Sirius XM Radio Raises Guidance

Shares of Sirius XM Radio rose 5% Wednesday to $2.75 as CEO Mel Karmazin said the company added 446,000 new subscribers in the third quarter and raised guidance to 1.8 million net additions for the full year.

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Karmazin delivered his update during a presentation at Liberty Media’s annual investor day. Liberty owns 49.5 percent of Sirius XM and is expected eventually to take control of the company.

Karmazin, who has insinuated that he probably won’t remain as CEO once Liberty takes control of Sirius XM, said talked up satellite radio during his presentation, emphasizing that it’s a better business that traditional radio and Internet radio. Along those lines, Pandora (Internet radio) will generate about $429 million in revenue this year while Clear Channel Radio (traditional radio) generates $3 billion. Sirius XM, though, will take in $3.4 billion this year.

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Overall, terrestrial radio in the U.S. will bring in $15 billion in revenue this year, down from $18 billion in 2001. During that same frame satellite radio went from zero to $3.4 billion.

“It is our belief that terrestrial radio will probably continue to decrease over the next five years – satellite radio will continue to grow,” Karmazin said at the Liberty event. “Obviously, our subscription model is an important part of the advantages.”

He also talked up Sirius XM’s ability to deliver adult content without offending the FCC and to feature music uninterrupted by commercials.

Karmazin, citing third-party sources, said Sirius XM boasts about 90 percent of the country’s subscription music business, with 22.9 million paying subscribers compared with 4 million for Spotify, 1.1 million for Pandora and 1 million for Rhapsody.

Liberty’s presentation included an update on its effort to control Sirius XM. The company filed an FCC de jure application and a 30-day public notice period began Oct. 2 and its plan is “to exercise control when approved.”

After the stock's gain on Wednesday to one penny shy of its 52-week high, Sirius XM sported a market capitalization of $10.54 billion.