NEW YORK (Reuters) - Sirius XM Radio Inc (SIRI.O: Quote, Profile, Research, Stock Buzz) Chief Executive Mel Karmazin is optimistic the satellite radio provider can outlast the car industry's turmoil and overcome its own debt issues, but admits these problems have punished its shares.
Speaking at the Reuters Media Summit in New York, Karmazin also forecast double-digit revenue growth in the fourth quarter and says Sirius can boost revenues in 2009, unlike other media companies.
Despite a 75 percent fall in its share price since July, Karmazin insists Sirius' underlying fundamentals are sound: it offers popular programing like Howard Stern's talk show and commercial-free music for which millions are already paying about $13 a month. What is more, people will keep buying cars no matter how dire things may seem in the auto industry now, he said.
"The merger has made us control our costs (and) we are dealing with going to significant profitability in the years ahead," Karmazin said. "Is everything rosy? Of course not. But what's going on is not operationally problematic."
Created by Sirius' acquisition of XM Satellite Radio, the company is the biggest U.S. satellite radio provider and one of the largest U.S. subscription services with about 18.9 million subscribers.
However, its growth is tied to the automobile industry, which is ailing and seeking a federal government bailout as the world financial crisis lingers.
About half of new cars being sold have satellite radios installed in them and about half of those become satellite radio subscribers, Karmazin said. Sirius' radios are also sold in retail stores.
"We're continuing to grow because some people are still buying cars," he added, noting that even a bankruptcy in the auto industry would not significantly stall Sirius.
Whoever buys a bankrupt car company's assets would likely want to maintain partnerships with Sirius since they share revenue from satellite radio subscriptions. "We are profitable for them," he said of the automakers.
OPTIMISTIC ABOUT DEBT
Investors have pushed Sirius' share price as low as 14 cents, from $1.60 when the merger closed, due in part to concerns over whether it can address the $1 billion in debt that matures in 2009, including $210 million in February, $350 million in May and $400 million in December.
Karmazin said that while the tight credit market has made it difficult to get optimal terms, he is confident the company can refinance that debt.
"We are still engaged (in talks)," he said. "We're still optimistic we're going to get that piece done."
Shares of Sirius rose as high of 19 cents on his comments, before closing at 17.28 cents on Nasdaq, still down 3.46 percent from Tuesday.
Karmazin said Sirius met its sales targets, without specifying them, for the Friday after Thanksgiving, which kicks off the holiday shopping season. Continued...
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