SIRIUS SUBSCRIBER GROWTH PROJECTED TO LAG YEAR BEHIND XM’s
Sirius projects subscriptions will rise to 321,000 by end of 2003 from 29,947 activations as of Dec. 31, reaching 1.3 million subscribers by end of 2004. So said Sirius in preliminary proxy statement filed with SEC for as-yet-unscheduled special shareholder meeting to ratify terms of company’s proposed $1.2- billion recapitalization deal (CED Oct 18 p1).
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Projections on Sirius subscriber growth would put it roughly year behind progress of rival XM, which started commercial service nationally 8 months earlier than Sirius. XM announced at CES it had reached 360,000 subscriptions Dec. 31 and projected growth to million by end of 2003 (CED Jan 9 p5). Sirius expects its activations to reach 2.9 million by end of 2005 and 4.9 million by end of 2006, it said in proxy filing. Sirius has projected it will reach cash flow breakeven in 2005 at 2 million subscribers, assuming recapitalization plan is approved.
Average annual revenue per Sirius subscriber, excluding one- time $15 activation fee and ad revenue, is projected to rise to $156 in 2006 from $143 this year on new revenue streams such as premium program offerings, company said. Sirius said its projections assumed monthly churn rate would be about 1.5% for monthly, quarterly and 6-month subscriptions through 2005, rising to 2% per month thereafter. Projections assume rate of deactivations will increase as prices of receivers decrease, company said. Sirius said it assumed 10% of all multiyear prepaid subscribers would deactivate their service when their terms expired through 2005. Deactivation rate on multiyear prepaid subscriptions is projected to rise to 13% starting in 2006, filing said. It said for prepaid subscribers who renewed service when their term was complete, renewal rate of 60% for multiyear subscription is expected in 2003, 70% in 2004.
Sirius said in proxy statement that it opted for out-of- court restructuring over Chapter 11 proceeding because “we believe that a consensual transaction with our creditors will best preserve the value of our company for our common and preferred stockholders and creditors.” Moreover, it said recapitalization deal “will not expose our business and operations to the uncertainties and stigma often associated with a bankruptcy filing.” However, prepackaged bankruptcy plan will be filed with court, but only if required minimum number of shareholders don’t approve debt-for-equity exchange.