Vegas Buzz

Vegas Buzz Radio Interview:

Gloria Clements, XM Radio

"We want to be the HBO of Radio."

- Gloria Clements, National Fleet Manager, XM Satellite Radio

LISTEN OR DOWNLOAD AUDIO INTERVIEW

Gloria Clements, Truck Show Las Vegas 2005

XM Satellite Radio ( www.xmradio.com NASDAQ: XMSR ) is still the leader, despite growth of its major and sole competitor, Sirius. XM continues to retain its first-mover edge and growth momentum. XM is well-managed, owns its own technology and manufactures its own product, decidedly strong competitive advantages.

Seven out of 10 satellite radio subscribers are XM Radio subscribers, and XM expects to end the year with six million subscribers.

An important growing market segment is the trucking industry, currently accounting for 10% of XM's subscriber base.

XM understandably maintains a presence at trucking industry shows such as the Truck Show Las Vegas.

Gloria Clements is National Manager, Fleets, responsible for marketing XM Radio to this vertical industry segment.

In the interview, we followed up on concepts shared with us in prior interviews with XM radio over the past three years and in particular:

• XM’s Growth
• Evolution of technology and competitive advantage over rival SIRIUS
• Trucking Industry-Specific Product, and benefits for truckers and trucking industry

VBR: Basically I'd like to start off with congratulating you (XM Satellite Radio) on your tremendous growth, and picking up in the consumer market. Used to be you used to have to beg and grovel and go to places like Radio Shack and say "Hey, can you order it for me." But now ... XM’s everywhere, Circuit City, Best Buy, Wal-Mart…

Plus the products are more home theatre friendly, more home-friendly; and that's where it has to go because the minute that it gets too techie or nerdy, people get turned off.

XM: Exactly.

VBR: And everybody we've talked to recently say that what's good is that it's simple; you push a couple of buttons here and there and that's what people are used to doing.

So here you have this wonderful satellite radio with this almost embarassment of riches with all these choices, and that's what it's all about today - Just choice; you don't have to take what's given to you anymore and you've got choices that don't quit.

XM: And we have options not only on our 150 channels and that alone... We have such incredible options in hardware now that we're still a generation and a half ahead of our competitor on hardware because we have the latest and greatest 窶・ all sizes, all price ranges - particularly with the new MyFi and its capabilities of handheld... and...

VBR: Can you tell us about the MyFi?

XM: Oh it's such an exciting product, and as you can see, it's here. And you're able to have an all in one bundle which our consumers are telling us 'we love bundles' - all in one-bundles…

VBR: Give it to me all at the same time…

XM: Right. Don't make me have to buy three boxes to get everything I need... (laugh).

But the NEAT thing about the MyFi: Think about an iPod, actually. But you really don't have to have a computer to download music.

VBR: That's what people are looking for...

XM: Exactly. And the neat thing is we can save five hours of music on this so you've got earbuds so you can listen to it wherever you go. Whether you take it to the gym, whether you take it on an airplane - wherever you want to go - you can actually save five hours of music. It can be news, talk, sports whatever; you can go to bed and program what you want to hear next morning; you're up, you're ready to go, and you've got five hours there.

VBR: It programs itself so you don't need a computer... You don’t have to download.

XM: You don't have to download... It's fabulous...

VBR: A lot of people don't want to do that...

XM: And, in this marketplace, these drivers are out on the road all the time; they don't want to be messin' with having to download music. They don't have that time or luxury...

But with XM Radio, you take it to the gym or you take it out on the walk or do whatever you want to with your earbuds, then you get into your car, you take off your earbuds, you dock it right in your car in the docking station - right there in the car - and it hooks up to your radio. Then you get to your house, you pop it out of that docking station, take it and put it in your home stereo; then you've got it at home.

You don't have to miss your talk channels, you don't have to miss your favorite 50's channel or whatever channel is your favorite. You've got it all, all in one bundle. So we're very excited about this piece and surprisingly the driver market has been very excited about this as well. And even though it is a more expensive bundle just because it has everything all inclusive, it is such value add because you've got everything you need. People who didn't think they wanted XM in the beginning or just didn't know about it, now all of a sudden realized that this answers all their questions, this solves all their problems; because they can take it anywhere.

The interesting thing in the truck market is we've got a couple of bundles. Truckers said the same thing, "Give me a bundle." So we've added a couple of fabulous pieces to make it more trucker-friendly...

VBR: Sounds almost like a commercial... "Give me a bundle."

XM: Exactly.

