Sirius cuts Q3 loss amid merger talk
EmptyShares of Sirius Satellite Radio dropped nearly 9% on Tuesday after the company reported a third-quarter loss that was in line with analysts' estimates though a bit lighter on revenue than was expected.
Sirius lost $120.1 million, down from a loss of $162.9 million a year ago. Revenue climbed 45% to $241.8 million, shy of the $244.3 million that Wall Street expected.
The company added 524,938 net subscribers to finish the period with 7.7 million. Sirius' chief rival and hopeful merger partner, XM Satellite Radio, has 8.6 million subscribers.
In a good omen for the deal, proxy adviser Glass, Lewis & Co. is recommending that XM and Sirius stockholders vote for the deal in separate meetings Nov. 13, the companies said Tuesday. "The transaction is fairly priced and will yield substantial cost synergies for shareholders of both companies," Glass Lewis said.
Sirius CEO Mel Karmazin predicted that the company will finish the year with more than 8 million subscribers and that it will garner revenue in the $1 billion range for the year.
Karmazin said during a conference call with analysts that some company executives were in Los Angeles on Tuesday shooting a TV commercial for Sirius.
He also said that the Sirius initiative for putting live TV in cars has been met with enthusiasm by the small number of consumers who have experienced it.
"We don't have enough subscribers to have conducted any research yet to determine what they like and don't like, but they are getting Nickelodeon, Cartoon Network and Disney live television in the back seat of the car," he said.
The Sirius-XM merger proposal still is being considered by lawmakers. On Monday, a group of Democras int Congress voiced their support, and some Republicans had done so earlier.
On Tuesday, Karmazin noted his experience with making mergers work, having been instrumental in combining Infinity with CBS and then CBS with Viacom.
He said he's still confident in a decision by year's end from regulators. "Assuming we get an approval on a Monday, the assumption will be that the transaction will be closed on Tuesday," he said.
The predictions of Wall Street analysts as to whether Sirius will merge with XM hover around the 50-50 mark. On Tuesday, Wedbush Morgan Securities analyst William Kidd reiterated his "buy" recommendation, predicting that shares will rise to $4 even without a merger, which he said "has less than a 50% likelihood of approval."
Sirius shares fell 32 cents Tuesday to $3.29. Sirius was the second-worst performer on The Hollywood Reporter Showbiz 50 stock index, the worst performer being XM, which fell 11% to $13.49.