Stern Leads Sirius to Large Loss

Sirius Satellite Radio said on Tuesday that its quarterly loss doubled, mainly due to a $225 million stock payment to shock jock Howard Stern. For the quarter ending March 30, the satellite radio operator posted a $458.5 million loss, compared with $193.6 million a year ago.

Stock compensation charges were nearly $285 million of that loss. This compares with a $38.7 million charge a year ago. However, revenue tripled from $43.2 million a year ago to $126.7 million, and the company showed strong subscriber growth.

Adding 761,187 customers in the quarter, the company's subscriber base grew to 4.1 million customers. This was 57 percent of net adds for satellite radio and nearly a 2-to-1 advantage at retail. The strong results also led Sirius to raise year-end guidance to 6.2 million customers.

Even with the company's continued financial issues, CEO Mel Karmazin put on a positive front. "Things are really going great here at Sirius," he said.

Karmazin told analysts that costs are stabilizing, and the company could potentially break even on a cash flow basis by the end of the year. XM has made a similar promise, however neither company has shown any progress so far this year.

Subscriber acquisition costs were $113 for the quarter, flat with the previous but down from $190 in the year-ago quarter. Karmazin also pointed to the company's slowing marketing expenses, saying Sirius' programming lineup was beginning to speak for itself.

The company also said it plans to have its first wearable satellite radio available by the summer, and will stream the Howard Stern show via the Internet to Sirius subscribers by Father's Day.