Sirius Reports 1Q Loss of $458.5 Million
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NEW YORK (AP) - Sirius Satellite Radio Inc. reported Tuesday that its first-quarter loss more than doubled, due largely to expenses of $225 million in stock-based compensation to its star shock jock Howard Stern. Revenue nearly tripled as the company expanded its subscriber base.
Sirius reported a net loss of $458.5 million, or 33 cents a share, for the January-March period compared with a loss of $193.6 million, or 15 cents a share, a year ago.
By far the largest factor affecting the results was costs for stock-based compensation, which all companies had to begin recording this year under new accounting rules. Sirius reported stock compensation expenses of $284.6 million, of which about $225 million went to Stern and his affiliates, a company spokesman said.
The company said stock compensation costs accounted for 20 cents per share of the loss in the most recent quarter. Analysts polled by Thomson Financial had been expecting a wider loss of 36 cents per share.
On an earnings call with analysts, company officials said they had enough cash on hand to fund their current needs and expect to start turning a profit on a cash flow basis as soon as the fourth quarter of this year. Sirius also said its average cost for acquiring subscribers – a figure closely watched by investors – fell 41 percent to $113 in the quarter.
Investors liked what they heard, and sent Sirius’s shares up 26 cents, or 5.6 percent, to close at $4.88 on the Nasdaq Stock Market. However, the shares are still closer to the lower end of their 52-week trading range of $4.36 to $7.98.
Revenues rose to $126.7 million compared with $43.2 million in the same period a year ago as the company continued to build up its subscriber base.
Sirius said it had 4.1 million subscribers at the end of the first quarter, having added about 761,000 customers in the most recent period. The company said it now expects to have 6.2 million subscribers by the end of the year.
Both Sirius and its larger rival XM Satellite Radio Holdings Inc. are spending heavily to sign up subscribers and programming talent to their services, which require special radio receivers and cost about $13 per month.
On the conference call, Sirius’s CEO Mel Karmazin said the company did not intend to follow the lead of XM in syndicating some of its programming to terrestrial radio.
CBS Radio, a unit of CBS Corp., announced recently that it was replacing rocker David Lee Roth in Howard Stern’s former time slot in several of its stations with shock jocks Greg “Opie” Hughes and Anthony Cumia, who now work for XM. CBS Radio had fired them in 2002 after they aired a live account of people having sex in St. Patrick’s Cathedral.
“It was a great deal for Opie and Anthony,” Karmazin said. “We’re in the business of getting subscribers to satellite radio.”
Karmazin used to head CBS Radio, which had been known formerly as Infinity Broadcasting.
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