Sirius Revenues Soar, But Losses WidenSirius Revenues Soar, But Losses Widen

Sirius Satellite Radio on Tuesday reported that third-quarter revenues rose 250 percent, but losses widened as customer acquisition costs and other expenses increased.

The New York-based digital radio company said net losses increased to $180.4 million, or 14 cents a share, from $169.4 million, or 14 cents a share, for the same period a year ago. Revenues, however, rose to $66.8 million from $19.1 million a year ago.

Revenues were driven by an increase of 359,294 net subscribers, a 97 percent jump from a year ago. Expenses, however, increased for customer acquisition, programming and content, customer service, billing and administration.

As of the end of September, Sirius had nearly 2.2 million subscribers. The company expects to have more than 3 million by the end of the year.

"We continued to gain retail and overall market share in the quarter, while meeting our guidance for third quarter net-subscriber additions," Mel Karmazin, chief executive of Sirius, said in a statement. "As we move into the important fourth quarter, we believe that our mix of innovative and competitively priced products at retail, combined with more Sirius factory installations by our automotive partners, will yield strong year-end results, and we are raising our subscriber guidance to over 3 million to reflect this expectation."

For the full year, Sirius predicted $230 million in revenues, and an adjusted loss from operations of $540 million. The company said its first quarter of positive free cash flow could be reached as early as the fourth quarter of 2006, and is expected for the full-year 2007.

Sirius's larger competitor XM Satellite Radio Holding Inc. last month also reported subscriber increases on widening losses in the third quarter. The Washington, D.C., company said losses increased to $131.9 million, or 60 cents a share, from $118 million, or 59 cents a share, the same period last year. Revenues, however, increased 134 percent to $153 million from $65.4 million a year ago.

Revenues were boosted by a doubling of subscribers in the quarter to 5.04 million from 2.52 million last year. XM expects to exceed 6 million subscribers by the end of the year.

To drive subscriber growth XM and Sirius have spent heavily on programming. The latter company's new programming includes Martha Stewart Living Radio, and shock jock Howard Stern, who is set to start in January. Nascar coverage is scheduled to start in 2007.

This year was XM's inaugural season of exclusive Major League Baseball coverage. Under a 10-year agreement, the company becomes the exclusive satellite radio network for the National Hockey League, beginning with the 2007-2008 season.

In addition, both companies have pushed hard to have automakers factory-install radios supporting their services. Sirius has deals with DaimlerChrysler, BMW of North America and Ford Motor Co.; XM with General Motors, Honda, Toyota and Hyundai.