CORRECTED - UPDATE 2-Sirius XM to roll out iPhone app in second quarter

Thu Mar 12, 2009 5:21pm EDT

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(Corrects name of executive in fourth paragraph to Jim Meyer instead of David Frear)

* Sirius plans to launch iPhone-based service in Q2

* CEO says has had talks with DirecTV

* Sirius says 2009 EBITDA to exceed $300 mln

* Says 2009 auto sales rate was 9 mln-9.5 mln in Jan-Feb

* Shares jump 21.9 percent (Adds executive quotes on iPhone deal)

By Yinka Adegoke

NEW YORK, March 12 (Reuters) - Sirius XM Radio Inc (SIRI.O) looks to expand the reach of its satellite radio service with the second-quarter launch of an iPhone application as it explores a potential marketing partnership with satellite TV provider DirecTV Group (DTV.O).

The company, which had to sell a 40 percent equity stake to John Malone's Liberty Media (LINTA.O) to resolve looming debt problems, is looking for new revenue streams as its primary distribution outlet, new car ales, is looking "terrible" this year, management said on Thursday.

Sirius said the iPhone application would be available to its 19 million subscribers and to Apple Inc's (AAPL.O) 7 million U.S. iPhone users. It can also be used by iPod Touch Wi-Fi users,

"This is a large and interesting opportunity that will maintain our subscription-based economics while providing customers easier access to our content through means other than our traditional satellite-based platform," Sirius President of Operations and Sales Jim Meyer said on a call with analysts.

Sirius also sells satellite radios through traditional retail outlets, but it had a very weak fourth quarter, when electronics chain Circuit City CCTYQ.PK, a major customer, filed for bankruptcy.

"There's a lot of opportunity for (Sirius) with iPhone," said Miller Tabak analyst David Joyce. "Unlike buying a new car, it's not an expensive proposition, but it's a tough time for consumers to be trying new products."

Based on January and February data, car sales for 2009 are projected to fall to between 9 million and 9.5 million, a far cry from historical volumes of 16 million to 17 million a year, according to Sirius management.

But the company said it was benefiting from "truly extraordinary" operating efficiencies following its protracted acquisition of XM Satellite Radio, which closed last year.

Sirius said it would post positive earnings before interest, taxes, depreciation and amortization in 2009, the first year it would do so. It expects 2009 EBITDA to exceed $300 million, compared with the analysts' average estimate of $303.4 million compiled by Reuters Estimates.

However, Sirius said the U.S. recession made it impossible for it to forecast revenue or give a more detailed earnings outlook.

Sirius Chief Executive Mel Karmazin said he had held talks with DirecTV Chief Executive Chase Carey and Liberty Chief Executive Greg Maffei in recent days about possible joint marketing opportunities.

Liberty has a 48 percent controlling stake in DirecTV, the largest U.S satellite TV provider, and there has been much speculation of an operational partnership with Sirius.

"We think that there are opportunities to work with lots of partners, including DirecTV, on ways of adding subscribers for both companies," said Karmazin.

"It wouldn't be hard to think about the fact that DirecTV might be able to have a special package for many of their subscribers to be able to get Sirius at an attractive price."

A DirecTV was not immediately available.

Sirius shares were up 21.9 percent at 19.5 cents in afternoon Nasdaq trade. (Reporting by Yinka Adegoke, Editing by Maureen Bavdek and Lisa Von Ahn)

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