Time Warner Inc.'s America Online and XM Satellite Radio Holdings Inc. are expected to announce today that they will create an online radio service together, the (paid-restricted) Wall Street Journal reports Monday. Excerpts follow.
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The new co-branded service, which hasn't been named yet, will replace the current paid service on XM's Web site and will replace AOL's current radio services -- AOL Radio and Netscape Radio.
For AOL, the agreement is part of the Internet giant's efforts to turn itself around. In the past two years, four million AOL subscribers have defected, primarily to cable and phone companies that provide high-speed Internet connections. AOL hopes that by beefing up its radio services by providing greater access to programming via its Web sites, it can persuade subscribers to stay with the service.
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For small but fast-growing XM, with 3.8 million subscribers, the deal is about marketing to AOL's 22 million subscribers. "We get enormous brand building and sampling out of it," says XM Chief Executive Hugh Panero. He believes many of those online samplers will eventually subscribe to his radio service, which costs $22.95 a month.
The move strengthens AOL's position against other big online radio networks, including closely held Live 365 Inc., Yahoo Inc.'s radio service and Microsoft Corp.'s MSN Radio. And it helps AOL and XM compete with online offerings from regular radio networks.
Competitors include Clear Channel Communications Inc., which by the summer will be streaming -- or providing Web-site access to -- 300 of its 1,200 radio stations. In addition, Viacom Inc.'s Infinity Broadcasting unit has been streaming stations through AOL but recently announced it would start its own streaming program.
