Sirius XM CEO: Revenue Up Over Last Year

Sirius XM expects to conclude the year with 19.1 million subscribers and revenues of $2.4 billion, up from $2.1 billion last year, CEO Mel Karmazin told attendees of the newly merged satellite radio operation during an annual shareholders meeting Thursday (Dec. 18) in Manhattan.

Despite a hideous year of slowing sales by vehicle manufacturers, the satcaster forecasts that 2008 will end with about 500,000 more new vehicle subscriptions to the satellite service for a total of 5.8 million, more than the 5.3 million achieved during the previous year by Sirius and XM operating as separate entities. The company expects subscriptions to be sold in 50 percent of all new cars in 2009 and to end 2009 with 20.6 million subscribers and revenues of about $2.7 billion.

While satellite radio subscriptions continue to grow, there is evidence that they are slowing. The company said it gained 10 percent more subscribers this year, compared to 27 percent growth in 2007 and a whopping 48 percent growth in 2006.

Declining subscriber growth aside, the company argued it is among the fastest growing U.S. media businesses. Sirius XM expects to grow 2009 revenues by 13 percent compared to a 9 percent gain by DirecTV, 8 percent by Cablevision, 6 percent by Time Warner and Comcast, 3 percent by Dish Network, while terrestrial radio is estimated to decline 9 percent.

By merging operations, Sirius XM expects combined synergies to save it $429 million in 2009. It has also cut its staff by 22 percent, dropping its headcount from 2,058 to 1,600 by year’s end.

In November, the company concluded a “channel rationalization” realignment, and subsequently eliminated duplication on its 130 music channel lineup, which dropped to 67 music channels, 63 of them shared by the separate Sirius and XM services. There were 164 talk/sports channels reduced to 147 channels. Sirius has 75 talk/sports channels, while XM has 134 channels (including part-time channels) and there are 38 shared channels. In a filing with the Securities and Exchange Commission Thursday, the company reported that the channel reductions will save $35 million annually and that there were 10,000 consumer cancellations in the wake of the realignment.

By way of long range guidance, Sirius XM expects subscriptions to grow at an impressive clip in the coming years, jumping from an estimated 20.6 million in 2009 to 22.1 the following year, to 24 million in 2011, to 26.2 million in 2012 and to 28.4 million by 2013 with revenues reaching $4.1 billion that year.

But, before any of that happens, the company has to clear some major debt hurdles in the coming months. Karmazin said that among the management priorities is resolving the 2009 liquidity problem by restructuring and reducing a total of $995 million in debt, some $209 million incurred by the old Sirius that is due in February, and $350 million of old XM debt that matures in May 2009. Other management focus points, Karmazin said, include maximizing synergies, growth EBITDA and free cash flow, maintaining growth, and, the vintage Wall Street/public company adage, “enhancing shareholder value.”