Starbucks, XM Terminate Marketing Agreement; XM Makes $22 Million Payment To Get Out


Starbucks and XM (NSDQ: XMSR) radio will end a longstanding joint marketing agreement that will result in the Starbucks XM Cafe channel going off the air. The agreement, which established a Starbucks branded channel and covered in-store radio, had been slated to continue into 2009, according to an SEC filing. XM has issued Starbucks $22 million worth of XM shares to get out of the deal early. If XM’s share price falls before Starbucks can sell its shares, XM may have to issue more shares to make up the difference.

No reason is given in the filing for the termination. XM, of course, is still waiting on its approval to sell to Sirius (NSDQ: SIRI), which could happen anytime. Starbucks, meanwhile, has been snuggling up closer to Apple (NSDQ: AAPL) on music-related things, which may have something to do with it. Fans of the adult contemporary Starbucks XM Café Channel will be able to enjoy it for a little bit longer before they turn off the mic. (via AP)


Rob L

Satellite Radio just likes to throw around money, that's why they are money losing operations and have been so for years.

Buy Apple!

Mr. Fetid Jeansweater

Uh…XM would not pay Starbucks $22MM to get rid of the channel just because Howard Schultz is getting frisky with Steve Jobs. Even if no one ever listened to the channel, I doubt it matters to XM as they have more channels than they can program anyway.

More likely, XM was paying Starbucks for the in-store airplay and it hoped to get subscriptions out of the exposure. But that wasn't happening. Thus, XM may have calculated that it would cost less to pay Starbucks $22MM now than continue making payments into 2009. The amount of the payment is guess but maybe $2MM a month.

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