Sirius XM’s Subscriber Counts Rise, Profits Do Not

For the full year, the company reported EPS of $0.06 on revenues of $3.8 billion, compared with EPS of $0.51 and revenues of $3.4 billion in 2012. The consensus estimate called for EPS of $0.07 on revenues of $3.78 billion.

Not that any of this matters much. In early January, Liberty Media Corp. (NASDAQ: LMCA) said it planned to purchase the 48% of Sirius XM it does not already own for a price of $3.68 a share. The acquisition price was below the price at which Sirius was already trading, but because Liberty absolutely controls Sirius, there is not a lot that minority shareholders can do to stop the deal.

The company noted that its total subscriber acquisition costs in the fourth quarter totaled just 12% ($44 per additional subscriber) of adjusted revenue, the lowest percentage in the company’s history. To top that off, the number of self-pay customers has reached an all-time high of 21.1 million. Paid promotional subscribers fell by 434,240 in the fourth quarter after a major OEM switched to unpaid trial subscriptions.

Net subscriber additions for the year totaled 1.66 million, bringing total subscribers at the end of the year to 25.6 million.

Sirius XM reiterated previous 2014 guidance: revenues topping $4 billion, net subscriber additions of about 1.25 million, adjusted EBITDA of around $1.38 billion and free cash flow approaching $1.1 billion.

When Liberty made its bid for Sirius XM in January, we noted that access to the satellite company’s free cash flow would be very welcome as Liberty, through its 27% stake in Charter Communications Inc. (NASDAQ: CHTR), makes a play for Time Warner Cable Inc. (NYSE: TWC).

For Sirius XM shareholders, the benefits of being acquired by Liberty are all in the future. The reward may pan out, or it may not. A lot depends on how the Charter bid for Time Warner ultimately concludes.

Sirius XM stock was down about 0.9% in premarket trading Tuesday to $3.52, after closing at $3.55 Monday night. The 52-week range is $2.95 to $4.18. Thomson Reuters had a consensus analyst price target of around $4.50 before this report.