XM Radio Posts Narrower 4Q Loss

The Associated Press
Monday, February 26, 2007; 6:34 PM

McLEAN, Va. -- XM Satellite Radio Holdings Inc., which last week announced plans to combine with rival Sirius, said Monday a 45 percent jump in revenue and a tighter leash on marketing costs helped narrow its fourth-quarter loss.

The Washington-based company, which has never reported a profit, said it lost $263.1 million, or 90 cents per share, after paying preferred dividends in the final three months of 2006. That beat a loss of $270.4 million, or $1.22 per share, a year ago.

The fourth-quarter loss includes a one-time charge of $57.6 million to reflect the declining value of XM's 23 percent stake in Canadian Satellite Radio. Excluding that one-time charge, XM lost 70 cents per share, a penny better than the consensus estimate of Wall Street analysts surveyed by Thomson Financial.

XM shares fell 17 cents, or 1.13 percent, to close at $14.93 on the Nasdaq Stock Market.

Quarterly revenue increased to $257 million from $177 million a year ago.

XM finished the year with 7.6 million subscribers, a 29 percent increase from a year ago, when it had 5.9 million. But XM had predicted at the beginning of 2006 that it would have 9 million subscribers at this point.

Subscriptions slowed as smaller competitor Sirius, which added Howard Stern to its programming lineup, took an increasing share of the market, particularly on radios sold through retail outlets as opposed to those installed in automobiles at the assembly plant.

For the year, XM lost $732 million, or $2.70 per share, compared to a loss of $675 million, or $3.07 a share, in 2005. But annual revenue increased 65 percent to $933 million from $558 million in 2005.

A week ago, XM Satellite and New York-based Sirius Satellite Radio Inc. announced a deal to combine their operations. The companies bill the deal as a merger of equals, but to make it happen Sirius will be giving $4.57 billion of its stock to XM shareholders.

First, though, the companies must gain approval from the Federal Communications Commission and other regulatory agencies.

The companies _ which have lost a combined $6.8 billion as public companies, according to Standard and Poor's Compustat _ have said a merger will help keep costs down. In the last few years, both XM and Sirius have spent heavily to lure top talent and programming to their respective lineups, including lucrative deals for Oprah Winfrey and Major League Baseball on XM, with Stern and the NFL on Sirius.

In a conference call with analysts, XM executives took pains to assure consumers they will not be stranded with obsolete receivers if the deal goes through, though they did not offer details. Currently XM and Sirius receivers are incompatible. Sirius chief executive Mel Karmazin offered a similar assurance Monday in an interview on Stern's radio show.

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