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Out From Behind The '08 Ball, Kagan Projects Positive Cash Flow For Satellite Radio In 2008
XM and Sirius have a combined stock market capitalization of $16 billion. Yet Kagan Media Research forecasts they won't achieve positive cash flow until 2008, with a combined $454.1 million in earnings before interest, taxes, depreciation and amortization. Before those profits materialize, they'll incur more than $1.5 billion. in a cash flow deficit for 2005-07, according to the Kagan databook "Satellite Radio Outlook 2005: Analysis and Projections for the Industry."
"A growing subscription base is vital to satellite radio's long term success. And although XM and Sirius continue to attract new customers at an impressive rate, high operating costs have impeded their ability to generate positive cash flow," said Michael Buckley, associate analyst at Kagan Research. The red ink through 2007 comes from intense competition for subscribers that pushes up marketing and programming expenses.
XM broadcasts all Major League Baseball games under a $650 million, 11-year agreement and Sirius will air shock-jock Howard Stern as part of a five-year, $500 million contract.
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