• by Erik Sass  @eriksass1, August 1, 2007

The skies have it.

Sirius Satellite Radio enjoyed 51% growth in revenue in the second quarter of 2007 compared to the same period last year, topping $226 million, the company announced on Tuesday. Plus, its net loss shrank 44% to $134 million--thanks in part to more effective cost-control measures, including a reduced average cost of new subscriber acquisition.

The satellite radio broadcaster added 561,493 new subscribers in the second quarter, bringing total subscriptions to 7.1 million--a 53% increase over the total second quarter last year. At the same time, the average cost of acquisition for each new subscriber shrank from $131 to $108, an 18% drop. The average cost of subscriber acquisition has been one of the key cost areas for Sirius and its proposed merger partner, XM.

The positive revenue figures from Sirius follow similar strong second-quarter results from XM, where revenue increased 22%, compared to the same period in 2006 to $277 million, while its net loss dropped 23% to $176 million. Since second-quarter 2006, XM has added 1,350,000 net subscriptions (the figure takes "churn" and dropped subscriptions into account), ending this quarter with 8.25 million subscribers.

The XM-Sirius merger is far from a sure thing, facing regulatory hurdles as well as skeptical lawmakers. Overall, Banc of America radio analyst Jonathan Jacoby says his Washington contacts "believe that there is still only a 35% chance of FCC approval, up from less than 30% a few months ago."

To bolster its chances, Sirius CEO Mel Karmazin outlined a revised subscription program that the companies will adopt if allowed to merge. In the new "a la carte" program, subscribers have the option of choosing radio programming, picking only the genres they want. Under the post-merger terms, subscribers to both services would be able to choose from two basic a la carte options.

The first allows subscribers to one service to choose 50 satellite channels from that service for $6.99 a month, about half the current rate of $12.95; consumers can also add additional channels beyond the basic 50 for $.25 apiece. Under the second plan, for $14.99, subscribers can choose up to 100 channels--including premium programming from the other service.