XM, Sirius Both Report $100M Net Losses In Q3

By Jeff Malester On Dec 9 2002 - 8:00am




The third quarter was not kind to rivals XM Satellite Radio and Sirius Satellite Radio, in which each company posted over $100 million in losses for the period.

While XM Satellite Radio had revenue for the quarter ended Sept. 30 of $5.6 million, vs. $1,000 from the year-ago period, the net loss for the quarter climbed to $109.6 million, up from a net loss of $65 million in the same three months in 2001.

XM posted a negative $67.1 million Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA). That compared with negative EBITDA of $49.8 million in the same three months last year. (EBITDA is commonly used as a measure of performance for capital-intensive companies as well as measure a company's ability to service debt.)

XM ended the third quarter with 201,544 subscribers, adding 64,836 subscribers, representing a 47 percent increase, since the previous three months.

For the nine months, XM consolidated revenue jumped to $11.2 million, compared with $1,000 in the same period last year. EBITDA for the nine months came in at a negative $222.3 million, compared with a negative $125.6 million in the same nine months in 2001. Net loss for the nine months increased to $339.1 million, up from $140.4 million in the year-on-year.

XM, in continuing to seek substantial additional funding, said it has been in discussions with General Motors regarding deferral of up to $200 million in payment obligations. This would include exchanging these payments for certain debt and convertible securities, as well as the introduction of an arrangement that would permit certain payments to be made in either stock or cash.

XM's ability to execute any arrangement regarding deferral of payments to GM is contingent upon certain modifications to XM's capital structure and the company securing at least $200 million in additional financing. No terms have been finalized with GM.

Meanwhile Sirius Satellite Radio more than doubled its net loss, to $108.2 million for the third quarter, ended Sept. 30, compared with a net loss of $46.9 million in the same three months last year. Loss from operations was $81.7 million in the third quarter, up from a loss of $30.7 million in the same three months in 2001.

The company recorded negative third quarter EBITDA of $60.1 million, compared with negative EBITDA of $37.5 million in the year-ago period.

Sirius, which has had difficulties in obtaining financing, said if current recapitalization is not completed, additional funding of about $600 million will be needed until operations become self-sustaining, with about 3 million subscribers.

The company said it had 11,821 subscribers at the end of the third quarter, and 16,136 subscribers as of Oct. 31. With completion of re-capitalization, Sirius expects to have sufficient cash to cover its funding needs into the second quarter of 2004.

Sirius, which launched its nationwide satellite radio service last July, reported $17,000 in total revenue in the third quarter.

For the nine months, Sirius recorded negative EBITDA of $172.6 million, compared with a negative $106.6 million in the same period last year.

Net loss for the nine months climbed to $300.4 million, up from a loss of $163.1 million year over year. The company's operating loss for the nine months ballooned to $222.3 million, up from a loss of $116.6 million in the previous period.

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