As the auto industry continues to build its post-recession sales, American broadcaster Sirius XM Radio Inc. also has rebounded.
For the first quarter, which ended March 31, the New York satellite radio company reported an all-time high 20.6 million subscribers -- a 9 percent increase from the same point a year earlier.
The company said it added a net 373,062 subscribers during the quarter, a gain of 118 percent over the same period last year.
Sirius XM said it posted $78.1 million in net income, an 88 percent increase over the first quarter of 2010. Revenue during the quarter grew to $724 million compared with $664 million in the same period last year.
In a statement, CEO Mel Karmazin said that he attributes the increases largely to the recovery of auto sales -- and the increased number of vehicles that offer satellite radio capability.
"Consumers are buying cars again," he said, "and demand for our product is strong."
Catching on in the market
Sirius XM's gains in subscribers far outpaced the growth of U.S. auto sales. In the first quarter, U.S. light-vehicle sales rose to 3.1 million vehicles, a gain of 20 percent over the first quarter last year.
The radio company said that of its 20.6 million total subscribers nearly 3.8 million (18.3 percent) had subscriptions paid by auto manufacturers. Among its 373,062 new subscribers, it said, about two-thirds of the subscriptions were paid by auto manufacturers compared with 59 percent of its new subscribers during the same period last year.
Sirius XM's first-quarter conversion rate, or the percentage of promotionally paid subscriptions that convert into self-paid subscribers, dropped slightly to 44.7 percent from 45.2 percent during the same period in 2010.
The company said in its 2010 annual report that 62 percent of all new vehicles sold in the United States were factory- or dealer-equipped with its satellite radios, up from 56 percent in 2009.
Story of survival
The recession nearly killed satellite radio, which was pioneered separately by Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc.
But in 2007, Sirius and XM announced a planned merger after both operators had hemorrhaged cash for years. The companies merged in 2008 after the Federal Communications Commission approved the union on the basis that subscription prices would not be affected. Critics contended that the decision allowed a monopoly.
Sirius XM recently informed the U.S. Securities and Exchange Commission that its base subscription price would remain the same throughout this year.
But even after the merger, as the auto industry took a turn for the worse, so did Sirius XM, which considered filing for Chapter 11 in 2009, according to The New York Times.
Mark Boyadjis , senior analyst at IHS Automotive, said Sirius XM should avoid most of the fallout from the March 11 earthquake and tsunami in Japan -- along with sluggish sales in some southern U.S. markets beset by floods and tornadoes this spring.
"Given the trends that are pretty well established, and given the issues happening in the southern United States, I would suspect that Sirius XM sales are going to soldier on for the next couple years," Boyadjis said.