But with the Roady 2 and the SKYFi 2 which are our two other portables, we've added a suction cup mount that truckers can put right there on the windshield. We've added our antenna bracket so they can take that little magnetic antenna and move it outside instead of having it on their dash, put it on the sideview mirror, and be done with it.

We've also added a remote control and they feel like they've got everything they need for a truck bundle, a professional package.

And actually they're the same price in the truck market as they are without all those extra pieces out in the Circuit City and Best Buy world.

So they're all just great pieces (for the truck market).

VBR: And it's all pretty much affordable?

XM: We've got the spectrum now... We've got a $99 product and we've got a $299 product. So whatever your taste, whatever your pocketbook, we have an answer for you.

VBR: It's pretty cool when people can walk around and get satellite radio...

XM: Exactly, and be on an airplane and be able to listen to what you missed. Another feature that the MyFi has; it has a TiVo function so that you can actually put it on PAUSE for thirty minutes and come back and not miss the end of that baseball game because it's right there live - or recorded.

VBR: That is pretty neat.

XM: It's very neat.

VBR: How many channels altogether do you have ?

XM: We have 150 channels now. We've even added a Latino sports channel.

You can get your baseball and your soccer all in Spanish - which is huge out in this part of the country.

VBR: The Hispanic market is pretty big now .

XM: Absolutely.

VBR: One out of seven people in the country is Hispanic.

XM: Absolutely. We've been told that they're loving that piece of our pie.

One of the other huge things in this market are the fleets. Fleets are now saying "You know this is the greatest retention tool that I've found for my drivers." Because it is the gift that keeps on giving. And so a lot of fleets are saying "It's time to belly up to the bar and pay for this for our drivers." So now we've even worked on special fleet rates so a fleet can actually pay for everybody all at one time and have a monthly bill and be able to have their drivers have XM every single day that they drive for them.

VBR: So it's like a perk nowadays.

XM: Definitely a perk.

VBR: I'd like to have XM radio if I were a driver.

XM: Well if you drove, you'd swear that you would not leave home without it.

One of the most important things about the fleets is that so many fleets in the beginning were feeling like their drivers could take responsibility of the service and they might take responsibility of the hardware or vice versa.

But the important thing is that now the pendulum is swinging. They really are thinking that this is something they should pay for. Some of them are payroll-deducting the drivers and helping their drivers pay for it, and the nice thing is we're flexible with all of their different needs. We're trying to answer all those needs of the different fleets that come whether they're large, or 20 trucks, 5 trucks or three thousand trucks. We’ve got a package for each one of those.

VBR: What's the installed base right now, with trucks? The trucking industry today?

XM: How many truckers are part of our whole subscription base?

VBR: Yes. Tough question, I know…

XM: It's not a tough question. We have over 4.2 million subscribers today.

We've got over 4.2 million subscribers today. So we're over that mark. And out of that mark, we're probably looking at 10% are truckers. And that's probably on the low-end. I think that's a conservative estimate.

VBR: Gloria Clements, you're National Manager of Fleets... What does that mean?

XM: All of us at XM wear a whole lot of hats.

VBR: You're a small entrepreneurial company that's growing really big...

XM: We look really, really big, but we're really start-up and everybody's pulling a lot of weight and our responsibility is the trucking fleets across the country as well as the truck stops across the country. As well as the OEMs and what’s coming out of the factory. PanaPacific is our distributor here and they did a phenomenal job getting the product to the truck stops and the truck dealers and the OEMs, working with us on plans and strategies to help us saturate this market. So that's my role: Helping introduce satellite radio to the entire trucking industry.

VBR: Wow. How far are you along in your goals?

XM: I think we've just barely scratched the surface; we've finally gotten to the point where drivers aren't coming up to us and asking "What is that satellite radio? That X-FM thing?" they called it...

VBR: Well XM has almost become an alternative way of saying "Satellite radio."

XM: Exactly. We feel our branding is very important.

VBR: When you say "XM" people say "Oh, satellite radio..."

XM: And you know it's important for people looking at a radio to say "You've got everything: You've got AM, you've got FM, you've got XM. It's just a natural segue.

And remember the days when we said we wouldn't pay for television? Now we wouldn't dare to watch just three channels anymore. Everybody has cable, and you wouldn't be without it. XM"s going to be in everybody's cars, and everybody's trucks. And in everybody's homes throughout this country in a very short period of time.

VBR: And certainly you've already got the infrastructure to do that .

XM: Absolutely.

VBR: And you're already present in North America everywhere.

XM: Exactly.

