits station, a recent hits station, light music, and country on XM.

Meanwhile, XM's competitor, Sirius, announced Wednesday that it was rolling out four new talk and entertainment channels: Fox News and Talk, Blue Collar Comedy, Cosmo Radio, and the Playboy Channel. The programming changes, which take effect on Tuesday, March 14th, are intended to net a larger share of the young adult market of both genders. The introduction of Blue Collar Comedy and the renaming of Sirius' channel for cross-country truckers--now called "Road Dog Trucking"--may also indicate that the channel is aggressively pursuing the working-class demographic.