Worldspace Satellite Radio has announced results for the third quarter of 2006 ended September 30, 2006. The Company added 16,866 net subscribers during the third quarter of 2006, ending the quarter with 176,831 subscribers, 136% higher than third quarter 2005. In India, the Company added 18,568 net subscribers during the third quarter of 2006, ending the quarter with 138,065 subscribers, 287% higher than third quarter 2005.
During the third quarter, WorldSpace announced a series of content and business highlights. The Company signed an exclusive broadcast license agreement with ESPN STAR Sports to provide its subscribers with live audio coverage of over 200 days of cricket, including a minimum of 77 days featuring the Indian national team. Starting in mid-November 2006 and running through February 2008, ball-by-ball, real-time coverage, highlights, commentary and related programming will air on "play," the WorldSpace-branded all-sports channel for South Asia and the Middle East.
The Company expanded its branded line-up of specialty programming with the launch of "Falak," India's first exclusive 24-hour Urdu channel. This brings to 31 the number of self-produced channels on the WorldSpace Satellite Radio Network and reinforces the Company's commitment to delivering a truly unique, personal listening experience. The Company also signed an agreement with CNBC Arabiya, adding an outstanding Arabic-language channel to its lineup for subscribers in the Middle East and Africa.
WorldSpace Chairman and CEO Noah Samara stated, "We remain confident in the medium to long term value proposition of global satellite radio. WorldSpace continues to be well positioned with a number of assets and real market opportunities to capitalize on our existing infrastructure. Over the third quarter, we focused on fixing the issues that we identified in India -- in marketing, sales and distribution, and customer care -- and on building our technology and regulatory infrastructure.
"We are concentrating on improving our operating performance in India, including the management of churn," Samara continued. "While we believe we are making progress in these areas and should begin seeing real results over the next couple of quarters, we are also determined to bring partners on board who we expect will make contributions to in-market execution and funding requirements. Indeed, we are actively responding to expressions of interest from a set of outstanding potential partners. Also, we are close to finalizing a plan that we expect will extend our financial resources through effective cost management."
Revenues Increase
For the third quarter of 2006, WorldSpace reported revenues of approximately $3.3 million, representing a 42% increase compared with revenues of approximately $2.4 million for the third quarter of 2005. Subscription revenue grew 89% to $1.8 million for the third quarter of 2006 compared with subscription revenue of approximately $1.0 million for the third quarter of 2005. On a sequential basis, subscription revenues were 6% lower than the $1.9 million in the second quarter of 2006, and overall revenues in the third quarter of 2006 were 11% lower than the $3.8 million in the previous quarter. Second quarter of 2006 revenue numbers were augmented by approximately $0.2 million in "Other" revenue from a settlement with a broadcaster capacity lease, and approximately an additional $0.2 million of subscription revenue earned by the Kenya Institute of Education program.
Net Loss and EBITDA Loss Narrow Sequentially
WorldSpace recorded a net loss for the third quarter of 2006 of $28.9 million, or $0.77 per share, compared with a net loss of $15.4 million, or $0.48 per share for the third quarter of 2005. Sequentially, the net loss improved 21% from the second quarter 2006 results of $36.7 million, or $0.98 per share due to an increased income tax benefit. WorldSpace had an EBITDA (earnings before interest income, interest expense, income taxes, depreciation and amortization) loss of $27.1 million for the third quarter of 2006, compared with an EBITDA loss of $29.1 million for the third quarter of 2005, and an EBITDA loss of $30.8 million in the second quarter of 2006.
SAC Decreases and CPGA Increases Sequentially
Subscriber Acquisition Costs (SAC) fell to $37 in the third quarter 2006, on a blended basis and $38 in India. Cost Per Gross Addition (CPGA) increased in the quarter to $137 on a blended basis, from the $131 CPGA in the second quarter 2006, primarily due to the spending of $3.3 million in the third quarter on the A. R. Rahman campaign in India. In India, the CPGA increased to $126 for the third quarter from $122 in the second quarter of 2006. WorldSpace's CPGA is the fully-loaded cost to acquire each new subscriber, including SAC, as well as advertising and marketing expenses. SAC represents subsidy on equipment sales.
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