XM Loss Widens, Target of Federal Probe

XM Satellite Radio's quarterly loss continues to widen even in the face of rapidly increasing revenues, the company reported Thursday. Additionally, XM is the focus of two separate inquiries by the FCC and Federal Trade Commission.

First quarter losses for XM widened to $149.2 million from $119.9 million a year earlier. However, revenue jumped to $208 million, more than double the $102.6 million in the first quarter of last year. XM added 568,900 subscribers, bringing its total count to 6.5 million.

"With our first quarter subscriber growth, we remain on track to reach nine million subscribers and positive cash flow from operations by year end," XM president and CEO Hugh Panero said.

The company also disclosed Thursday in filings with the Securities and Exchange Commission that it was the target of two investigations. The first deals with its marketing practices and was initiated by the Federal Trade Commission.

The FTC is looking into whether XM's billing and rebate activities, among other practices, comply with federal laws such as the Telemarketing Sales Rule, Truth in Lending, and CAN SPAM regulations.

The second deals with the XM's SkyFi2 portable devices. The Federal Communications Commission alerted the company recently that its transmitter is not in compliance with federal emission limits.

XM said it is conducting an internal review of both matters, and said it would fully comply with the investigations.