- The Washington Times - Friday, February 17, 2006

NEW YORK (AP) — Sirius Satellite Radio Inc. reported a wider loss in the fourth quarter yesterday as costs for building its rapidly growing base of subscribers mounted.

The company, which added shock jock Howard Stern to its roster last month, lost $311.4 million compared with a loss of $261.9 million in the same period a year ago.

The loss per share came in at 23 cents, a penny lower than analysts surveyed by Thomson Financial had been expecting and 2 cents greater than the loss of 21 cents a year ago. Revenue more than tripled to $80 million from $25.2 million.

Despite the relatively in-line results, the shares of both Sirius and rival XM Satellite Radio Holdings Inc. fell yesterday. XM this week disclosed the sudden departure of one of its board members, who warned of a looming “crisis” at that company if it didn’t rein in costs.

XM also posted a much-wider-than-expected loss on Thursday as it spent heavily on marketing to counter the threat from Mr. Stern joining Sirius. XM executives said they expected that spending to decline sharply going forward.

Sirius’ shares fell 39 cents, or 6.9 percent, to close at $5.26 after heavy trading, while XM’s shares dropped $2.41, or 10 percent, to close at $21.57, also in heavy trading. Both issues trade on the Nasdaq Stock Market.

Sirius and XM are spending heavily to expand their businesses, which charge about $13 a month for dozens of channels of commercial-free music, as well as talk, news and sports.

Sirius reported that its costs for acquiring new subscribers more than doubled to $145.2 million from $64.9 million in the same period a year ago. Its average cost for adding each subscriber, however, fell to $113 from $124 in the same period a year ago.

Sirius ended 2005 with 3.3 million subscribers, triple the level of 1.1 million from a year ago. XM has more than 6 million subscribers.

Sirius, which is based in New York, said it added 1.27 million subscribers in the fourth quarter, the leadup period before it added Mr. Stern to its lineup in early January.

The company also said it expected to be profitable next year, and to generate about $3 billion in revenue and $1 billion in free cash flow, after expenditures, in 2010. Sanford C. Bernstein analyst Craig Moffett called the forward projection “very positive” in a note to investors.

Sirius’ five-year contract with Mr. Stern was originally worth $500 million, but its value swelled to $600 million because of the appreciation of Sirius’ shares. XM has also signed big-ticket programming deals, including a $650 million baseball pact.

Sirius also announced yesterday it had reached a new agreement to carry the Fox News and Fox News Talk channels beginning March 15.

The previous agreement had expired at the end of 2005.

For the full year, Sirius lost $863 million, or 65 cents per share, compared with a loss of $712.2 million, or 57 cents per share, in 2004. Full-year revenue jumped to $242.2 million from $66.9 million.


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