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Sirius XM total revenue rises, while satellite radio subscribers decline

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Sirius XM Radio
Total revenue for Sirius XM Radio Inc. grew by 1 percent year-over-year, while total subscribers continued to decline - also by 1 percent - for the second quarter of 2009, the company announced today.

Pro forma total revenue for the second quarter of 2009 grew to $608 million, up from $601 million in the second quarter of last year. At the same time, subscription revenue reached $577 million, up 3 percent from the same period last year of subscription revenue of $558 million. Total cash operating expenses since the Sirius and XM merger one year ago decreased by 28 percent year over year.

Sirius XM ended the quarter with exactly 18,413,435 total subscribers, a decrease of 1 percent from last year and a decrease of 185,999 subscribers from the 1Q09.

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Sirius XM Subscribers: Only 83,000 subscribers added in Q4

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Sirius XM net subscribers (quarterly)Deep within the recent Sirius XM Radio Inc. earnings release is hidden the fact that the satellite radio provider only added about 83,000 net subscribers in the fourth-quarter.

The result? Sirius XM ended 2008 with a just hair over 19 million subscribers. In my opinion, this further solidifies my argument that the company needs to have a renewed focus on retail in an attempt to be less dependent on the auto industry.


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Comparing Sirius and XM Subscriber Numbers

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Now that the merger is approved, this will be presumably the last time we can compare the subscribers number of between Sirius and XM. Interestingly enough, this is the first time in a long time that XM has outpaced Sirius in net subscriber additions.

Total Subscribers for Sirius and XMThe above graph shows total cumulative subscribers dating back to the fourth-quarter of 2001. It's neat to see Sirius' sharp growth curve has started to level out since late 2007. That's not to say that subscriber growth has stalled - hardly - but the shape of the curve is starting to bend.




Quarterly Gross Subscribers for Sirius and XMThe above column graph shows the quarterly gross subscriber additions between both Sirius and XM dating back to two-years. Note that XM lost marketshare in gross additions back in late 2006 by a significant margin (about 200k subscribers). But since then, the gap between the two companies has steadily narrowed.

In the first quarter of this year, XM regained its gross subscriber additional lead, but only by a slim margin. I think you can attribute this near-parity performance to increased penetration as OEM equipment in automobiles. That's both a great testament to the strength of the channel, and pretty scary thought about the dependency on a single industry.




Quarterly Net Subscribers for Sirius and XM
Now we look at the quarterly net subscriber additions between Sirius and XM, and here you can see that for the first time in a long time, XM has outpaced Sirius in net additions. Derive what you want out of that, but we're not talking about a significant margin here. The gap closed a lot in the first-quarter of this year, and then the tables turned this past quarter.
 
I'm not sure if we can draw any eye opening conclusions here, because from this point forward it's a totally different ball game. These are just historical numbers. The various programming packages - including A La Carte packages - interoperable radios, and soon-to-be-renegotiated content deals are going to alter how this landscape looks going forward.

Welcome to the new chapter.
 
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Sirius subscribers rise over 8.9 million, loss narrows

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SiriusSirius Satellite Radio Inc. said revenue has increased 25 percent to $283 million, total subscribers have exceeded 8.9 million and adjusted loss from operations fell 70 percent.

According to its preliminary second quarter 2008 financial results, Sirius had 8.924 million subscribers, thanks to total gross subscriber additions of 1.029 million.

Retail subscribers increased 7% in 2Q08 to 4.677 million while OEM subscribers increased 53% year-over-year to 4.247 million. Sirius added 279,820 new net subscribers for the quarter, consisting of 246,221 from the OEM channel and 33,599 from the retail channel.

Average monthly self-pay churn rate was 1.6% for the quarter, down from 2.1% in first quarter 2008. Conversion rate is estimated to be approximately 48% for the second quarter, up from a conversion rate of approximately 47% in the first quarter of this year.

Total revenue for the quarter is expected to be approximately $283 million, an increase of 25% year-over-year. Operating expenses, excluding depreciation and stock based compensation, are expected to remain approximately flat in 2Q08 as compared to the same period last year. Second quarter 2008 adjusted loss from operations is expected to be approximately $24 million, an improvement of 70% from the adjusted loss from operations of $79 million in the second quarter 2007.


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XM surpasses 9.6 million subscribers

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XM

XM Satellite Radio Holdings Inc. surpassed 9.6 million subscribers in the second quarter of 2008, marking the fifth consecutive quarter of record OEM gross additions.

XM added 322,000 new net subscribers in the second quarter of 2008 for a total of 9,653,000 subscribers, that's a 17% increase in subscribers since the end of the second quarter of 2007.

Total gross additions for the quarter came in at 1,081,000 - that includes a record 857,000 gross additions from the automotive (OEM) sector - the fifth consecutive quarter of record OEM gross additions. Retail gross additions were 224,000 for the quarter.

Churn also improved in Q208 to 1.67 percent. Compare that to both second quarter 2007 churn of 1.84 percent and to first quarter 2008 churn of 1.77 percent.

XM also said that subscription revenue for second quarter 2008 is expected to be in the range of $283 - $288 million, and that adjusted operating loss is expected to be in the range of $32 - $38 million (excluding the impact of any FCC settlement). Conversion rate for promotional subscribers is expected to be in the range of 52.7 percent to 53.4 percent.

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Sirius Canada beats 750,000 subscribers

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Sirius

Sirius Canada has exceeded 750,000 paying subscribers, adding more than 250,000 subscribers in the 8 months since October 2007, according to an announcement made this morning.

The last 8 months were the company's strongest period of subscriber growth since inception and Sirius expects the growth to continue through the Father's Day sales period and beyond.

