Sirius Satellite Radio CEO Mel Karmazin told analysts last week that the proposed Sirius/XM merger could be finalized quickly if federal agencies approve.
“If we get approval on [a] Monday, the assumption is the transaction would be closed on [a] Tuesday,” Karmazin said.
In a financial conference call with analysts, where Karmazin reported an upbeat third quarter for Sirius, he detailed his experience with mergers which include Infinity Broadcasting into CBS and CBS into Viacom. Karmazin said “Don’t think it would be overly complicated to get our arms around the merged companies.”
The board of directors at both XM and Sirius are expected to vote on the proposed Sirius/XM merger on Nov. 13 and the Federal Communications Commission and Department of Justice are expected to rule on the merger by the end of the year.
Sirius today reported positive retail growth of plus-64,000 net new subscribers for the third quarter, ended Sept. 30, compared with XM Satellite Radio’s third-quarter loss of minus-17,000 net subscribers for the quarter.
Karmazin credited Howard Stern for Sirius’ retail performance. He reminded analysts that many had predicted the “Stern Effect” would create a temporary lift in Sirius sales for the fourth quarter in 2005 and first quarter in 2006 only. “We said we would see a benefit for years to come, and we were right,” he countered.
Sirius reported most of its third-quarter subscriber growth was generated by new car sales, or a total of 460,837 OEM Sirius net new subscribers.
He touted the overall growth of satellite radio, claiming, “Sixteen million subscribers to satellite radio now feel that terrestrial radio does not satisfy them enough. It’s only 5 percent of the population or 15 percent of the homes in the U.S., so there is significant opportunity for growth.”
Karmazin said Sirius’ Back Seat live satellite TV, recently launched through Chrysler, was performing well.
In other areas, Sirius affirmed its commitment to be cash flow positive in the fourth quarter, regardless of the status of the merger.
Karmazin also stated that the Copyright Royalty Board concluded its hearings two weeks ago and will decide on the royalty rates to be paid by Sirius and XM to SoundExchange by the end of the year. SoundExchange is the royalties collection unit of the Recording Industry Association of America.
Finally, Karmazin admitted that overall satellite radio retail sales are slower than expected, but he added that retailers are expecting a strong fourth quarter. Sirius plans a TV campaign that will begin airing close to Black Friday.
In its third quarter, Sirius reported a 45 percent increase in revenue from the year-ago quarter, to $241.8 million, and subscriber growth of 524,938 net additions during the quarter, driving ending subscribers up 50 percent from a year ago to approximately 7.7 million. — Additional reporting by Steve Smith
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