XM Losses Nearly Double In Third Quarter

Erin Killian
Contributor
Baltimore Business Journal
October 25, 2007

XM Satellite Radio Holdings Inc. said its third-quarter loss widened despite more subscribers because its retail sales slowed in anticipation of its merger with Sirius Satellite Radio Inc.

The Washington, D.C.-based company lost $145 million in the third quarter, nearly double the year-ago loss of $85 million.

Third-quarter revenue was $287 million, compared with $240 million in the year-ago quarter.

"During the third quarter, XM achieved year-over-year gains in both gross and net subscriber additions, despite weakness at retail, driven primarily by a record number of new automotive subscribers," said chief executive Nate Davis, who replaced Hugh Panero in August.

XM also spent more money on operations.

Its operating expenses widened by $100 million due in part to a vast increase in marketing costs. XM spent $122 million in the third quarter on marketing, compared with $88 million in the year-ago quarter. Third-quarter general and administrative costs grew to $46 million, compared with $22 million a year ago.

XM's future hinges on its anticipated merger with New York-based Sirius Satellite Radio Inc. (NASDAQ: SIRI).

The company plans to hold a special meeting of shareholders Nov. 13 to vote on the merger. While the boards of directors of both companies have approved the merger, the companies are still awaiting approval from the Federal Communications Commission.

XM (NASDAQ: XMSR) said it ended the third quarter with 8.5 million subscribers, compared with 7.2 million in the third quarter 2006.