SIRI
Sirius Satellite Radio announced Oct. 4 it added more than 359,000 new net subscribers to its subscription satellite radio service in the third quarter 2005, bringing its total subscribers to 2.2 million. The addition represents a 97 percent increase in new net subscribers compared to the 182,000 new net additions during the third quarter 2004.
“We continued to experience strong subscriber growth during the third quarter, which was the best third quarter in our history, and increased our market share from the year-ago quarter by more than 20 percent,” Mel Karmazin, Sirius CEO, said in a statement. “With the traditionally heavy holiday selling period coming up, we fully expect demand for our service to accelerate significantly through the remainder of the year.”
Sirius reiterated its projection of reaching 3 million subscribers by the end of 2005.
The new net subscriber additions beat Bear Stearns estimates for the quarter. According to an Oct. 4 research report, Bear Stearns said it had expected new net subscriber additions to be 330,000. Citing a September Sirius filing with the U.S. Securities and Exchange Commission, Bear Stearns analyst Robert Peck noted that as of Sept. 15, Sirius added 262,000 new net subscribers, a daily run rate of 3,400 new net subscribers. With the additional 97,000 subscribers added in the last 15 days of the quarter, the daily run rate accelerated to 6,500.
Bear Stearns suggested the start of the National Football League regular season in the United States, to which Sirius holds the exclusive satellite broadcast rights, and strategic placing of marketing dollars as the drivers to the spike in subscriber growth at the end of the quarter.
The announced subscriber figures created a slight bump in Sirius’ stock price, but the stock was unable to hold its gain. Sirius closed at $6.83 per share Oct. 4, the day of the subscriber announcement, up 30 cents from the previous day’s close. However, the stock dropped each of the next two days, closing at $6.39 Oct. 6.
XMSR
XM Satellite Radio announced Oct. 3 that it added more than 617,000 new net subscribers during the third quarter 2005, a 48 percent increase compared to the more than 415,000 new net subscribers added during the third quarter 2004. XM said it ended the third quarter 2005 with more than 5 million subscribers.
“During the third quarter, we increased our lead as the number one satellite radio company by topping 5 million subscribers, and we expect to surpass 6 million by the end of the year,” XM President and CEO Hugh Panero said in a statement. “This was our best third quarter ever, and we expect the fourth quarter to be the most successful in the history of our company.”
While Panero offered an optimistic view of the net new subscriber additions, the numbers came in below SG Cowen & Co.’s estimate of 640,000 and the 626,000 consensus estimate of Wall Street analysts, SG Cowen & Co. noted in an Oct. 4 research note.
“We believe this solid but less than expected net add growth reflects a reduced marketing effort during July and August when retail market share was still notably stronger than Sirius,” analyst Tom Watts said. “We believe XM is keeping its marketing powder dry for a real fight in [the fourth quarter] when Sirius begins promoting Howard Stern’s January arrival. Between XM’s strong [fourth quarter] push and Sirius’ ‘Howard effect,’ we expect [this year’s fourth quarter] to be a record quarter for the sector with approximately 2 million total net adds.”
XM’s stock price also received a bump the day the third quarter subscriber figures were announced, closing up 7 cents to $35.98 Oct. 3. Like Sirius, the stock then took a downturn, falling throughout the next three trading days to close at $34.14 Oct. 6.