VBR: One of your satellites is called "Rock" and the other is called "Roll?"

XM: Exactly.

VBR: That's pretty interesting... Being in the news business you get a lot of email. Did you know this? Did you know that? Lots of press releases... A friend told me that.

XM: Our headquarters are in Washington, D.C., and if you ever have an opportunity to come visit our studios, you will not believe it. It still blows me away and I've been with XM for three years now.

VBR: Now what do you need a studio for?

XM: Oh my gosh...

VBR: You do live stuff also?

XM: We have a D.J. for every one of our channels. We have 82 studios in our building, plus we have an enormous live studio where we bring in talent. Just yesterday Willie Nelson was there performing live. We had Bonnie Raitt, Al Jareau... You name it... They come in and perform. We have our own customized live programming.

VBR: Now since we're in Vegas, I've got to ask the question, "Do you do anything live from Vegas?" Or do you bring in any Vegas acts and put them live in the studio?

XM: Actually we don't do that. That hasn't come up yet.

VBR: We should probably do that. We'd love to have a piece of that pie.

XM: You never know. XM is always open to new suggestions.

One of the neatest things we've done - sort of like on Bravo - There's the Actor's Studio on one of the cable channels - We have the Artist's Confidential, where we bring in the artists; they have an intimate one-on-one, they talk, they sing, they tell us all good things (about themselves).

VBR: So this is like an MTV unplugged? Sorta?

XM: Exactly. We want to be the HBO of Radio. And we're getting there.

But we had this original programming with some fabulous, fabulous new shows that will become standard on XM and we've already got an enormous following. So the neat thing about Willie Nelson being in - he was there live - we recorded it live - and then we will repeat that on the Country Channel or the Bluegrass Channel - wherever he might fit... So people will get to hear that ongoing... It's fascinating. It's more than just music, and 'canned this' and 'canned that.'

VBR: It's almost like a cultural phenomenon, like the iPod is, in a way.. Probably before the iPod became so popular or almost concurrent... when people started carrying their little XMs around..

XM: Exactly.

VBR: So that's a pretty interesting thing. Kind of like what Starbucks did, they made it into a cultural thing, you know? It's not just a product. You've got to be "good enough" to go there and partake of it.

XM: Well you're exactly right, and you may or may not know that Starbucks has their own channel on XM, Hear Music.

VBR: Yes we did.

XM: Channel 75.

It's a phenomenal channel where you get Willie Nelson and all of his favorite songs instead of his songs.

It's really... We're doing so many new things... And we have an enormous talk team and music team that get together and brainstorm and listen to our listeners, and hear what they want. And respond.

VBR: Do you have a hand in the programming yourself? Do you produce any programming?

XM: Do I produce any programming? Oh no, they wouldn't have me do that.

VBR: Why not?

XM: I'm just a pawn out here helping the drivers get XM radio. That's what I'm here to do.

VBR: Were you from the trucking industry yourself?

XM: Absolutely.

VBR: Were you a driver?

XM: No, no... I spent 10 years with COMDATA. We produced a three-hour Trucker's Magazine on tape that we did for fleets to help them communicate with drivers...

VBR: Sounds almost like a podcast…

XM: It was, and it was fabulous...

VBR: Podcast on cassette...

XM: And the interesting thing is the segue to XM from that piece of being out in the field helping fleets communicate with their drivers, this was just our COMDATA to the Power of X; this moved us to a whole new level. And the mission behind this for me is we're helping with the lifestyles of drivers. Drivers' lifestyles and lives are changed because they have XM in their cab. It doesn't just keep them awake; it doesn't just entertain them; it changes their life.

The traffic and weather channels that we have... It helps them on the road, it helps them plan their routes. We have an emergency channel that they can turn to in an emergency situation

VBR: So it's really beyond entertainment, but it gives you that in spades as well.

XM: Exactly, exactly.

VBR: I know if I was a trucker out there I'd want this information.

XM: You would not drive without it.

VBR: I wouldn't. It's pretty amazing.

XM: You know what? I'm still amazed. I'm amazed every day.

VBR: The technology just blows me away.

XM: And it will continue to blow you away!

VBR: I've always been an aficionado of what XM has done. I continue to follow it.

XM: Just keep your 'ears on,' because it's not going to be very far from now...

VBR: Sounds like CB talk...

XM: That's right, because we're always introducing new products every year and what's coming is very exciting, so you'll want to keep you ears on and watch for it.

VBR: You're not going to tell at this point, right?

XM: Oh no, well, they'd shoot me at sunrise. (Suffice it to say) ... We've got great things coming and we always will.

