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SiriusXM Provides More 2.0 Details

2/15/2011 10:53:19 AM Eastern

New
York - SiriusXM 2.0 service will offer a host of features said CEO Mel Karmazin.

These
include an electronic program guide; ability to buy music; and ability to
pause, resume, replay, and record programming, Karmazin disclosed during an
analysts' conference call.

SiriusXM
also reported that it expanded its subscriber base for the sixth consecutive
quarter to a year-end 20.2 million, but it interrupted four consecutive
quarters of net income with a fourth-quarter net loss of $81.4 million, thanks
in part to $59.7 million in charges and $85.4 million in losses incurred by
extinguishing debt and credit facilities.

The
charges included a write-off of the $56 million book value of a Sirius 4
satellite that was to be used as a ground-based spare. The company recently
launched an in-orbit XM spare and plans to launch another Sirius satellite in the
fourth quarter, the last to go up for about another five years.

Despite
the fourth-quarter net loss, the company posted $71.6 million in operating
income for the quarter and posted full-year net income of $43.1 million
compared with a 2009 net loss of $352 million.

Revenues
grew in the quarter by 8.8 percent to $735.9 million and by 14 percent for the
full year to a record $2.82 billion.

For
the full year, the company posted $210 million in free cash flow following
2009's $185 million and, in 2008, more than $500 million in negative cash flow,
said Karmazin, who noted that free cash flow will ramp up dramatically in the
future because no new satellites will be launched for about five years.

The
company posted a subscriber base gain of 1.4 million in 2010 to a record 20.2
million, compared with a 2009 loss of 231,098. Karmazin said he expects gains of
another 1.4 million subscribers in 2011, thanks to rising auto sales and to self-pay
churn rates and promotional-to-paid conversion rates that improved in 2010 and
will continue at those rates in 2011.

The
fourth-quarter gain in net new subscribers was 328,789, up from the year-ago
gain of 257,028.

 "With the outlook for improving U.S. auto
sales, declining capital expenditures, and the expanded functionality coming
with the launch of SirusXM 2.0, we look forward to another year of growth  and strong financial performance," said Karmazin.

For
the 2.0 launch in the fall, Karmazin reiterated plans to add a "significant
number of channels" and offer a suite of channels targeted to Hispanics. The service
can be received only by a new generation of tuners available this year only through
retail, but existing radios won't become obsolete.

Some
of 2.0's capabilities, however, are already available through select tuners. The
XMp3i MP3-style XM portable, for example, records programs for later playback,
and the Xpress RCi Dock and Play tuner offers a program guide and ability to
pause live programming for up to 60 minutes. 
The SkyDock for the car enables iTunes tagging to later purchase songs
heard on satellite radio, as does a planned universal car tuner, which will be
controlled by select aftermarket head units and is due this year from multiple
aftermarket suppliers.

In
other comments, Karmazin said Internet radio services that allow for customized
channels are popular because they are free and require consumers to listen to
commercials. He said he expects more commercials to begin appearing on those
channels, and that "sounds an awful lot like terrestrial radio." On its
Internet-delivered service, SiriusXM would consider customized channels if
subscribers want it, he said.

 

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