Sirius Q2 Sub Growth Builds

By Joseph Palenchar -- TWICE, 7/19/2010

NEW YORK — The satellite-radio subscriber base grew for the fourth consecutive quarter during the three-month period ending June, and it grew at a faster rate than it did in the first quarter.

The number of net new subscribers surged 583,249 in the second quarter ending June, compared with 171,441 in the first quarter, Sirius XM reported. The surge led the company for the third time to upwardly revise its 2010 forecast for net adds, now expected to hit around 1.1 million, up from a previous forecast of 750,000.

The company ended the second quarter with a record 19,527,448 subscribers, up by more than 1.1 million from the yearago period to exceed the company’s previous peak of 19 million in 2008.

The second quarter’s 583,249 net adds contrast sharply with a second-quarter 2009 loss of 185,999 net subscribers. For the first half, net adds of 754,690 contrast with a year-ago first-half net loss of 590,421 subscribers.

The company said it would break out second-quarter and first-half net adds by retail and OEM channel in early August when it makes its second-quarter financial report.

“Our subscriber results mark the best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008,” said CEO Mel Karmazin. “The strong execution in both adding subscribers and retaining them resulted in our record-high 19.5 million subscriber milestone despite continued economic uncertainty.”

For the quarter, Sirius XM increased gross subscriber additions by 46 percent and decreased deactivations by 8 percent compared with the year-ago quarter. Churn by consumers who directly pay for their subscriptions improved to 1.8 percent in the second quarter, from 2 percent in the year-ago quarter. The conversion rate from a trial subscription included in the sale of a vehicle to a consumer- paid subscription improved in the second quarter to 46.7 percent from a year-ago 44.3 percent.

Previously, the company attributed its Q1 net adds to better-than-expected new car sales, improving retail sales, and a greater number of new-car buyers converting promotional subscriptions to paid subscriptions. Also playing a role were a small but growing number of used-car OEM-radio reactivations and a churn rate that fell to 2 percent of the subscriber base from a year-ago 2.2 percent.