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XM Sub Growth Slows; Sirius Gains 64 Percent

New York — As expected, XM Satellite Radio reported significantly lower subscriber additions for the second quarter than for the period last year. Rival Sirius Satellite Radio, however, reported strong additions of 600,460 net new subscribers, for a 64 percent gain over the quarter a year ago.

By contrast, XM cut its subscriber gains by a third from the quarter a year ago, achieving net additions of 398,000 new subscribers, compared with 647,226 subscribers added for the quarter last year. XM’s product sales were hampered by delays this spring, which hit just as the Major League Baseball (MLB) season kicked off — a key period for XM as it owns the exclusive satellite radio programming rights to MLB games.

“As we previously indicated, subscriber growth in the second quarter was limited by product availability and overall softness in the retail channel,” said Hugh Panero, XM president/CEO. “As we approach 7 million subscribers, however, XM Satellite Radio remains one of the fastest growing consumer entertainment products,” he said.

XM failed to ship its much anticipated XM/MP3 players (the Pioneer Inno and Samsung’s Helix and Nexus) in the first quarter, and missed the March ship date for its new low-cost AGT Sportscaster, creating a perfect storm of negative effects as XM could not advertise without the key products and therefore missed the early part of baseball season.

The Sportster, Inno and Helix have since begun shipping.

Dan Murphy, product marketing and distribution senior VP, said in an earlier interview, “The delay of the AGT Sportscaster was a problem because we had been out of the leader price-point product for a month or two.”

He noted the delayed products and the delay in marketing “was part of our determination to reduce our guidance.” XM in late April reduced its subscriber guidance for the year by a half million, to a total of 8.5 million by the end of the year; though still a 40 percent growth over the year earlier, Murphy said.

XM remains the market leader with a total of 6.89 million subscribers, compared with Sirius’ total of 4.68 million subscribers. Sirius expects to reach 6.2 million subscribers by the end of the year, compared with XM’s forecast of 8.5 million.

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