Sirius XM Radio Inc. posted a 14-percent increase in subscribers in the second quarter of 2012, attributing the surge to higher new-vehicle sales. Sirius XM posted $3.1 billion in net income in the second quarter of 2012, boosted by a $3 billion income tax benefit, compared to $173 million in the same period in 2011.
Sirius XM logged a 13-percent rise in revenues to $837.5 million. At the end of the second quarter 2012, Sirius XM had 22.9 million subscribers, boosted by around 622,000 subscribers during review period, and 1.02 million subscribers during the first half of 2012. According to Sirius XM chief executive Mel Karmazin, around two-thirds of all new vehicles sold in the United States are fitted with a satellite radio and a trial to Sirius, thanks to the company’s long-term deals with carmakers.
Karmazin was also pleased with Sirius XM’s growth in the used-vehicle market. Karmazin said that vehicles relegated to the second-owner market are likely to have a satellite radio. The company’s new-car penetration rate began to increase materially five or six years ago.
According to Sirius, the rate of people becoming paid subscribers after their trials terminates remained steady. Sirius XM chief financial officer David Frear said that the new vehicle consumer conversion rate was around 45 percent for the second quarter of 2012, a figure similar to the numbers posted in the second quarter of 2011. Karmazin disclosed that Sirius XM has conservative auto-sales expectations for the second half of 2012, as the economy shows signs of "tepid growth."
Operating from its base in Midtown Manhattan, New York City, Sirius XM Holdings, Inc., -- which does business as Sirius XM Satellite Radio -- provides three satellite radio and online radio services in the United States. These services are Sirius Satellite Radio, XM Satellite Radio, and Sirius XM Radio. Sirius XM Holdings is the product of a merger between New York City-based Sirius Satellite Radio and Washington D.C.-based XM Satellite Radio.
After years of speculation and three months of serious talks, the merger between Sirius and XM was disclosed on February 19, 2007. At the time, Sirius and XM had nearly 14 million combined subscribers, of which around 8 million were for the latter. However, both companies haven’t posted an annual profit since they were established.
The merger -- believed to be worth around $13 billion at its completion -- was prompted by the opportunity to lower programming costs, as it eliminates overlapping stations as well as duplicated marketing costs. After a 57-week review process, the US Department of Justice approved the merger on March 24, 2008, while the FCC approval followed on July 25, 2008.