Sat Radio: Looking Up
XM is still losing money, but it posted stronger results than expected this morning, reducing its quarterly loss by 36 percent, to $85.5 million. Revenue per subscriber, cost per subscriber acquisition, and total subscriber numbers all improved (though the company's "churn," or turnover rate among subscribers, also rose, from 1.4 percent to 1.8 percent).
XM shares rose almost 16 percent today, and the share price of rival Sirius, which reports on Monday, gained nearly 7 percent. Both stocks have been in a steep year-long decline.
XM CEO Hugh Panero predicted the company will be nominally profitable ("positive cash flow from operations") in the fourth quarter.
It's still hard to discern a stable business model for a company that spends $93 to get each new customer and earns a little over $10 per subscriber. XM and Sirius have been locked in something of a death struggle for sat-radio supremacy, with each spending outrageous sums to acquire name-brand talent and gain new subscribers. Sirius paid a reported half-a-billion dollars to bring onboard Howard Stern (whose debut show over the satellite, according to USA Today, featured "Farting sounds to the theme from 2001: A Space Odyssey for more than one minute"). How many $12.95/month subscribers do you have to gain to make that a wise investment?
— Richard Martin, Senior Editor, Unstrung