Sirius Satellite Radio CEO Mel Karmazin told analysts Wednesday that the fledgling service "potentially" could have its first quarter of positive cash flow in 2007 and that its revenues will top $1 billion next year, from about $600 million this year.
That, in a way, was Karmazin's way to tell analysts to cool down after the the company earlier this week revised its estimate of how many subscribers it will have by year's end. The company announced it wouldn't hit its targeted forecast of having 6.3 million subscribers by the end of the year. Instead, it says the total will be between 5.9 million and 6.1 million, a revision that sent Sirius stock tumbling 7.7% on Tuesday.
Karmazin noted that even if Sirius subscriber growth stayed flat for the next three years, it would add 8 million subscribers on top of the 6 million it projects to have by the end of this year.
When asked about a possible merger with rival XM at the Credit Suisse media week conference in New York, the former Viacom topper didn't crush the idea, though he was quick to point out it was the analysts, not his company, raising the question. "You're talking to somebody who believes in consolidation," Karmazin said. "I think consolidation creates value."
But mainly, Karmazin stayed focused on how Sirius was growing, though not quite at the speed once predicted. He said Sirius revised its estimate after retail's Black Friday when Karmazin said he recognized the company wouldn't be able to match the December it had last year, when Howard Stern's impending Sirius debut caused enough consumer excitement that, in the last 10 days of 2005, Sirius added a half million new subs. "I was concerned we couldn't do that this year," he said.
Karmazin told analysts he looked forward to Sirius TV, a planned service that will mainly air kids video, and is slated to begin next year. Sirius is targeting family vehicles with TVs in the back seat. With an antenna "the size of a hockey puck," Sirius will be able to stream video to those sets. But he said that, neat idea aside, it's not a business he expects will be a big game changer for Sirius.