TORONTO – All the hard work and milestones met by Canadian Satellite Radio (which does business as XM Satellite Radio in Canada) is not being reflected in the company’s share price, CEO John Bitove complained today on the release of the company’s third quarter results.
As of May 31st, XM Canada had 269,900 subscribers and Bitove added there will be plenty more to come as the National Hockey League hockey season gets closer. As of the upcoming season, XM is the exclusive satellite radio provider for the NHL.
Bitove also pointed out how many cars being made and sold in Canada have XM gear inside. For example, 150,000 General Motors vehicles are equipped with factory-installed satellite radios. The company has also increased its retail distribution network with a year-to-date addition of more than 500 new locations, achieving a total of more than 3,300 retail locations across Canada.
All that is on top of the 120 channels XM now offers "with no terrestrial repeats," he added, a shot at competitor Sirius Canada, which – since they’re owned by CBC and Standard Broadcasting – rebroadcast some of their stations’ shows.
"We are pleased with our performance this quarter, and as we move forward we will continue to search for new opportunities to maintain our aggressive growth strategy and build our subscriber base. Our long-term agreement (worth $62 million to XM Canada) with the NHL is an example of our commitment to growth," said Bitove.
For the three-month period ended May 31, 2007, XM Canada reported revenue of $5.7 million, an increase of 144% over the third quarter of 2006. "This increase in revenue is the direct result of an increase in our subscriber base. Revenue to XM Canada is generated by subscriptions, activation fees, sale of merchandise and advertising sales on Canadian-produced channels," reads the company’s press release.
Adjusted operating loss for the quarter was $9.8 million, an improvement of $3.4 million over the third quarter of 2006. "Adjusted operating loss is expected to improve as we continue to grow our subscriber base and manage operating expenses," according to the release.
For the third quarter, average revenue per unit (ARPU) was $11.70, a decrease of $1.30 from the third quarter of 2006. The company incurred subscriber acquisition costs of $40 per gross addition, a decrease of $29 from its ’06 Q3. Cost per gross addition was $178, a decrease of $63 over CSR’s third quarter of 2006.
"The decline in ARPU and SAC from the third quarter of 2006 is primarily due to our fiscal 2007 holiday promotion, which included service credits and hardware rebates that are being amortized as a reduction of revenues over the term of the subscriber payment plan, as well as the introduction of multi-year plans during 2006 and an increasing number of family plan activations. The decline in SAC is also due to an increasing number of subscriber additions through our automotive partnerships. CPGA decreased due to a decrease in both SAC and advertising and marketing expenses," reads the release.
Operational expenses for the three-month period ended May 31, 2007 included general and administrative expenses of $3.6 million, marketing spend of $5 million and cost of revenue of $6.3 million.
As for the proposed merger of U.S. companies XM and Sirius, Bitove declined comment saying the company will make a decision only if it has to.
CSR shares closed Monday up 8% to $5.79.
