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NEWS: DELPHI CORPORATION INVESTS IN ONDAS MEDIA'S PLANNED EUROPE-WIDE SATELLITE RADIO BUSINESS by GRANT GODDARD

www.grantgoddard.co.uk January 2006

American car parts manufacturer Delphi Corporation has taken a “significant cash strategic investment” in Madrid-based Ondas Media, which has plans to develop a Europe-wide satellite radio business by the end of the decade. Announcing its investment at last week’s Consumer Electronics Show in Las Vegas, Delphi said it would provide hardware to Ondas, advise on strategy and take a seat on the company’s board. Ondas still needs to raise more than $1bn to fund its start-up plans. Bob Schumacher, general director of Delphi's advanced product development, said: "We believe satellite radio will revolutionise the European audio broadcast industry across the continent by offering consumers a lot more choices that are aligned with today's lifestyles." Ondas chief executive Celso Azevedo said: "Europe's diversity in languages and cultures, often seen as a possible deterrent for pan-European satellite radio, is in reality a fantastic opportunity for Ondas and Delphi to address a largely untapped market together." Delphi plans to open a new technology centre in Germany later this year to develop satellite radio technology, the area in which it is already the largest manufacturer of sets in the US for the XM and Sirius satellite radio networks. In Europe, Ondas faces the challenge of negotiation with each European country’s broadcast regulator for an appropriate licence and spectrum. Uncertainty surrounds Delphi’s future because, since last October, the company has required reorganisation under American bankruptcy laws. Research by Delphi and Ondas has shown that Europeans listen to an average 17 hours per week of radio, compared to more than 20 hours in the US, and it concludes that Europeans desire more diversity in radio programming, particularly in sports coverage. Competing plans for a pan-European direct-to-home satellite radio service have already been started by Viatis, a division of US-based corporation Worldspace, and by Luxembourg’s Europa-Max Participations SA, both of which have separate proposals to launch a satellite within the next two years. An earlier attempt by Luxembourg-based Global Radio SA was abandoned in 2003 due to lack of funds. Questions surround the feasibility of such a project. Anthony de Larrinaga, European media analyst for SG, said: "I'm not too sure where the gap in the market would be for a satellite service, particularly in the UK, or what the business model would be to support it". Jimmy Schaeffler, an analyst at the Carmel Group consulting firm, said a company would need to raise at least $750 million to pay for the satellites, launch and infrastructure. He added that any service would need to broadcast in several languages and that dealing with individual country regulatory authorities could prove a logistical nightmare.

News: Delphi Corporation Invests In Ondas Media's Planned Europe-Wide Satellite Radio Business ©2006 Grant Goddard

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David Bank, a satellite radio industry analyst with RBC Capital Funding, said that forging partnerships with car companies would be the most important task for Ondas and Delphi. He pointed to WorldSpace, which has a partnership with Delphi in India, but has had difficulty finding car manufacturers willing to install its radios. In the UK, Sky launched its 'Gnome' satellite radio receiver late last year while, in the south of the UK, the Worldspace free and subscription-based services can be received from its African satellite footprint using its custom radio receiver.

[First published in 'The Radio Magazine' as 'Euro Satellite Get US Backing', #718, 11 January 2006]

Grant Goddard is a media analyst / radio specialist / radio consultant with thirty years of experience in the broadcasting industry, having held senior management and consultancy roles within the commercial media sector in the United Kingdom, Europe and Asia. Details at http://www.grantgoddard.co.uk

News: Delphi Corporation Invests In Ondas Media's Planned Europe-Wide Satellite Radio Business ©2006 Grant Goddard

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