Sirius to Broadcast NASCAR Racing

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Sirius Satellite Radio Inc. on Tuesday said it would broadcast NASCAR racing starting in 2007, adding another pricey sports package to its roster, but said it would sell advertising on a channel devoted to the hugely popular auto racing circuit.

Under an exclusive five-year pact, Sirius will pay NASCAR (National Association for Stock Car Auto Racing) rights fees totaling $107.5 million, with the highest payments in the final years of the term.

NASCAR, which counts the Daytona 500 as its premier event, is currently broadcast on Sirius' larger rival, XM Satellite Radio Holdings Inc., under a deal set in 2000.

Asked on a media conference call to compare the value of this deal with the fees paid by XM, Brian France, chairman and chief executive of NASCAR said the new pact was worth "a lot more."

"We are disappointed that we were unable to reach an agreement on extending our arrangement with NASCAR beyond the 2006 season," said XM spokesman Chance Patterson. "Certainly this deal will fuel the ongoing debate about the cost of sports programing across all media."

Both XM and Sirius, money-losing companies not expected to turn a profit for several years, have signed expensive deals to broadcast professional sports. XM last year signed a $650 million deal to broadcast Major League Baseball, while Sirius will pay $230 million for National Football League games.

In January, Sirius extended its nonexclusive agreement with the National Basketball Association to broadcast pro basketball games.

Janco Partners analyst April Horace said the deal may split potential satellite radio customers into those who enjoy music and talk shows and those who make sports a priority.

"At the retail level, Sirius has a more robust sports package, and that, combined with Stern, could sway future consumers to Sirius," she said. "But then again, if they are not very sports-oriented it could sway them to XM."

Sirius lags behind XM in subscriber numbers but attracted widespread attention last year after it signed a deal with controversial radio show host Howard Stern and made media veteran Mel Karmazin its chief executive officer.

The deal will be a driver of subscriber growth and advertising revenue, according to Sirius, which provides subscription-based radio services for a monthly fee. Both companies are racing to add features that will spur subscribers to pay between $10 and $13 a month for the service.

Ironically, the addition of NASCAR and Stern gives Sirius a pair of brands that will attract advertising -- although both XM and Sirius tout that most of their programing is free of the frequent commercials found on traditional radio stations.

Shares of Sirius slipped 25 cents, or about 4.2 percent, to $5.61 in active trade on Tuesday afternoon.

Analysts said the stock was hurt by reports that a frequent guest on Stern's radio show has been subpoenaed by the U.S. Securities and Exchange Commission in a probe of possible insider trading in Sirius Satellite Radio.

Karmazin on the call reiterated the company's view that the matter does not involves Sirius or any actions of its officers.

Source: Reuters

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