Earnings: Sirius: 3Q Loss Narrows; Revenue Jumps 150 Percent; 5.1 Million Subscribers

Like rival XM, Sirius Satellite Radio had a better-than-expected third quarter. The company’s net loss narrowed to $162.9 million, or 12 cents per share, compared with $180.4 million, or 11 cents per share while revenue more than doubled to $167.1 million. Analysts were expecting a loss of 14 cents per share on sales of $169.4 million, according to Thomson Financial.
Other highlights from the earnings release:
— Sirius endded the quarter 5.1 million subs, up 135 percent from a year earlier. The company added 441,101 net subscribers and estimates that it captured 61 percent of all net additions in the quarter. About 205,900 came from retail sales and 236,500 from the automakers. The company expects to have 6.3 million subscribers at the end of the year.
— Average monthly revenue per sub was $11.17, up from $11.15, while the monthly churn rate rose to 2 percent from 1.8 percent reflecting the growth in customers generated from automakers. Acquisition costs per gross subscriber addition fell 23 percent to $114.
Update: From the 3Q call transcript (via SeekingAlpha): Sirius CEO Mel Karmazin compared his company’s performance with that of terrestrial radio. Only Clear Channel and CBS Radio, his former company, will have more revenue than Sirius next year, he said, and they have existed for 35 years and 80 years respectively. Sirius started four years ago and expects to hit $1 billion in revenue in 2007 and $3 billion in three years.
— Karmazin ducked a question about a merging with XM, which some analysts say is inevitable. “I really don’t have very much to say about any hypothetical combination that could or could not exist. … You shouldn’t take that to mean that it’s possible or you shouldn’t take that to mean it’s not possible. You should just assume that we have nothing really to talk about.” Then, in true Karmazin fashion, he quickly added: “You should assume that we will be looking to kick their ass in the fourth quarter … and they are looking to do the same to us.”
— Karmazin said he was pleased by the early reviews for the Stiletto portable device and Sirius Internet Radio.
— The company remains “very bullish” on fourth quarter OEM sales and expects a surge in holiday retail sales.
— Like XM, Sirius is against efforts by the music industry to make satellite radio companies pay higher royalties. The two rivals are working jointly to head off the increase. Karmazin said that the music industry wants satellite radio to fix its problems “but we don’t think that our role in life is to fix their problems. … Our role should be to pay a fair price for material.”
Earnings release | conference call (replay)