XM Satellite Radio Holdings Inc., which last week announced plans to combine with rival Sirius Satellite, on Monday reported a narrower fourth-quarter loss as a larger subscription base led to a 45 percent boost in revenue. Its shares rose nearly 2 percent in morning trading.
The Washington-based company, which has never reported a profit, said it lost $263.1 million, or 90 cents per share, after paying preferred dividends in the final three months of 2006 versus a loss of $270.4 million, or $1.22 per share, a year ago.
The fourth-quarter loss includes a one-time charge of $57.6 million to reflect the declining value of XM's 23 percent stake in Canadian Satellite Radio. Excluding that one-time charge, XM lost 70 cents per share, a penny better than the consensus estimate of Wall Street analysts surveyed by Thomson Financial.
Quarterly revenue increased to $257 million from $177 million a year ago.
XM finished the year with 7.6 million subscribers, a 29 percent increase from a year ago, when it had 5.9 million. The subscriber additions, reported last month, are in line with revised estimates. But XM had predicted at the beginning of 2006 that it would have 9 million subscribers at this point.
Subscriptions slowed as smaller competitor Sirius, which added Howard Stern to its programming lineup, took an increasing share of the market, particularly on radios sold through the retail market as opposed to those installed in automobiles at the assembly plant.
For the year, XM lost $732 million, or $2.70 per share, compared to a loss of $675 million, or $3.07 a share, in 2005. But annual revenue increased 65 percent to $933 million from $558 million in 2005.
A week ago, XM Satellite and New York City-based Sirius Satellite Radio Inc. announced a deal to combine their operations. The companies will have to gain approval from the Federal Communications Commission and other regulatory agencies before a merger can take place, however.
The companies have said a merger will help keep costs down. In the last few years, both XM and Sirius have spent many millions of dollars to lure top talent and programming to their respective lineups, including lucrative deals for Oprah Winfrey and Major League Baseball on XM, with Stern and the NFL on Sirius.
Last year marked the first year that XM added more subscribers through the automobile market than the after-market retail segment. XM chief executive Hugh Panero said in a statement that XM is well-positioned for future growth as the satellite radio market increasingly becomes reliant on factory-installed models.
"The automobile market is emerging as a key catalyst for satellite radio's future growth, and XM is well-positioned through its relationships with the nation's largest and fastest-growing automakers," Panero said. "Our financial metrics are heading in the right direction as marketing costs have declined and our revenues have increased."