XM Satellite Radio’s (XMSR) imminent merger with rival Sirius (SIRI) hasn’t stopped people from signing up for satellite radio service. XM said today that it signed up 322,000 net new subscribers during Q2 for a total of 9.65 million subscribers, up 17% year-over-year. Caveats:
- To get 322,000 net subscribers, XM had to sign up 1.08 million gross subscribers. Which means some 760,000 subscribers left the service during Q2.
- XM had to sign up more new customers than it did in Q2 2007 to keep fewer of those customers than it did in Q2 2007. Q2 2008 net subscriber additions were down 4.7% year-over-year while gross subscriber additions were up 14.8%.
- Most of XM’s new subscribers aren’t actually deciding to buy satellite radio but are buying it pre-installed in their cars. A record 857,000 gross subscriber additions — 79% — were “OEM” gross additions, and just 21% explicitly signed up for XM at a retail store. In theory, OEM subscribers are more likely to leave the service after their introductory free/reduced service is up.
Good news: Churn, the percentage of subscribers who leave XM each month, fell to 1.67% in Q2, down from 1.84% a year ago and 1.77% in Q1.
XM also said subscription revenue for Q2 will be in the range of $283 million to $288 million and that its Q2 adjusted operating loss is expected to come between $32 million and $38 million. Wall Street seemed to like those numbers — XM is up 6.2% today to $9.07.