NEW YORK (Reuters) - Sirius XM Radio Inc SIRI.O Chief Executive Mel Karmazin on Wednesday forecast double-digit revenue growth in the fourth quarter and is confident the company can refinance debt due in 2009.
The satellite radio provider will also be able to boost revenues in 2009, unlike other media companies, he said, and has no immediate plans to cut subscription prices, even in the midst of the recession.
Karmazin said Sirius met its targets, without specifying them, for the Friday after Thanksgiving, which kicks off the holiday shopping season.
“We did exactly what we wanted to do for Black Friday, which is not great news because we didn’t have high expectations,” he told the Reuters Media Summit in New York.
Sirius XM, created by the merger of Sirius and XM Satellite Radio, is the biggest U.S. satellite radio provider and one of the biggest U.S. subscription services with about 18.9 million subscribers.
Its radios are sold in stores and installed in cars. Its growth is tied to the automobile industry, which is ailing and seeking a federal government bailout as the world financial crisis lingers.
“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.”
About half of the new cars that are being sold have satellite radios in them and about half of those become satellite radio subscribers, he said.
“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.
The company also faces some $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). Nothing has changed,” he said. “We’re still optimistic we’re going to get that piece done.”
Karmazin also ruled out any interest in selling Sirius XM in the near term.
“We don’t feel that we need to be acquired,” he said. “You should assume the company is not for sale.”
Sirius' shares, which fell 5 percent on Wednesday, have been pummeled since the merger with XM Satellite was completed in July and is down more than 75 percent. By contrast, the Standard & Poor's 500 index fell about 25 percent, and shares of cable company Comcast Corp CMCSA.O, the only U.S. media company with more subscribers, slid 20 percent over the same period.
Investors are expected to share their views about the performance of Karmazin and management later this month at a shareholder meeting in New York. He insists that the underlying fundamentals are sound: Sirius offers programing that people desire, 19 million pay about $13 a month for it already, and many more cars will sell no matter how dire things may seem.
Karmazin says he is well aware of how the stock has performed, since he has put every dollar he has earned in salary back into Sirius shares.
Displaying his matching XM and Sirius cuff links, sartorial evidence of his passion for the company, he said he understands why sentiment around the company has been so gloomy.
“A lot of people own shares, and some people think that I’ve done the worst job since I’ve been at the company,” he said. “It’s not a good time to be a publicly traded company that’s not making money, that doesn’t have earnings, that has to get its debt refinanced.”
He added: “There is nothing, nothing, zero, more important than us making money and getting through this 2009 hurdle.”
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Reporting by Robert MacMillan and Franklin Paul; editing by Jeffrey Benkoe, Richard Chang
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