Sirius Beats XM Satellite in Adding Subscribers

Sirius Satellite Radio Inc. accelerated gains against larger competitor XM Satellite Radio Holdings Inc., adding more customers for the third straight quarter.

Sirius gained more than 600,000 net subscribers in the second quarter compared with 398,000 additions at Washington-based XM Satellite, the companies said Thursday. XM’s customer total rose to 6.89 million, while New York-based Sirius had 4.68 million.

XM Satellite struggled to win subscribers as its new portable radios failed to meet regulatory standards and Sirius made gains with shock jock Howard Stern. XM Satellite will have to add 1.61 million subscribers in the next six months to meet its goal of 8.5 million by year-end.

“They were pretty handicapped this quarter,” said David Bank, an analyst with RBC Capital Markets. “Sirius took some market share from them, particularly as XM didn’t have as much inventory in the channel and didn’t support it with promotional spending.”

Shares of XM fell 38 cents, or 2.6%, to $14.11 while Sirius shares gained 5 cents, or 1.1%, to $4.53.

Sirius has been gaining on XM Satellite since agreeing to spend more than $500 million on Stern and his daily talk show. In anticipation of the program’s launch in January, Sirius added 1.14 million customers in the fourth quarter, compared with XM Satellite’s 898,300. In the first quarter, Sirius added 761,000 subscribers, compared with XM’s 569,000.

“There’s still the Howard Stern effect,” said David Joyce, an analyst at Miller Tabak & Co. in New York. “Sirius is beating out XM due to a combination of receivers and programming.”

Although XM Satellite Chief Executive Hugh Panero responded to Stern by signing talk show host Oprah Winfrey and singer-songwriter Bob Dylan, retail sales of radios slowed in the second quarter.

A year earlier, XM added 647,000 subscribers in the second quarter.

The Federal Communications Commission in April informed XM Satellite that its new radios exceeded emission limits for FM radio signals, leading the company to stop shipments to stores in the second quarter.

XM Satellite has since resumed shipments after modifying the radios, spokesman Chance Patterson said.

He said the company was still working to meet FCC requirements.