Karmazin hopes FCC sides with Sirius in struggle with Liberty
Sirius Satellite Radio saw profit and revenue hikes last quarter as it added almost 300,000 net new subscribers despite a price increase for its service at the start of the year.On a conference call with analysts, CEO Mel Karmazin addressed an ongoing spat with Sirius’ largest shareholder, Liberty Media, which is trying to assume control of the radio satcaster through its 40% stake. Liberty filed a petition with the Federal Communications Commission recently asking the agency to declare it in “de facto” control. Sirius filed a protest. “Forty is not the new 50,” Karmazin said. “Liberty has significant influence, but not control…We believe that is what the FCC will conclude, but we are waiting to hear from them.” John Malone’s Liberty hasn’t indicated why it wants the official change in its status except to keep all its options open. Sirius’ net income rose to $108 million from $78 million. Revenue grew 11% to $805 million. Sirius ended the March quarter with 22.3 million subs, which it said was an all-time high. “SiriusXM is starting the year with tremendous operational momentum,” Karmazin said. He said rising auto sales and “strong execution” will help add an estimated 1.5 million subscribers this year — up from the company’s previous prediction of 1.3 million adds. New vehicle consumer conversion rate was 45% in the first quarter of 2012, in-line with the first quarter of 2011. Free cash flow swung to $15 million in the first quarter versus a negative $17 million recorded a year ago. CFO David Frear said the growing cash flow is reducing leverage and improving the company’s credit profile, which should benefit stockholders as Sirius refinances or pays down more than $1 billion of high coupon debt over the next 15 months.
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