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Sirius Adds 500K Net Subs; New Stiletto Due

7/31/2007 09:26:00 AM Eastern

New York — Sirius Satellite Radio added more than a half million subscribers during the second quarter and will announce new products next month including a new portable/wearable Stiletto 2.

In addition, like XM Satellite Radio, the company said most of its new subscribers for the quarter came from the OEM sector, which proved unexpectedly strong while retail sales were softer than expected.

For the quarter, ended June 30, Sirius added 561,493 net new subscribers of which 70 percent, or 431,650, were OEM subscribers and 129,843 were aftermarket customers.

Sirius reached a total of 7.1 million subscribers compared with XM’s 8.25 million.

Total revenue for the quarter increased to a record $226.4 million, up 51 percent from $150.1 million for the quarter a year ago. Net loss improved by 44 percent to a loss of $134.1 million compared with a loss of $237.8 million last year.

Regarding new products, Sirius said it will unveil a new Sportster plug-and-play receiver next month in addition to a new Stiletto and confirmed it will launch backseat TV in the aftermarket.

Sirius reduced its churn slightly to 2.1 percent and improved the SAC cost per gross subscriber addition by 18 percent to $108, down from $131 for the period last year.

Regarding the pending merger, CEO Mel Karmazin said, “Momentum for the pending merger with XM continues to build.”

Karmazin said the company expects to substantially comply with the Department of Justice’s (DOJ) second request for information by the end of the summer. He noted the information requested by the DOJ was so extensive that Sirius spent “a little over a million dollars just for the photocopying of the material we had to send them.”

Karmazin explained the Federal Communications Commission (FCC), the DOJ will examine two main areas, including the definition of the market. It will ask if the market is limited to XM and Sirius, or does it include general audio entertainment such as radio, Internet radio, MP3 players, etc. The DOJ will also focus on the efficiencies created by a merged Sirius/XM because “the government wants to make sure the consumer benefits from the merger … and if there are efficiencies … they would be passed on to the consumer,” said Karmazin.

He noted an independent auditor found efficiencies would amount to “billions of dollars in the long term” and million of dollars annually.

If there merger is approved, Sirius and XM would aggressively pursue an interoperable chipset that could be completed in one to 2.5 years.

If the merger is approved by the end of the year, the company would implement some of its new recently announced pricing options by Father’s Day and the new a la carte pricing options by Christmas, Sirius said.