Sirius upbeat on 2005.

Mel Karmazin characterizes a New York Post report of a potential merger between XM and Sirius Satellite Radio as the “third rumor” he has had to deal with in his first eight weeks as Sirius CEO. The comment came as Sirius issued new subscriber numbers and revised upward its guidance for 2005.

“I have not met with the [XM] chair or the CEO, so I have no idea where this has come from,” Karmazin said during his firm’s Wednesday morning (Jan. 26) earnings conference call.

Commenting later in the call on a question about potential antitrust restrictions for such a merger, Karmazin said he would never try to predict what the government would or wouldn’t approve, adding that he thought such a merger would be a “difficult deal to get through.”

According to the Post, the two satellite competitors have been meeting lately to talk about the possibility of a merger, but the discussions have not advanced. Among the topics reportedly discussed is how to maneuver antitrust concerns that would arise from what would amount to a monopoly in the fledgling satellite radio business.

To alleviate those concerns, the Post suggests that the companies' strategy would be to convince regulators that satellite radio is part of the exploding mobilize music market.

Combining XM and Sirius would ease a price war for content, reduce marketing costs and provide other cost efficiencies.

Meanwhile, just a few weeks after giving early guidance about how it expects 2005 to play out, Sirius Satellite Radio has revised that guidance upward.

Sirius expects to end 2005 with 2.5 million subscribers, 200,000 more than was previously expected.

Sirius had 521,479 gross subscriber additions in the fourth quarter. Of those, 348,711 came from retail outlets and 130,881 via partnerships with automotive, trucking and boating companies.

For 2004, Sirius posted total revenues of $66.9 million and added a net 882,197 subscribers, breaking through 1.1 million total subs by December. The company's net loss increased to $261.9 million in 2004, and its adjusted loss from operations rose to $126.1 million.

Revenues are expected to reach $210 million in 2005.

Programming and content expenses increased by $33.7 million in 2004, to $63.9 million. The company attributed the increase to rising costs to create, produce and acquire content, specifically its deal with the National Football League.

Sirius ended 2004 with roughly $759 million in cash, cash equivalents and marketable securities, which it believes is sufficient to reach cash flow breakeven under its current business plan.