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More Subs, More Revenue, But Wider Loss For Sirius

New York — Sirius Satellite Radio reported a dramatically higher number of subscribers during the first quarter, but at the same time its net loss for the period more then double to $458.5 million.

Sirius ended the first quarter with 4,077,747 subscribers, reflecting the debut of Howard Stern, resulting in net subscriber additions of 761,187, a 149 percent increase in net additions from the year-ago quarter.

During its first quarter, ended March 31, it produced $126.7 million, up 193 percent from $43.2 million in the year-ago quarter, and advertising revenue increased to a record $7.3 million. CEO Mel Karmazin claimed during a conference call today that the advertising revenue for the quarter represented 53 percent of total satellite radio advertising.

Despite this good news for Sirius, the loss for the quarter was substantial. The company reported a net loss of $458.5 million vs. a net loss of $193.6 million from last year’s first quarter. Karmazin explained that the net loss came from equity charges. “Non-cash equity charges were the primary reason for our widening loss over last year and do not impact our free cash flow guidance or our very bright short- and long-term prospects.”

Concerning the subscriber numbers, Sirius reported that the average churn was 1.8 percent, in line with guidance and that subscriber acquisition costs per gross addition was $113 for the first quarter, a 41 percent improvement over the year-ago quarter.

Karmazin claimed a 64 percent share at retail of satellite radio net additions during the first quarter. Sirius added 534,958 net subscribers from retail, a 169 percent increase over the year-ago quarter. The company also added 225,343 net subscribers from its automotive OEM channel, a 109 percent gain.

Sirius said the Howard Stern Show will stream over the Internet by Father’s Day for paid subscribers, offering an additional method of hearing Stern.

And the company confirmed it will release its first “live” portable headset radio this summer, which will receive Sirius programming as-you-go as well as “expanded memory” (over the S50, presumably), MP3 capability, a “buy” button to purchase favorite songs, “and some surprise features,” said a spokesman.

Sirius will also offer new plug-and-play models with improved features and sleek designs for Father’s Day, he said. The latest version of the Sportster, referred to as the Sportster IV, is now in production and will reach stores in late May, said the company. It uses Gen 3 chipsets and will be one of the first Sirius products to use a universal connector that allows expanded accessory options. — Additional reporting by Amy Gilroy