UPDATE 2-Sirius CEO sees cost costs, revenue growth
(Rewrites first paragraph, adds details, executive comment, byline, updates stock activity)
NEW YORK, Aug 7 (Reuters) - Sirius XM Radio (SIRI.O) expects to trim costs in everything from programming to research and development as it integrates the newly merged companies Sirius and XM Satellite Radio, chief executive Mel Karmazin said on Thursday.
Karmazin, in his first conference call with analysts since the $3.3 billion deal closed last week, signaled that he was confident that the company can meet its target of squeezing out $400 million in cost savings next year.
"We're working toward long-term improvements in the merger that should bring in subscriber economics, improved financial performance ... and, mostly importantly, generating a significant amount of free cash flow," he said.
Revenue, which is driven by fees that subscribers pay to the radio services, will continue growing, despite concerns about weakness in the automobile market, an important source of new subscribers, he said.
"Satellite radio will continue to be important to the automakers, regardless of their individual company issues, primarily because we are a source of revenue and an important cool factor to help them sell cars," he said. "We expect the production penetration rate to continue to climb, regardless of how many cars are produced."
He added that the company anticipates selling a radio that would receive both services "a number of months sooner" than Sirius promised as part of its agreement with the federal regulators.
Along with agreeing to freeze its prices for three years, Sirius told regulators it would have a radio that carries both XM and Sirius programming ready within nine months.
Karmazin's comments came after the company released full second quarter results, which were similar to figures it released in a preliminary report last week.
Sirius' standalone net loss was $83.9 million, or 6 cents a share, compared with $134.1 million, or 9 cents a share, one year ago. The loss beat analysts expectations by a penny, according to Reuters Estimates.
Revenue rose 25 percent to $283 million. Sirius, which took over XM in a $3.3 billion deal, ended the quarter with 8.9 million subscribers.
The merger -- first announced in February 2007 -- came after a marathon period of government scrutiny over the deal.
Sirius did not release any financial figures for the newly combined company, but it may in coming weeks as its integration continues.
Karmazin said the the combined company's revenue would be around $2.4 billion, making it the second biggest radio group in the United States, after Clear Channel Communications.
"We anticipate being the largest-revenue radio company in the U.S. very shortly, as our top-line growth is dramatic," Karmazin said. Continued...
