Sirius XM hits new subscriber high
CEO: Listen to Howard Stern for update on his futureNEW YORK -- Sirius XM Satellite Radio last week hit its highest subscriber mark ever, CEO Mel Karmazin said Tuesday after his company posted its second quarterly profit in a row as revenue rose strongly amid continued subscriber gains and a new music royalty fee.
The satellite radio company had previously hit a subscriber record in the fourth quarter of 2008, for which it had reported 19,003,856 users. "We are back to record subscribers," Karmazin touted the ramp-up after the firm's recent return to customer additions following a temporary slump.
The CEO also said he was encouraged that during the recession users didn't abandon their satellite radio service in big numbers. "Consumers love our product. They stuck with us despite 10% unemployment," he said, adding that "there is clearly an economic turn" as of late that is encouraging.
Asked about whether shock jock Howard Stern would renew his Sirius contract, which expires at the end of the year, Karmazin echoed his comments from a previous earnings call that an announcement will likely come from Stern himself during one of his shows. "You should just listen to Howard's show," he said.
Sirius posted a first-quarter profit of $41.6 million, compared to a year-ago loss of $238.8 million. It had recorded its first-ever profit -- since its creation via the merger of Sirius and XM -- in the fourth quarter. Pro forma revenue, which assumes the Sirius-XM merger happened on Jan. 1, 2007 and excludes certain items, rose 11% to $670.6 million in the latest quarter. A U.S. music royalty fee introduced in the third quarter was one of the key drivers of the gain.
With quarterly net subscriber additions of 171,441, Sirius ended March with 18,944,199 subscribers. In the year-ago quarter, it had lost 404,422 customers.
Karmazin lauded "continued positive subscriber growth, double-digit growth in revenue and a sharp focus on costs" as key drivers of success in the first quarter. "The continuing recovery of the automotive sector and expanding signs of increased consumer spending are encouraging signs for the company's growth prospects."
Sirius executives said they decided not to raise their full-year 2010 guidance so early in the year though. The guidance calls for 500,000 subscriber net adds and more than $2.7 billion in pro forma revenue, among other things.
Here some other highlights from the earnings call:
* Karmazin was asked about his thoughts on the end of a price freeze put on the company by government regulators when they approved the Sirius-XM merger. He said it should come to an end in mid-2011 and would give Sirius "a whole lot of flexibility," not simply to boost subscriber fees, but offer various packages. Karmazin called it "another arrow in our bag" to drive financials.
* Karmazin touted Sirius' recent success in regaining compliance with Nasdaq listing requirements and highlighted that the firm is more valuable than 92% of stocks on the exchange, which is just not as visible due to the low stock price and number of shares outstanding. "We have a very valuable company," he said.
* The CEO also lauded how Sirius makes more money per subscriber per year than competitors - $70, compared to $10-$20 for terrestrial radio and $2 for online competitors.