CNBC Press Releases

DAVID FABER: WHAT IS THE LIFE OF A SUBSCRIBER WHO DOES NOT CONVERT?

MEL KARMAZIN: WE HAVEN'T BEEN AROUND LONG ENOUGH BUT IF YOU TAKE THE 1.5% CHURN RATE YOU GOT A SIX YEAR LIFE OF A SUBSCRIBER.

DAVID FABER: HOW THIS IS INDUSTRY RIGHT NOW? YOU KNOW, OBVIOUSLY ADVERTISING IS NOT YOUR KEY COMPONENT. SUBSCRIBERS BUT YOU DO DO ADVERTISING, YOU CERTAINLY KNOW THE INDUSTRY WELL AND THERE IS CONCERN ABOUT AN ECONOMIC SLOWDOWN. ARE YOU STARTING TO SEE IT ALL IN TERMS OF ADS AND AD RATES.

MEL KARMAZIN: IT IS VERY HAVE HARD FOR ME TO TALK TO YOU TODAY ABOUT OUR CURRENT BUSINESS BECAUSE WE HAVE ALREADY CLOSED OUR QUARTER AND WE HAVEN'T REPORTED IT YET. BUT WE HAVE GIVEN GUIDANCE THAT SAID WE'LL BE OVER 8 MILLION SUBSCRIBERS AT THE END OF THE YEAR WHICH MEANS THAT WE WILL HAVE ADDED TWO MILLION SUBSCRIBERS IN THIS YEAR. AND, YOU KNOW, WE ARE NOT CHANGING THAT GUIDANCE AT ALL. YOU KNOW, WE'RE VERY COMFORTABLE WITH ADDING IT. OUR ADVERTISING BUSINESS, OUR BASE IS LOW, BUT OR ADVERTISING BUSINESS IS UP, THIS YEAR, OVER LAST YEAR, IN RADIO, THAT IS A PRETTY IMPRESSIVE STATEMENT TO MAKE THAT WE WILL BE UP DOUBLE DIGITS WHEN EVERYONE ELSE IS SORT OF--

DAVID FABER: AS YOU SAY FROM A LOW BASE.

MEL KARMAZIN: LOW BASE BUT AGAIN AS WE GET MORE AND MORE SUBSCRIBERS AND THE MERGER ALLOWS TO US DO THAT WE'LL HAVE MORE EARS TO OFFER ADVERTISERS AND THEREFORE WILL HAVE A HIGHER ADVERTISING BASE AS WELL.

DAVID FABER: WHAT HAPPENS IF THIS DOESN'T GO THROUGH? DESPITE YOUR DETERMINATION THAT IT WILL HAPPEN? WHAT WILL YOU DO? STICK WITH THIS? IS THERE A BACKUP PLAN.

MEL KARMAZIN: OUR BACKUP PLAN WAS ALWAYS BUSINESS AS USUAL, IN THE FOURTH QUARTER OF 2006 WE WERE FREE CASH FLOW POSITIVE. IT WAS A REALLY GOOD SIGN THAT SHOWS THAT --

DAVID FABER: FREE CASH FLOW POSITIVE, YOU YOU HAVE BEEN PROMISING THAT FOR A LONG TIME.

MEL KARMAZIN: IN THE FOURTH QUARTER OF '06 MADE $30 MILLION IN FREE CASH FLOW AND SUSPEND GUIDANCE BECAUSE OF THE MERGER. WE'LL GO BACK TO OUR BUSINESS, WE'LL CONTINUE TO GROW OUR BUSINESS AND WE WILL BE A FREE CASH FLOW BUSINESS AND WE'LL BE STRONGER AS A RESULT OF THE MERGER AND WE'LL BE ABLE TO BE A BETTER COMPETITOR AND HAVE MORE INNOVATIVE PRODUCTS WE'LL HAVE IT AT LOWER PRICES AND BE ABLE TO COMPETE WITH TERRESTRIAL RADIO, A WHOLE LOT BETTER IF THE MERGER TAKES PLACE BUT IF IT DOESN'T, BACK TO BUSINESS.

DAVID FABER: ALL RIGHT, WE'LL SEE IF WE CAN HOLD YOU TO THAT ONE WAY OR THE OTHER.

MEL KARMAZIN: ALWAYS HAPPY TO BE HELD TO IT.

DAVID FABER: THANK YOU, MEL KARMAZIN, PRESIDENT AND CEO OF SIRIUS AND POTENTIALLY THE CEO OF A COMBINED SIRIUS/XM, ERIN BACK TO YOU.

About CNBC:
CNBC is the recognized world leader in business news, providing real-time financial market coverage and business information to more than 340 million homes worldwide, including more than 95 million households in the United States and Canada. The network's Business Day programming (weekdays from 5:00 a.m.-7:00 p.m. ET) is produced at CNBC's headquarters in Englewood Cliffs, N.J., and also includes reports from CNBC news bureaus worldwide. Additionally, CNBC viewers can manage their individual investment portfolios and gain additional in-depth information from on-air reports by accessing http://www.cnbc.com.

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