XM Satellite subscriber gains beat estimates

NEW YORK (Reuters) - XM Satellite Radio Holdings Inc XMSR.O on Monday posted better-than-expected net new subscriptions for the second quarter, lifting its total to about 9.7 million, and sending shares up more than 6 percent.

In a preliminary report, XM, which is in the process of being acquired by rival broadcaster Sirius Satellite Radio (SIRI.O), said it added 322,000 new net customers, up 17 percent from one year ago.

The figure exceeded expectations of many Wall Street analysts, who in general saw additions of less than 275,000. Although Miller Tabak & Co analyst David Joyce had expected 360,000, he was impressed that other figures beat his forecast. In a note to clients, he noted that "... gross adds of 1.081 million beat our 897,000 estimate with better OEM (automotive) gross adds and better retail gross adds."

The company said gross additions for the quarter included a 857,000 gross new subscriptions for radios in automobiles. It marked 224,000 retail additions, which are radios and accounts purchased at locations such as electronics stores.

XM forecast subscription revenue for the second quarter at $283 million to $288 million and an adjusted operating loss of $32 million to $38 million.

Second quarter churn, a measure of how many subscribers quit the service, improved to 1.67 percent from 1.84 percent a year ago and 1.77 percent in the first quarter.

Separately on Monday, XM said it was offering $400 million of new senior notes, part of a series of transactions related to its debt refinancing in connection with the pending merger with Sirius.

XM and Sirius are awaiting word from the U.S. Federal Communications Commission, which is expected to comment soon on the pending merger. The FCC decision is the final hurdle in a regulatory marathon for the deal, which was first announced in February 2007. Antitrust authorities at the U.S. Justice Department approved the merger this past March.

The merger would bring entertainers such as Oprah Winfrey and shock jock Howard Stern under the same banner. It has been criticized as anti-competitive by the traditional radio industry and by some U.S. lawmakers.