Sirius Reports Good Q3, Outlines 2.0 Service

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Sirius XM’s planned 2.0 service will increase bandwidth 25 percent, enabling the satellite-radio broadcaster to offer more programming to next-generation satellite radios without making existing radios obsolete revealed.

Although the company already offers more than 130 channels, the 2.0 service will enable more music and audio channels as well as more data services to new radios, potentially including expanded programming for Hispanics as part of a separate subscription tier, CEO Mel Karmazin said reporting upbeat third-quarter results.

Adjusted total revenues grew 15 percent in the third quarter to $722.5 million and for the ninemonth period by 13.4 percent to $2.1 billion. Net income grew for the fourth consecutive quarter to $67.6 million compared with a year-ago loss of $151.5 million. Nine-month net income hit $124.5 million compared with a year-ago loss of $363.8 million.

The 2.0 service is due to launch in the fourth quarter of 2011.

Because the new service will be available only on new radios, Sirius XM will make it possible to sell aftermarket satellite radios to vehicles with OEM-installed satellite radios, spur replacement purchases of transportable radios, MP3- style headphone portables offering live service, and satellite home tuners.

The first 2.0 radios will be available next fall at retail stores, said operations and sales president Jim Meyer said.

The radios and service, said Karmazin, present “huge upside opportunities for us,” noting that the company offers only three Hispanic channels. With 2.0 service, he said, it “would not be difficult” to create a group of 10 to 12 channels devoted to the Hispanic market. The company “has not done a good job at all reaching out to the Hispanic-speaking market,” he noted.

Separately for the three months ending September, Sirius XM lost 188,884 retail (non-OEMradio) subscribers compared with the year-ago period and lost 637,188 retail subscribers in the first nine months of its fiscal year. The losses brought its retail subscriber base as of Sept. 30 to 7.09 million out of a total subscription base of 19.86 million.


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