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Sirius Has Upbeat Q1

5/13/2008 09:27:00 AM Eastern

New York — Sirius reported double-digit sales and subscriber increases and a double-digit reduction in its loss for the first quarter, ended March 31.

Sirius CEO Mel Karmazin also had some pointed words about how long it is taking for the Federal Communications Commission (FCC) to make a decision on its proposed merger with XM Satellite Radio.

"Sirius continues to demonstrate robust subscriber and revenue growth, along with strong cost discipline and significant improvement in our bottom line," said Mel Karmazin, CEO of Sirius in a prepared statement. "Compared with a year ago, first quarter 2008 subscribers grew 31 percent, revenue grew 33 percent, while cash operating costs only grew 8 percent, leading to a 55 percent decline in our adjusted loss from operations."

He added, "We await the FCC decision on our pending merger with XM, and we are eager to deliver the strong benefits of the combined company to our subscribers and stockholders."

During a conference call with analysts Monday Karmazin expressed frustration with the FCC by saying, “We filed our application over 400 days ago and it’s almost 350 days on the FCC’s clock. The FCC historically tried to review deals within 180 days. We share the reasonable frustration that many of our investors feel.”

Karmazin also said he shares investors “outrage” at some “opportunistic parasites” trying to urge the FCC to adopt restrictions on the deal that would benefit their own self interests. Parties have asked the FCC to require HD Radio in satellite radios, that radios be open-sourced and that radio spectrum be allocated to a third party. Karmazin said Sirius would work with the FCC on regulations on the deal, provided these would not harm subscriber or shareholder interests.

On the call yesterday, it was the first time in many quarters the Sirius CEO fully conceded that the merger was having a primary negative effect on retail sales and causing consumer confusion. He added, “If the merger happens, we think there will be some good opportunities to expand in the retail market. We’ll wait till we talk to XM,” after the merger, he said, to explore and announce those opportunities.”

He said that the merger confusion was not impacting sales at the OEM level

Sirius ended first quarter 2008 with 8.64 million subscribers, up 31 percent from 6.58 million subscribers at the end of first quarter 2007. Retail subscribers increased 10 percent in the first quarter 2008 to 4.64 million, from 4.23 million at the end of first quarter 2007. OEM subscribers increased 72 percent in the first quarter 2008 to 3.98 million, from 2.32 million at the end of first quarter 2007. During the first quarter 2008, Sirius added 322,534 net subscribers and achieved a 52 percent share of satellite radio net subscriber additions.

Total revenue for the first quarter 2008 increased to $270.4 million, up 33 percent from first quarter 2007 total revenue of $204 million.

Sirius reported a first quarter 2008 net loss of $104.1 million, an improvement of 28 percent over first quarter 2007 net loss of $144.7 million. The adjusted loss from operations for first quarter 2008 improved 53 percent to $39.5 million, as compared with the adjusted loss from operations of $84 million in first quarter 2007.

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