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Sirius Posts Record Year

2/27/2007 01:16:00 PM Eastern

New York — Sirius Satellite Radio announced a record year and fourth quarter, with narrower losses as the company continues to lead in satellite radio retail sales.

Sirius expects to reach 8 million total subscribers by the end of 2007, after adding 2.7 million new subscribers in 2006, setting an industry record, it said.

For the fourth quarter, ended Dec. 31, 2006, Sirius had a net loss of $245.6 million, compared with a loss of $311.4 million for the quarter a year ago. Revenues for the quarter more than doubled to $193.4 million, from $80 million last year.

The company said the quarter was stronger even than the first quarter in 2006 when Howard Stern joined Sirius and credited its strategy of differentiating its programming.

Where last year, Sirius’ goal had been to simply reach parity in retail sales with XM Satellite Radio, the company exceeded expectations.For the full year, Sirius said it captured a 67 percent share of net new subscribers, or a total of 1.6 million subscribers from the retail side and 1.1 million from new car sales. It ended the year with more than 6 million total subscribers.

The cost to acquire new subscribers (SAC) also fell during the year to $114, down from $139 in 2005. Helping to keep SAC costs down in 2007 are new radios due later this year that use generation-four chipsets, now in production by ST Microelectronics. These radios will have better form factors and improved battery life, said the company.

For 2007, Sirius expects narrower gains in net subscriber additions, particularly in the first half, because of the “Stern bubble” last year.

Also, for the first half, there may be some confusion in the market about the pending merger, said the company. “To combat this issue we will guarantee customers that any radio they buy from Sirius will not become obsolete,” said president of operations and sales, Jim Meyer.

Speaking on a financial earnings call today, CEO Mel Karmazin said that the issue of the pending “merger of equals” with XM has given satellite radio a lot of “front and center” public attention. “That part of it has been positive,” he said, adding that Sirius sales over the weekend were not negatively impacted by a purchasing delay effect due to possible confusion about the merger.

Sirius further stated that its recent acquisition of the rights to NASCAR could also boost revenues this year.

In Canada, Sirius said its share of retail sales according to The NPD Group was 70 percent for the fourth quarter.