XM: Radio to the power of “Uh-oh”

XM radio today lowered its subscriber forecast, citing “unexpected weakness in demand for its satellite radio service as well as potential legal pitfalls from a recording industry lawsuit,” per the Wall Street Journal.

The Journal also points out that XM will hit 8.5 million subscribers by the end of 2006, lower than its previous guidance for nine million customers by year’s end. The company had 6.5 million subscribers at the end of the first quarter.

We wonder: Would a settlment,a la the way Sirius reached a deal with record labels) pave the way for downloadable radio and more subscribers, or is there something more serious afoot here? We also wonder if the insanely escalating cost of putting gas in the car is robbing people of the appetite to keep satellite in their ride. A new report, released this month suggest such a line of thought might not be so crazy.


“The latest Consumer Reports Auto Pulse Survey finds 37 percent of consumers say gasoline prices are so high they are looking at replacing their current vehicles with more fuel-efficient ones — mainly hybrid models.”

If people are feeling it that badly, they might take issue with paying the equivalent of half a tank of gas to hear Bob Dylan pick songs about the rain.