An arbitrator denied XM Satellite Radio’s request to recover 20 percent of the value of two Boeing-built satellites, XM announced in a Sept. 27 filing with the U.S. Securities and Exchange Commission.

The XM-1 and XM-2 satellites suffered from power loss due to a solar panel problem that affected a group of Boeing satellites based on the 702 platform, forcing XM to launch replacements earlier than anticipated. Boeing had problems with six of the 702 platforms. Besides XM, other satellites that suffered from the solar-panel problem were built for Panamsat (which purchased two), Telesat Canada and Thuraya Satellite Communications.

XM had recovered $142 million, or 80 percent of the amount, from insurers and filed an arbitration claim in August 2004 for the remaining 20 percent of the value. The company was recently told that its claim was rejected and no further recovery efforts will be made, XM said. The result does not affect previous payments, the company added.

XM-3, another Boeing 702 satellite, was placed into orbit in February, while XM-4, also based on a 702 satellite, is scheduled to be launched by a Sea Launch Zenit-3SL in October.

In June 2005, XM award a contract to Space Systems/Loral (SS/L) to manufacture the XM-5 satellite, which is scheduled to be finished in 2007 and be held as a ground spare.

XM and rival Sirius Satellite Radio also are dealing with complaints.

Oprah Partnership Starts Strong

The news was better for XM on the programming front, as the launch of the highly touted Oprah & Friends channel brought in 13 new, high-profile advertisers for XM, the company announced Sept. 27. The radio channel, which features content produced by Harpo Radio Inc., was launched Sept. 25.

Among the advertisers attracted by the Oprah brand are: Acuvue, Crown Publishing, Dove, GE, Iams, J.C. Penney, Jenny Craig, Slimfast, Snapple, Splenda and Target.

"In terms of ad sales, this is XM’s most successful channel launch ever," Scott Karnedy, XM senior vice president of sales and marketing solutions, said in a statement. "Not only are clients investing millions of dollars to be a part of Oprah & Friends, but most of them are advertising on XM for the very first time."

While the majority of XM’s revenue comes from customer subscriptions, XM advertising revenue is growing, the company said. XM generated $20 million in ad sales in 2005, up from $8.5 million in 2004 and $4.1 million in 2003. XM did not reveal how much revenue the new advertising is contributing.

Separately, Arbitron Inc., which measures network and local market radio audiences across the United States, announced Sept. 25 it would delay previously announced plans to add satellite radio to its measurements.

At the Arbitron Radio Advisory Council meeting in July, Arbitron had discussed plans to report individual satellite radio channels in the Fall 2006 survey reports but delayed that plan "in order to further refine rules for crediting satellite radio entries," Arbitron said.

The delay will allow Arbitron to refine and test its rules for handling various types of entries that could be assigned to either satellite or over-the-air stations.

"As an example, we want to test the rules necessary to assign entries such as NFL football or MLB baseball since these programs are broadcast on both over-the-air radio and satellite," Brad Feldhaus, Arbitron’s vice president of product management and client services, said in a statement.

The company hopes to begin reporting individual satellite-radio channels in its survey reports at some point in 2007. "We recognize the implementation date for reporting satellite in local markets has moved previously, and for this reason we hesitate to provide another target survey date until we have this desired additional data," said Feldhaus.