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Costs Still High at XM

Revenue doubles but the loss widens, and subscriber acquisition costs remain above year-ago levels.
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XM Satellite Radio


posted a wider-than-expected loss Thursday as sales doubled.

The Washington, D.C., pay radio broadcaster lost $149 million, or 60 cents a share, in the quarter ended March 31, compared with a year-ago loss of $120 million, or 58 cents a share. Revenue rose to $208 million from $103 million a year earlier.

Analysts surveyed by Thomson Financial were looking for a 55-cent-a-share loss on sales of $201 million.

"XM delivered solid results on key financial metrics during the first quarter," said CEO Hugh Panero. "XM added more than 568,000 new subscribers at efficient subscriber acquisition cost levels. XM is positioned for continued strong growth in 2006 with our outstanding content and the introduction of five new radio models, including our revolutionary XM/MP3 players. With our first quarter subscriber growth, we remain on track to reach 9 million subscribers and positive cash flow from operations by year end."

The company added 568,902 net new users in the quarter, giving it 6.5 million subscribers at March 31. Subscriber acquisition costs fell to $62 per user from $89 in the fourth quarter, when XM threw out the kitchen sink in an all-out ad blitz aimed at countering Howard Stern's debut on


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, but were $10 higher than a year ago.Cost per gross addition fell to $94 from $141 in the fourth quarter but was higher than $90 last year.

XM's promotional free-for-all in the fourth quarter led to the

departure of a longtime backer and board member, telecom banker Jack Roberts of Bear Stearns. He departed in February, warning that the company would face a crisis if it didn't pull back on spending.