Like Sirius, XM insists it is fully funded to continue as a stand-alone, but management is still predicting that merger approval is coming soon. XM added 1.4 million net new subscribers in 2007, breaking nine million, but that that was down from 1.7 million net adds in 2006. “This decline was due to fewer retail gross adds, coupled with churn from a larger subscriber base,” CEO Nate Davis told analysts, painting it as a positive development that XM has moved from a focus on retail receiver sales to add subscribers to an OEM focus. XM’s automaker partners increased their output of XM-equipped new cars by 64% in 2007.
Revenues jumped 22% in 2007 to 1.1 billion and cut the year’s loss by 37 million to 682 million. Q4 revenues rose 20% to 308 million and the net loss declined by 18 million to 239 million.
Echoing Sirius CEO Mel Karmazin, XM Chairman Gary Parsons said he had nothing new to report on the needed DOJ and FCC approvals for the two satellite companies to complete their long-pending merger. Both he and Davis said they still expect those approvals to come through. “In the meantime, in the unlikely event that a merger does not go forward, we are fully funded for a standalone businesses and we expect XM to deliver solid growth, improved operational performance, outstanding customer satisfaction and to remain well-positioned with or without a merger,” Parsons told investors and analysts.
RBR/TVBR observation: As Davis talked about the decline in retail sales of satellite radio receivers, he noted competition from new devices that supply audio entertainment, which is the song that both satellite companies have been playing for federal regulators to try to convince them that XM and Sirius don’t compete just against each other, but against a growing array of audio devices. “Competition from satellite radio has even made FM radio better,” Davis declared. Too bad he didn’t continue on and name his favorite New York stations.
