Tuning In to XM

Investors await an all-clear signal from XM (XMSR) satellite radio.

The Washington, D.C., pay radio broadcaster is expected to release its second quarter financial results before the market opens Thursday. Fans will be tuned in for signs that the company is back in its groove.

Wall Street has grown fearful that rival Sirius ( SIRI) has sucked a large portion of the subscriber growth out of XM's universe. Stumbles like radio production halts, an abandoned video acquisition, heavy insider selling and a very public no-confidence vote by a departing director have made for a rough year at XM so far.

XM shares hit a new 52-week low Tuesday and are down 60% for the year as investors flee from the falling pay-radio star.

But there are signs of encouragement. On Monday, XM hired telecom veteran and board member Nate Davis as its operations chief, putting a steadying hand at the wheel. The company also reached an early license renewal with the American Society of Composers, Authors and Publishers, or ASCAP.

Some industry observers see both moves as steps in the right direction. Having Davis head operations gives the impression that the company is getting a better grip on the day-to-day business. And with a number of media licenses up for renewal, the seemingly harmonious deal with ASCAP holds promise for future negotiations.

"In our view, the ASCAP agreement likely sets a template for the remaining rights fees to be negotiated at or below current revenue share rates," Merrill Lynch analyst Laraine Mancini writes in a research note Monday. Mancini rates XM neutral and Sirius a buy.

Though XM has been losing market share, especially in store sales, some analysts say this is merely a catch-up by Sirius, which launched service a year after XM.

For the second quarter, analysts expect XM to post an adjusted loss of 66 cents a share on $221.6 million in sales. Meanwhile, Sirius is expected to report Tuesday that it lost 15 cents a share on revenue of $146.7 million.

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