"Sirius has experienced a surge of growth in the past 8 months from both the automotive and retail channel and its subscriber base is now in excess of 750,000 paying customers," said Mark Redmond, President and CEO, Sirius Canada Inc. "The last 8 months were the strongest period of subscriber growth since launch and our success to-date has surpassed the expectations of the company's management and shareholders.

"We'd like to thank Sirius' employees, subscribers as well as our automotive and retail partners for helping achieve this important milestone."

Sirius Canada also said it will increase their programming line-up to 120 full time channels later this month.

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CEO: XM saw largest OEM growth in satellite radio history

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XMDespite falling U.S. auto sales, XM Satellite Radio delivered the highest number of vehicle based subscriptions in satellite radio history, said CEO Nate Davis during yesterday's earnings call.

"Even with the relative softness in the US auto-market, XM delivered the largest number of OEM growth additions in the history of satellite radio," Davis said.

XM had over 800,000 gross OEM additions and roughly a million factory installed XM radios manufactured and delivered to dealers in the quarter, Davis told investors. "That is a 48% year-over-year quarterly increase."

XM ended the quarter 355,000 net subscriber additions from the OEM channel, while Sirius brought in over 321,000 net subscribers from the automotive channel.

Still, XM had a net loss of 51,000 subscribers from the Retail channel, while Sirius squeaked out just over an additional 2,500 subscribers from Retail

Davis explained that while the company had successfully increased direct retail sales to their website and call centers, those increases did not offset "the continuing decline in overall retail sales through the big box retailers."

"However, offsetting this retail weakness... is a continued acceleration of our OEM growth," said the CEO. "XM 2008 installations could well exceed 4 million units close to the long range estimate we provided a number of year's ago."

[Transcript via SeekingAlpha]

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Satellite Radio Subscribers: The gap between Sirius and XM is closing

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Sirius and XM subscribers
I don't think anyone thought we would still be doing this comparison since the merger was announced, I sure didn't, but here we are again. The above chart shows the total cumulative subscribers comparing Sirius and XM.

Total Satellite Radio Subscribers:
  • Sirius: 8,644,319
  • XM: 9,330,000
But while the total subscriber numbers are interesting, I think it's the net and gross additions that are most significant.


Net subscriber additions for Sirius and XMAbove is a chart shows the quarterly net subscriber additions dating back two years. Look at Q1 of this year: Sirius and XM are nearly equal in quarterly net additions. This is a significant shift from prior quarters where Sirius truly dominated.

Quarterly Net Additions:
  • Sirius: 322,354
  • XM: 303,000

So let's take a look at gross subscriber additions:
Gross subscribers for Sirius and XMThis chart shows a different picture of XM once again dominating gross subscriber additions - albeit, just barely.

Quarterly Gross Additions:
  • Sirius: 1,003,422
  • XM: 1,034,000
To their credit, XM did a great job in gaining gross subscribers from the same period last year - the question is whether this trend will continue for future quarters. But that's a question (at least for these Sirius vs. XM comparisons) that may not matter if the FCC actually makes a decision.

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Why Arbitron's satellite radio ratings are wrong

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"When the only tool you have is a hammer, then every problem begins to look like a nail."
- Abraham Maslow

In the world of statistics and research, methodology is paramount. That's pretty basic. If you're going to draw a conclusion from the polling of a sample, the methods you use to extract those answers had damn well better be solid. Because in the end, the way this data is gathered defines the final outcome.

And this is exactly why I say that the Arbitron ratings for satellite radio listening are wrong. Indeed, they're bullshit.

Maybe that was a bit harsh, I'm sorry. Let's instead say that these ratings are for "information purposes only," because that's how Arbitron refers to them.

Mind you, the criticism that's about to ensue has absolutely nothing to do with terrestrial radio and how its listenership is measured. That's a whole different issue. This is meant to point out the flaws in how Arbitron measures satellite radio listenership and nothing more. So when I say that "Arbitron's ratings are wrong" I mean for Sirius and XM, and not regular radio.

So let's begin.

Arbitron Diary

Reason #1
The Arbitron Diary.

Actually, it's the methodology for terrestrial radio ratings that's screwing it all up. Arbitron's diary is built from the ground up to measure AM/FM. Not Internet Radio. Not Satellite Radio. Not even HD Radio (that is, if anyone was listening to HD Radio). It's meant for good ol' regular radio and nothing else.

Here's a big problem: There is no checkbox for a listener to select "Satellite Radio." None. Nothing for Sirius. Nothing for XM. Nothing. Diarykeepers need to actually physically write in the service and the channel info, in addition to the time they started and stopped listening to the program as well as the location of where they did this. Do you think people will actually write in all that information? Right there, the data becomes tainted.

Follow the jump to keep reading...

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XM Canada says it will outpace XM in the U.S.

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XMXM Canada is likely to outpace the subscriber growth of XM in the U.S., the company said yesterday.

"We believe the Canadian market will surpass the growth predicted for the U.S., given the U.S. is in its sixth year of business and we're still in our early stages of growth cycle here in Canada," Michael Moskowitz, the company's new president and CEO.

XM Canada reached 350,000 subscribers as of the end of their first quarter (ending Nov. 30th), a growth rate of 86% over the same period the prior year.

Moskowitz said XM Canada has benefited from the promotional campaigns and product penetration in the United States. The awareness helped prepare Canadians for the rollout of the service.

"We're really at the infancy stage here," Moskowitz said. "We still have a low percentage of cars that come with XM, so I think there's tremendous opportunity."

"The best years are to come because we're at an earlier stage in the whole development of satellite radio in Canada," he added in an interview after the meeting.

As for the merger, Moskowitz said it's still business as usual up north. "Even if there was a merger it would take several months - upwards to a year - because there's (Canadian) government regulations that would have to come into play as well," he said.

[The Canadian Press]
Thanks Lee!

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