New York – XM Satellite Radio announced that it netted 64, 836 new subscribers during the fourth quarter or a total of 201,554 to date.
In addition, XM confirmed plans to reach a subscriber base of 350,000 by the end of this year and it announced new estimates for a subscriber pool of 1.2 million by the end of 2003, according to XM president and CEO Hugh Panero.
At an a financial news conference today, Panero painted a bright outlook for continued strong XM sales due to new car sales with factory installed XM from General Motors and new low cost products such as the Delphi XM Sky Fi Radio. However, Panero said the company is still trying to secure its next round of financing. It is seeking $200 to $250 million, which could see the company through to a positive cash flow, which is now expected to occur at the earlier date of mid to late 2004.
Panero said he expects to announce new financing by December, adding, ‘From a programming, operational and marketing perspective, XM continues to hit on all cylinders. From a financing perspective, we need more fuel, but we are heartened by interest from GM and investors. ‘
XM said it has taken several steps to reduce cash burn and that subscriber acquisition cost (SAC) is now down to $124 from the projected $130 at the end of this year. He said this was due to the fact that XM reduced its subsidy fees on the popular selling Delphi SkyFi and that XM found it can reduce advertising while maintaining subscriber acquisition rates. In addition, Panero said General Motors would spend $12 million on new car advertising this quarter, which highlights XM.
OEM sales are expected to jump from the minority to a 2/3 majority of XM sales next year as GM rolls out between 350,000 and 400,000 XM equipped cars through the end of model year 2003.
Since General Motors began selling XM factory installed radios in a wide range of vehicles this fall, it is finding a 70 percent activation rate within eight weeks in XM-equipped cars, Panero said. And GM is expected to generate between 60,000 and 70,000 XM subscriber sales in the fourth quarter, he added.
Also boosting sales are the Delphi SkyFi, the transportable system from home to car to portable, which allows users to receive XM for a starting price of only $199 including antenna and one kit. The product is accounting for 40 percent of sales in areas in which it is selling, said Panero who said the product is opening up the home market for XM and is helping XM to ‘become a truly mass market product.’ Delphi is expected to produce over 120,000 SkyFi units by the end of the year, said XM.
XM said it would add a CNN channel on December 2, a new alternative rock station and a channel dedicated to live music. XM also said it has acquired over 6,000 subscriptions to its new premium Playboy Channel in two months of service. It further reported no impact on sales since the launch of competitor Sirius Satellite Radio.
