XMSR

XM Satellite Radio added more than 568,000 net new subscribers during the first quarter of 2006, bringing its total number of subscribers to more than 6.5 million, the company announced April 3. In the first quarter of 2005, XM added a then-record 541,000 customers to bring the total number of subscribers to 3.8 million.

"The first quarter represented another solid quarter of growth in XM subscribers and is consistent with our goal of 9 million subscribers by year end," Hugh Panero, XM’s president and CEO, said in a statement. "More importantly, our subscriber growth was achieved economically, with a substantial reduction in the cost to acquire a new subscriber as compared to the fourth quarter of 2005."

In February, XM reported fourth quarter 2005 subscriber acquisition cost of $89, up from $64 in the 2004 fourth quarter, due to higher marketing expenses to counter the addition of Howard Stern by rival Sirius Satellite Radio.

XM’s stock dipped slightly the day the subscriber numbers were announced but regained its losses and closed April 5 at $23.94. The share price has slipped since its Jan. 9 high of $29.94 but has not fallen below $20 in 2006.

ORBM.PK

Orbimage Holdings Inc., which does business under the name Geoeye, will amend its second and third quarter 2005 financial statements, the company announced March 30. The changes to the quarters ending June 30 and Sept. 30 will reflect adjustments in the company’s accounting related to an interest rate swap agreement Orbimage entered into in June.

"Although this accounting change for our interest rate swap results in the need to restate our financials to adjust to the ‘mark to market’ method, it does not change the economics of the transaction, just accounts for it differently without any cash implications," Henry Dubois, Orbimage’s chief financial officer, said in a statement.

Orbimage stock, which is traded on the Pink Sheets market, has climbed steadily after opening 2006 at $10.95. The stock closed April 6 at $19.

SGC.MC

Digital+, the Spanish direct-to-home operator, may only have 2.3 million subscribers at the end of 2008, according to a report issued by Javier Marin, a media equity analyst at Morgan Stanley The target is less than the 2.5 million subscriber level Digital+ owner Sogecable is targeting.

"Since its inception Sogecable’s number of gross subscriber adds has increased each year," Marin said in the report. "However, the competitive landscape is changing. Before, the competition was between similar distribution platforms (Via Digital mainly, given the rapid collapse of QuieroTV); now it is with alternative distribution platforms (cable and ADSL), which, in our view, will fragment the subscriber base and make growth tougher." Digital+ ended 2005 with around 1.96 million subscribers.

"We expect the churn rate to continue trending down in the next three years, but to stabilize at 10 percent by 2008," Marin said. "Elsewhere in Europe churn rates below 10 percent have resulted in churn."

As well as giving potential subscriber targets for the operator, Marin examines the competitive landscape in Spain and the challenges facing the operator, in particular the role of Spanish telco, Telefonica. There could well be more competition for premium content in the future, but Marin believes this is unlikely in the foreseeable future.

"As Imagenio, Telefonica’s Internet Protocol TV division, continues to grow, and given that the really relevant content is scarce (mainly the domestic soccer league), there may come a time when there is a potential conflict with Sogecable," Marin said. "However, this is not an issue for this year, in our view, and maybe by 2007 the companies may view the expiry of the conditions imposed by the government for the merger of Via Digital and Sogecable by the end of 2007 as the time to explore opportunities for working together."

The Spanish digital television market also is beginning to see stronger competition. In recent weeks, Spanish cable operator ONO stepped up its attack on Digital+ by launching OJO, a new video-on-demand service. According to the operator, it already has around 400,000 subscribers using the service.

According to analysts’ that Satellite News spoke to this week, ONO still has weaknesses in its overall content proposition compared to satellite. While video on demand undoubtedly will help in terms of delivery, ONO’s overall content packages are still seen as weaker, so it will be interesting to see what impact video on demand will have on their overall strategy.

Contact, Javier Marin, Morgan Stanley, e-mail, [email protected]