VBR: Could you just run down your products one more time, the features, and where they can be found?

XM: Absolutely. The Roady 2 XM PRO is the professional trucker's bundle of our smallest portable unit that they can actually plug into a cigarette lighter and "plug-in-to-go." They don't have to have a professional install or any of that. Then we move on to the SKY-FI which is a little bit larger piece, a few more features and benefits and it also has a Trucker Bundle which has the added benefits, and also the MY-FI, the third portable, plus on the OEM side, Delphi makes a Satellite-Ready radio that all a driver has to do when it comes stocked in his truck is get a receiver, get an antenna, and he's good to go.

All of these products are sold at any of the truck stops we have the Petros, the Pilots, the TA's the Flying J's - also in Flying J's eStore, all these are available there as well as in all the truck dealers across the country.

So, a driver can pop in, get his truck serviced, and go and check out the satellite radio.

VBR: That's great. Is there anything else you'd like to talk about in terms of a pitch for XM satellite radio? What would be a good reason ... say I don't know anything about it? Why would I want it?

XM: You know the interesting thing... I did not think that I was a prime candidate myself. I fly everywhere, I'm in my car for 20 - 30 minutes at a time...

VBR: You've still got that 'geek-like aura,' though...

XM: I think it's gone a little past that, because everybody that listens for an hour, becomes a fan. We don't just have listeners, we have fans who don't want to drive without it. I can't even go to the airport without my XM in my car. I've been late because I've had to go back and get my piece and my docking station. You become such a fan... you're ears get spoiled because the sound quality is so much better than terrestrial radio.

VBR: That's not saying much...

XM: Yes, but the amazing thing is yes, we have no commercials on all of our music channels and that's just wonderful; but even besides all that the sound quality is so superior that your ears do become spoiled.

And you don't want to drive without it. I don't listen to anything else besides XM, I haven't listened to a CD in three years, and I didn't think I was your most likely candidate.

For you? It'll change your life. You'll get your CNN, you'll get your FOX news, you'll get all your talk you want, plus you can ... when did you graduate from high school?

VBR: '68.

XM: O.K., you live on the 60's channel, you will not believe how much fun you will have.

VBR: Kinda stuck in the '60's.

XM: There you go. And we don't just play oldies on the 60's Channel, you see?. It's like you were in the '60's. And we'll have commercials, and I Love Lucy and all those bits of sound bits from all those various things that were popular during the sixties and you drive down the road with a smile on your face.

And there's something to be said about putting you back to a time when there was no stress in your life!

VBR: Well, I'm definitely sold, I just need to get the right model because I want to listen to it everywhere.

XM: Well, I'll help you with that. We've got some great pieces, and some great buys. I'd love to help you do that. VBR

LISTEN OR DOWNLOAD AUDIO INTERVIEW

Corporate Profile

In the fall of 2001, XM Satellite Radio pioneered the introduction of satellite radio in the U.S. XM is America's #1 and most listened to satellite radio service. Broadcasting live daily from studios in Washington, DC, New York City and Nashville, Tennessee at the Country Music Hall of Fame, XM's lineup includes more than 120 digital channels of choice from coast to coast: 68 100% commercial-free music channels, featuring hip hop to opera, classical to country, bluegrass to blues; 34 channels of premier sports, talk, comedy, children's and entertainment programming; and 21 channels of the most advanced traffic and weather information for major metropolitan areas nationwide. Affordable, compact and stylish XM satellite radio receivers for the home, the car, the computer and boom boxes for "on the go" are available from retailers nationwide. In addition, XM is available in many new car models. XM is a popular factory- installed option on many General Motors models, as well as a standard feature on several top-selling Honda and Acura models. JetBlue Airways and AirTran Airways passengers will be able to listen to XM's programming in-flight later in 2004.

Rebuttal article: FCC - NAB - XM LOCAL radio controversy

In order to provide national coverage of weather, XM must of necessity cover local news, particularly weather conditions, and emergency circumstances. Giving all this to local stations would preclude drivers from getting the information when they need it most - prior to arriving at the local destination. Turning the shoe on the other foot, there was nothing in FCC regulations preventing local TV and radio stations like WOR New York, and Ted Turner's Super Station, from taking to the skies and also broadcasting via satellite. So why should satellite broadcasters being barred from covering local news?

The NAB sounds like they're trying to protect a broadcasting elite that's all but been decimated by new media technologies assaulting on all fronts.

(Vegas Buzz Radio Editorial)

(C) 2005 Vegas Buzz News Network