Sirius Satellite Radio and XM Satellite Radio both posted smaller third-quarter net losses as subscriber growth helped boost revenue gains for both companies.

Sirius posted revenue of $167.1 million in the 2006 third quarter, up 150 percent from the same period a year ago, the company announced Nov. 8.

Sirius credited the revenue gains to its addition of nearly 3 million subscribers throughout the last 12 months, including 441,000 net new subscribers in the 2006 third quarter. The company reported 5.1 million subscribers as of Sept. 30, compared to 2.2 million subscribers at the end of September 2005.

The revenue gains helped Sirius cut its net loss to $162.9 million in the 2006 third quarter. In the 2005 third quarter, the company lost $180.4 million on revenues of $66.8 million. Average monthly revenue per subscriber was $11.17 in the third quarter of 2006, compared with $11.15 in the same period a year ago.

Programming and content expenses increased $32.4 million to $55.9 million for the third quarter of 2006, compared to $23.5 million for the third quarter of 2005. The increase was attributed to license fees and consulting costs associated with new programming and higher broadcast and Web streaming royalties due to the growth in the number of subscribers.

Sales and marketing expenses increased $3.3 million to $41.5 million for the third quarter of 2006, up from $38.2 million a year ago.

Sirius is forecasting 6.3 million subscribers by the end of 2006 and total revenue of $615 million for the year.

"Next year we anticipate that there will only be two terrestrial radio companies that will have more revenue than Sirius," Mel Karmazin, the company’s CEO, said during a Nov. 8 telephone press conference with analysts. "They are Clear Channel and CBS Radio. Importantly, these companies will have little or no growt,h and we believe our $1 billion revenue in 07 will grow to $3 billion in three years. … Thanks to our dual revenue stream, I do not believe that in the history of radio a company will grow to $1 billion in revenue faster than Sirius.

XM Satellite Radio Holdings Inc. cuts its third quarter loss as revenues improved 57 percent, the company announced Nov. 6. XM lost $84 million in the 2006 third quarter, compared to a loss of $132 million in the same period a year ago.

Revenues jumped from $153 million in the 2005 third quarter to $240 million due to subscriber growth and an increase in average revenue per subscriber. XM added 286,000 net new subscribers during the third quarter to close with 7.2 million subscribers, up 43 percent from a year ago. XM expects to close 2006 with 7.7 million to 7.9 million subscribers.

Subscriber acquisition cost was $60 in the most recent quarter, compared to $53 in the third quarter of 2005. Cost per gross addition, which includes subscriber acquisition cost, was $93 in the 2006 third quarter, up from $89 in the same period a year ago.

"With significant growth in revenue and narrowing losses we are on track for positive cash flow from operations in the fourth quarter of this year," Hugh Panero, XM’s CEO, said in a statement.

Some analysts and industry observers continue to push the possibility of a merger of the two satellite radio providers or a takeover of one by the other. Executives of both Sirius and XM declined to comment on the possibility of such a combination, and Karmazin added that a healthy rivalry most likely will become even more intense as the holiday sales season ramps up.

"There clearly would be a good amount of value creation that would be there, but regarding whether or not such a combination would take place, I really have nothing that I could say about it," Karmazin said. "You shouldn’t take that to mean that it’s possible or you shouldn’t take that to mean it’s not possible. You should just assume that we have nothing really to talk about.

"You should assume that we will be looking to kick their ass in the fourth quarter, and we do that, and they are looking to do the same to us, and we are competitors."