XM Stays Upbeat About Merger
By Amy Gilroy -- TWICE, 4/26/2007 8:43:00 AM
Washington — XM Satellite Radio CEO Hugh Panero told analysts today that XM remains positive in its outlook for a merger with Sirius.
“We continue to believe we will ultimately receive the necessary approval to continue with the merger,” Panero said during a conference call today, despite published reports this week stating that some analysts now place the chances of a merger at 10 percent to 30 percent.
In response, a spokesman for XM said after today’s conference call that other analysts are more positive. He cited a report last week from the Washington Telecom, Media & Tech Insider, which retains former FCC chief of staff Blair Levin as an analyst. The report gave the merger better than a 50 percent chance of receiving federal approval.
Panero said that a merger application was filed with the Federal Communications Commission (FCC) on March 20 and that the FCC is expected to open up public comment on the merger shortly.
XM spent $8 million on such merger expenses as hiring lobbyists during the first quarter, it reported.
The XM CEOalso reiterated, “We continue to operate XM as very much a stand-alone company,” as XM noted it reached 8 million subscribers and improved its retail market share during the first quarter.
While the company’s retail sales were down overall from the period a year earlier, XM said it increased its market share at retail to 50 percent during some weeks in March and to an overall share of 47 percent in March.
The company claimed that total satellite radio retail sales remain soft because of “competition from a range of entertainment products.” XM’s retail after-market gross subscriber additions for the quarter totaled 330,892 compared with 516,416 for the period last year.
XM said it will release two new plug-and-play products by mid-summer.
Regarding subscribers from new car sales, the company said the rate at which it converts new car buyer “trial” users to paid subscribers dropped slightly to 51.5 percent from 52.4 percent and that it expects the conversion rate to remain in the low 50 percent range.
XM continues to shift its marketing and other resources away from retail in favor of the OEM channel where it gets a better return in terms of new subscribers, but claims it will not let retail sales fall below a certain level. XM said it has received interest from more than one car maker in rolling XM’s monthly service fee into the car’s leasing plan.
OEM and rental car company gross subscriber additions were up for the quarter over the same period last year, totaling 537,175 compared to 490,890 a year ago.
Panero also said a shareholder lawsuit against XM filed in 2006 was dismissed.
According to the The NPD Group, Port Washington, N.Y., satellite radio retail unit sales to consumers year-to-date through March are down 36 percent compared with the same period a year ago. Dollar sales for the period are down 33 percent.
