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AM -- FM -- XM RIVAL DIGITAL SATELLITE RADIO SERVICES XM AND SIRIUS HOPE TO REVOLUTIONIZE RADIO AND MUSIC, TALK AND NEWS BEAMED STRAIGHT FROM THE SKY.

Byline: Jesse Hiestand Staff Writer

For Frank Sinatra fans who believe the Chairman of the Board must be holding court somewhere beyond the Pearly Gates, welcome to Frank's Place.

One of two competing satellite radio services launching this summer plans a channel where the late Sinatra and his Rat Pack buddies do nothing but sing, tell jokes and play outtakes from classic shows around the clock.

``You're going to feel like you are in a casino - you're going to smell the cigar smoke and hear the clinking of glasses,'' said Chance Patterson of XM Satellite Radio Inc.

Rival service Sirius Satellite Radio has lined up celebrity DJs including Sting and hip-hop pioneer Grandmaster Flash to spin their favorite tunes alongside stations run by cable's Discovery and History channels and live concerts from the House of Blues.

Both companies hope to do for radio what cable did for television - offer entertainment, talk and news that people are willing to pay for, in this case $9.95 a month.

``You wouldn't want to pay for the way radio is today,'' said Sirius spokeswoman Mindy Kramer. ``That's why we're giving people 50 channels of absolutely commercial-free music, a coast-to-coast signal you never lose, digital quality sound and unbelievable choice.''

A few Los Angeles companies have joined as partners in these ventures.

Salem Communications Corp. of Camarillo, a leading Christian broadcaster, will have at least one channel on the XM service, based in Washington, D.C.

Sirius, headquartered in Manhattan, recently lined up Hollywood-based HOB Entertainment Inc. to provide live and live-on-tape shows from its 27 House of Blues venues.

``I do think there's a huge market of people who want the best access to the music they want and are willing to pay for it,'' said Philip Fracassi, senior vice president of production at HOB Entertainment Inc.

Some analysts caution that people may balk at paying for what they've traditionally gotten for free.

``If these things can come out and get enough subscribers off the bat to where they're actually generating some cash, then they can probably find some more backing and may have a long-run shot,'' said Edward Jones media analyst Jake Balzer. ``If they don't get that then I think they'll be gone in a year.''

Sirius executives say they need only 1 percent of the radio-listening public, or about 2 million subscribers, to break even. XM says it may need twice that.

``Radio hasn't seen any technical upgrade in 40 years, since the advent of FM,'' Patterson said. ``Plus there are only about five basic radio formats across the country right now.''

Many in Los Angeles' radio community are taking a wait-and-see approach to their digital satellite competitors, said Don Barrett, who publishes an industry insider Web site, laradio.com

``Radio has always had its best strength with local - where else do you go for traffic and news,'' Barrett said. ``I think if it happens it's going to be a long way off to even see if it's going to be successful.''

L.A. radio veteran Nicole Sandler, program director and DJ at Internet radio station WorldClassRock.com, believes there is an untapped demand for alternatives to today's limited choices on the FM and AM dials.

``This really opens the door for a lot of alternatives,'' said Sandler, whose station migrated to the Internet after going off the air in Los Angeles in August at 103.1 FM. ``A lot of people aren't served by what's out there.''

Technology is being developed to let people receive Internet radio in the car, Sandler said.

XM and Sirius radio differ in some fundamental ways.

Sirius will only be available for the car, while XM can work in the home as well. Sirius does not believe this puts it at a disadvantage because most people behind the 200 million cars on America's roads listen to radio an average of 50 minutes per day.

``Radio is king of the car, so we feel that's where people will pay for the service,'' said Kramer of Sirius. ``When you're at home there's so many other demands and distractions on your time.''

The two technologies are not compatible, but the companies will allow future radios to decode both signals to avoid a VHS-vs.-Beta fiasco.

Sirius plans no commercials on its music channels, while some music stations on XM will have six minutes of ads each hour, still less than half that of regular radio.

Ultimately, the biggest difference is the choice of programming, and even there both are emphasizing original shows and a wide array of top-quality music.

In other respects the two services are nearly identical.

Both use satellites and a system of ground-based relay stations to beam 100 stations (50 music) to listeners in near-CD quality using a compressed digital signal. Each requires the customer to invest in a new radio. And both have invested heavily in sprawling production complexes to tape and broadcast the shows.

The 82 studios at XM's headquarters in Washington will coordinate the original shows and the 35 channels from brand-name partners like CNN, USA Today, The Weather Channel and BBC World Service.

``You won't hear this programming anywhere else - this won't be a rebroadcast of content from other places,'' said XM's Patterson.

XM plans channels for comedy, kids and several for Asian listeners, and a talk channel for African-Americans.

From its 76 studios, Sirius plans to broadcast news and talk from Bloomberg, CNBC, National Public Radio and others along with nine rock stations, five country and niche programming like Latin love songs, 1970s hits, sock-hop oldies and a channel devoted to Broadway songs.

``People will pay for commercial-free music where the on-air personalities are going to take you through the experience and their expertise of music,'' Kramer said of Sirius' DJs, which are expected to include Doors keyboardist Ray Manzarek.

XM- and Sirius-capable radios were unveiled this week at the Consumer Electronics Show in Las Vegas. Many will cost about $150 over the price of a standard car radio and only one XM radio, a $300 model from Sony, will work in both the house and car.

Many major car radio manufacturers plan to have digital satellite models available when the services become available.

The radios will also come in some new cars. Sirius is working with BMW, DaimlerChrysler and Ford Motor Co. General Motors Corp. is a strategic investor in XM.

The launch of XM's first satellite, dubbed ``Roll,'' was scrapped last week about 30 seconds before liftoff from a launch pad floating in the Pacific Ocean from Long Beach-based Sea Launch Co., an international consortium led by Boeing Co. Technical reasons were blamed and the launch was reset for Feb. 28. ``Rock'' is set up go up April 15.

They will orbit 22,300 miles above Atlanta and Denver.

Sirius' three birds are already racing through the heavens after leaving Baikonur Cosmodrome in Kazakstan, where Sputnik started the space race.

The elliptical orbits of Sirius' satellites at 23,000 miles means two are always over North America.

The systems also rely on a network of ground-based repeaters to keep the signal strong in urban canyons caused by skyscrapers, tunnels and other obstructions.

Both companies have raised more than $1 billion from investors.

Founded in 1990, Sirius had a jump start over XM, which formed in 1996, a year before the two firms acquired their S-band spectrum from the Federal Communications Commission for about $80 million apiece.

CAPTION(S):

drawing

Drawing: HOW SATELLITE RADIO WORKS

Jon Gerung/Staff Artist
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jan 14, 2001
Words:1251
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