Sirius XM Radio Dips Behind Netflix in Subscribers

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NEW YORK – Sirius XM Radio on Tuesday reported improved first-quarter financials and subscriber figures, but - as expected - the company's subscriber count fell behind that of Netflix in the latest period. Meanwhile, management said it is likely to raise its subscription prices if regulators allow it to do so later this year.

The company signed up 373,064 new subscribers, up from 171,441 in the same period a year earlier and ahead of Wall Street expectations, ending March with a total user base of more than 20.56 million - a new company record.

Sirius XM, the home of Howard Stern, recorded a first-quarter profit of $78 million, compared with a year-ago profit of $42 million.

Revenue rose 9 percent to $724 million.

As expected, the company’s total subscriber count is now behind the 22.8 million U.S. subscribers that Netflix had reported as of the end of the first quarter and that cable giant Comcast had as of the end of 2010.

Sirius XM had ended 2010 with 20.19 million subscribers, making it the second-largest entertainment subscription business behind Comcast and just ahead of Netflix. However, Netflix’s quarterly sub growth has been stronger, and the company was expected to overtake Sirius XM – and likely Comcast, which still has to report its latest figures - in terms of total users in the opening quarter of 2011.

Sirius XM reiterated its full-year 2011 guidance for subscribers and other metrics and slightly increased its forecast for free cash flow.

Sirius XM CEO Mel Karmazin on a conference call highlighted that the user figures make the company one of the largest subscription businesses in the world. He also said that the company would increase its subscriber addition target of 1.4 million for this year if it wasn't for uncertainty following the earthquake and tsunami in Japan, which he said could lead to short-term supply issues for automakers. Karmazin said through April his team hasn't seen any signs of shortfalls.

Karmazin said Sirius XM is expecting to raise its prices if regulators don't extend a three-year price freeze promised as part of the Sirius-XM merger in 2008. That provision expires at the end of July unless the FCC extends it. Sirius XM didn't say when a price increase could kick in and how high it could be, but Karmazin said it would be above inflation levels and help the company amid continued spending on such marquee content as Stern, Oprah Winfrey, the NFL and Major League Baseball.

Karmazin on Tuesday also touted the subscription revenue the company attracts. He calculated that terrestrial radio giant Clear Channel makes $13.61 per listener per year, while online streaming service Pandora makes up to $4.59 from active listeners. Meanwhile, Sirius XM made $141 per subscriber last year, he said.

He even briefly mentioned Charlie Sheen on Tuesday's call, saying that the company's decision to dedicate a channel for 24 hours in March to Sheen's antics under the name Tiger Blood Radio got Sirius XM "a huge amount of attention."

Karmazin also once again described an increase in the firm's number of Hispanics-focused channels as a key opportunity.

As of 11:15am ET, Sirius XM shares were up 5.8 percent at $2,02.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai

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