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XM Satellite Radio Holdings Inc. after just signing Oprah to a $55mn deal was shaken when director Pierce Roberts left the board as he said that he could no longer support the strategy that the company was taking nor serve as a board member. 

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In Roberts’s opinion the company was inviting a crisis since it is spending so much to draw new subscribers. 

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Roberts had this to say: 

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"I have been troubled about the current direction of the company and do not believe that it is in the best interest of the company's shareholders, there is, in my view, a significant chance of a crisis on the horizon."

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XM and their chief rival Sirius Satellite Radio have been spending in the hundreds of millions of dollars to attract celebrity talent and to push their marketing forward. That and the huge discounting of their radios in order to attract new subscribers have been eating away at their capital. 

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XM has announced that its marketing costs have skyrocketed 82 per cent higher, just in this quarter. Their offer of $50 () off of their radios is in order to attract customers who will then sign up for their $12.95 monthly service. Now the acquisition cost per subscriber is up to $89, from $64 a year ago. 

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XM chairman Gary Parsons tried to calm things down as he met with analysts and explained that the company must spend more in the early stages to build their customer base. 

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Roberts felt that the emphasis should be on cash flow to which Parsons commented in this way: "This is a balancing act for management,"  

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While XM added almost 900,000 new subscribers in the last quarter, it cost them far more that they intended and thus some of the problems that have ensued with Roberts.