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XM States Merger Confidence; Retail Subs Fall

10/25/2007 12:04:00 PM Eastern

Washington — XM Satellite Radio chairman Gary Parsons reiterated his confidence concerning the successful completion of his company’s merger with Sirius Satellite Radio.

Parsons told financial analysts during a conference today, “We remain as confident as we have ever been for merger approval.”

He added, “we have provided literally million of documents” to federal regulatory agencies and “at this point we are concentrating on responding very rapidly to any questions we receive and maintaining and expanding this base of support for merger approval.”

He said of the pubic comments filed with the Federal Communications Commission (FCC), four to one favored the merger with over 4,500 pro-merger comments in total.

The FCC and Deptartment of Justice (DOJ) are expected to rule on the merger by the end of the year.

XM also reported its first negative quarterly results in net new aftermarket subscriber additions, although it said rising OEM sales offset the decline.

Net new XM subscribers at retail dipped into the red with negative 17,000 new subscribers compared to plus-69,000 net new subscribers for the third quarter last year.

The company however reported a record volume of OEM gross subscriber additions and a fifty percent jump in net new OEM subscribers to 700,000.

XM president and interim CEO Nate Davis said, “While I’m disappointed the retail market had another quarter of slow growth, subscriber growth in OEM more than offset” the trend.

He blamed XM’s first negative subscriber results on a general softness in satellite radio retail sales due in part to competition from MP3 players and other products.

Davis cited The NPD group as stating overall satellite radio sales fell 30 percent compared to last year at retail.

Davis said however that he expects “significant retail net additions in the fourth quarter.”

Total subscriber sales reached 8.57 million compared to 7.19 million in the prior year.

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