Thursday, January 11, 2007

CitiGroup Note On Sirius

January 11, 2006

Eileen Furukawa of Citigroup issued a note this morning following their conference.
Key points are:

-With continued strong consumer satisfaction, SIRI reiterates that a price hike still remains a possibility. We think reaching positive FCF for '07 is achievable without a price hike - but any hike would make this goal even more easily attained.

-SIRI & XMSR remain in arbitration with RIAA over royalty fees with a deadline of Dec '7, but gap still remains btwn cur 2% rev share vs RIAA's 10% share wish.

-SIRI believes that NASCAR will be a meaningful source of subs since it had been one of the top 3 reasons (along with MLB and commercial free music) that XM subscribers gave as reasons consumers signed up with XM.

- SIRI expects ad revenue will double in '06 vs '07 aided by Stern and NASCAR, which is in line with our est for ad rev of $34M in '06 rising to $70M in '07. Longer term SIRI still thinks goal of ad revs at 10%+ of revs is reasonable.