Sirius reported that it will cut its year-end subscriber forecast from 6.3 million to a range between 5.9 and 6.1 million, due to sluggish post-Thanksgiving sales. At the end of the third quarter, Sirius had a total subscriber base of about 5.12 million.
According to Banc of America analyst Jonathan Jacoby, retail sales of satellite radio sets may fall by up to 20% in the fourth quarter.
Meanwhile, rival XM has revised its subscription forecasts downward three times in 2006. The latest announcement from Sirius is further evidence that a broad structural slowdown in the satellite radio market is here.
In the third quarter, Sirius signed up about 441,000 new subscribers--a noticeable decline from its net addition of about 600,000 in the second quarter and 761,000 in the first. XM has also experienced a slowdown in new subscriber additions, with just 286,000 new subscriptions in the third quarter, compared to 640,000 in the second quarter and 569,000 in the first.
One small consolation: Although the rate of new additions is slowing, both companies are posting smaller losses than before, and finding favor with Wall Street.
In the third quarter, Sirius' net loss was $162.9 million--down from $180.4 million in the third quarter of 2005. It's an even bigger drop from the company's second-quarter loss of $237.8 million and a first-quarter loss of $458.5 million, associated with high marketing costs surrounding Howard Stern's move to the company.
For its part, XM's third-quarter loss was at $83.8 million--down from $131.9 million in the same quarter last year. That's also a huge drop from the company's second-quarter loss of $229 million and first-quarter loss of $149.2 million.