Sirius XM sees improved bottom line
Satellite Radio co reports improved net subscriber additionsNEW YORK -- Sirius XM CEO Mel Karmazin on Thursday lauded Howard Stern's work on the pay radio platform and said he would like to continue the relationship after Stern's current contract expires at the end of the year.
"In the last four years, Howard has done his best work," he said on a conference call, pointing out that the national platform and less advertising time on Sirius have helped showcase the talk radio star's work better than on terrestrial radio. The most ads Sirius runs on is six minutes an hour, compared with up to 22, he said. "We'd like to continue working with him," Karmazin concluded.
Even though he wasn't at the firm back then, "bringing Howard to Sirius was a great call," Karmazin also said after an analyst asked about a possible contract renewal at a lower cost for Sirius. The $500 million five-year deal "has worked out terrifically well," and Stern has been a "great partner."
Sirius and radio giant Clear Channel have been widely seen as Stern's likeliest future options.
While Karmazin said he had nothing to announce yet, he told investors to stay tuned for updates and suggested the best way to do so may be by listening to Stern as he regularly discusses these issues.
Sirius XM Satellite Radio reported an improved bottom line and 257,028 net subscriber additions for its fourth quarter, leaving it down 231,098 for the full year 2009.
The company on Thursday said it ended the year with 18.77 million users and expects to add more than 500,000 net subscribers this year, exceeding the company's previous subscriber high of 19 million at the end of 2008.
2009 was the satellite radio firm's first full year of positive pro forma adjusted income from operations and positive free cash flow.
Sirius XM predicted 2010 adjusted income from operations to be up approximately 20% to $550 million, free cash flow to remain positive, and revenue of over $2.7 billion, compared with $2.53 billion in 2009.
"We demonstrated considerable operating momentum in the fourth quarter -- the addition of over 250,000 subscribers, (average revenue per user) growth, revenue growth, improved subscriber acquisition cost and continued operating cost reductions," said Karmazon. "These gains position us to deliver on our 2010 guidance."
CFO David Frear lauded the company's financial position as proof that the Sirius-XM merger is finally paying off. "With over $380 million in cash, positive free cash flow and continued growth in adjusted income from operations, our financial condition has never been stronger," he said.
In the fourth quarter, revenue rose 6% to $684 million, and expenses fell 7%.
Overall, the company swung to a $14 million profit, compared with a year-ago loss of $246 million. Adjusting for certain merger effects, the company's quarterly loss was $25 million as compared with $248 million in the fourth quarter of 2008.