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7/28/2005
XM Satellite Radio Holdings Inc. Announces Second Quarter 2005 Results and Increases Year-end Subscriber Guidance to 6 MillionXM Satellite Radio |
XM Satellite Radio Holdings Inc. today reported financial and operating results for the second quarter ended June 30, 2005. For the quarter, XM reported revenue of $125 million, an increase of 136 percent over the $53 million reported in the second quarter 2004. The significant revenue growth was driven by record second quarter net subscriber additions of 647,226, a 55 percent increase over the 418,449 subscribers added in the second quarter 2004. XM ended the quarter with 4,417,490 subscribers compared with 2,100,352 subscribers reported for the second quarter 2004.
With XM's first half performance and an even stronger outlook for the second half of the year, XM is increasing 2005 subscriber guidance from 5.5 million to 6 million ending subscribers.
XM's net loss for the second quarter 2005 was ($146.6) million, as compared to ($166.1) million in the second quarter 2004. XM reported an EBITDA loss of ($89.9) million for the second quarter 2005 compared to ($107.8) million for the second quarter 2004. XM's net loss and EBITDA for the second quarter 2004 each included a ($35.0) million charge for de-leveraging activities.
Efficient Quarterly Subscriber Growth
XM's second quarter subscriber growth was strong across both the retail aftermarket and automotive distribution channels. Second quarter 2005 Cost Per Gross Addition (CPGA) was $98, an improvement of $3, or 3 percent, from the $101 CPGA reported in the second quarter 2004. XM's CPGA is the fully-loaded cost to acquire each new subscriber, including Subscriber Acquisition Costs (SAC) of $50, as well as advertising and marketing expenses.
Major League Baseball Continues to Drive Subscriber Growth
In April, XM launched comprehensive live game coverage of the 2005 Major League Baseball (MLB) season. During the May/June time period, approximately 23 percent of new aftermarket subscribers surveyed said they decided to become an XM Radio subscriber because of MLB. In addition to MLB, XM began exclusive satellite radio coverage of live races from the Indy Racing League (IRL) and live golf tournament coverage of PGA TOUR events.
Samsung to Manufacture First MP3 Players with Satellite Radio Capability and XM and Napster Partner to Launch the "XM + NAPSTER" Integrated Music Service
Samsung MP3 players with XM capability will be available in two storage capacity sizes and include an XM home accessory kit. The Samsung players incorporate XM's "Connect and Play" Technology and are expected to be available by year-end.
Napster and XM announced "XM + Napster", a service scheduled to launch in the fourth quarter of 2005. The new service represents an integration of XM's satellite radio and Napster's online music services for listening online and on a variety of MP3 players, including the new Samsung MP3 players. XM subscribers will be able to listen to XM programming, mark their favorite music, and purchase and manage content through Napster for future enjoyment and storage on MP3 devices.
In the second quarter, XM also announced an exclusive agreement with Audible, the leader in digital downloading of spoken word content. Using XM/MP3 players, XM subscribers can purchase and download selections from Audible's 70,000 hours of online audiobook and spoken-word programming.
XM Strategic Initiatives to Broaden the Scope and Reach of Satellite Radio
During the quarter, and into July, XM announced a number of strategic initiatives that leverage its existing infrastructure, core competencies and resources.
- XM's Canadian partner, Canadian Satellite Radio (CSR), was granted a
license from the Canadian Radio-television and Telecommunications
Commission (CRTC) to deliver satellite radio to Canadians from coast-
to-coast.
- In July, XM announced an agreement to purchase WCS Wireless, a private
entity, for 5.5 million shares of XM Common Stock. The principal
assets of WCS Wireless are wireless spectrum licenses in geographic
areas covering 163 million people throughout the United States,
including 15 of the top 20 markets. On average, these licenses cover
10 megahertz in the frequency bands adjacent to XM's satellite radio
service. This acquisition will enable XM to potentially double its
bandwidth and broaden the existing business with a variety of
multimedia subscription services, including video, data and additional
audio products. We expect the transaction to close later this year,
subject to regulatory approval.
- In July, XM made a strategic investment of $25 million in the common
stock of Worldspace, Inc., a pioneer of satellite radio services in
Asia, Europe, India, the Middle East and Africa. In connection with
the investment, XM and WorldSpace will cooperate to develop satellite
radio products, technology and distribution networks optimized for
global markets.
XM, AOL and AEG Partner to Launch "Network Live" and XM and AOL Expand Online Offering
Capitalizing on the huge potential of multi-platform live entertainment programming, XM Satellite Radio, America Online and AEG, a world-leading sports & entertainment presenter, joined with Kevin Wall, Executive Producer of Live 8, to create Network Live. Network Live is the first multi-platform digital entertainment company committed to delivering live entertainment programming through the Internet, satellite radio and other global media platforms such as VOD, wireless and HDTV.
During the quarter, XM and America Online also announced the creation of the world's largest online digital radio network featuring the XM and AOL Radio Network programming. The co-branded service will combine a sampling of 20 XM stations plus 130 AOL Radio stations. In addition, an enhanced premium service with 70 XM stations and more than 130 AOL Radio original and third party stations will be available to AOL members at no additional charge and to consumers on the web for a low monthly fee. This service is expected to launch later this summer.
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