WORLDSPACE(R) Satellite Radio Reports Third Quarter 2007 Results

WORLDSPACE(R) Satellite Radio Reports Third Quarter 2007 Results

SILVER SPRING, Md., Nov. 8 /PRNewswire-FirstCall/ -- WORLDSPACE(R) Satellite Radio (NASDAQ:WRSP) , one of the world leaders in satellite-based digital radio services, today announced results for the third quarter of 2007 ended September 30, 2007. The Company ended the quarter with 177,644 subscribers worldwide, a loss of 12,689 from the close of the prior quarter, reflecting loss of subscribers in India and the planned cessation of marketing efforts in Europe ahead of the company's efforts to test and subsequently commence mobile service in Europe. In India, the Company lost 8,713 net subscribers during the third quarter of 2007, reflecting reduced marketing in that region, ending the period with 164,902 subscribers in India, 19% higher than at the end of the third quarter of 2006.

   Other highlights include:    -- As previously announced, WorldSpace and Fiat Group Automobiles signed a      first ever distribution and marketing agreement for satellite radio in      Europe.  WorldSpace expects that, beginning in late 2008, it will offer      customers in Italy, through aftermarket equipment installations      available through Fiat's vast dealership network and other outlets, a      mobile satellite radio service with 40-50 channels of music, sports,      news and entertainment programming.  OEM or factory-installed equipment      for Lancia, Fiat and Alfa Romeo models is expected to be available in      late 2009.   -- During the quarter, in order to shore up its liquidity, WorldSpace has      been engaged in discussions with a variety of potential investors and      partners, strategic and financial, about equity and debt financings.      The Company hopes to conclude a transaction in the next few months.    -- Content highlights include:        -- WorldSpace Satellite Radio broadcasts Live Earth 24-hour concert          series on three of its branded channels, available to all          subscribers worldwide.       -- EigoMANGA produces a Japanese Music Radio exclusively for          WorldSpace's global pop channel, UPop.  The weekly hour-long music          show features a mix of Japanese pop and rock music currently          leading the Oricon music charts in Japan.       -- WorldSpace provided live reporting and celebrity interviews from          the Second Annual Virgin Festival by Virgin Mobile.  Back-stage          interviews aired on WorldSpace channels Bob and Radio Voyager along          with the music of artists that performed live at the 2-day Virgin          Festival.       -- WorldSpace India and MSN launched a three-month pilot of an          internet radio service targeting Indian expatriates living in          places such as the US, UK and Middle East.  The service provides          Indians with 24 hour access to five vibrant genres of Indian          programming: Farishta (Hindi film classics), Sparsha (Kannada),          Spandana (Telegu), Gandharv (Hindustani classical) and Shruti          (Carnatic music).   

WorldSpace Chairman and CEO Noah Samara stated, "We are very pleased with our continuing progress in Italy, as we have now lined up the right partners to make this launch successful, between Fiat, Telecom Italia and Fraunhofer for receiver development. We see great opportunities in this market for a robust mobile service offering, and are confident that, with our partners, we can devise a strategic course to implement our strategy and acquire the financial resources to support it.

"In India, we are operating on a restrained basis," Samara said. "We are postponing marketing spending until we secure a repeater license that will enable us to provide seamless service to automobiles. We will then be in a position to leverage our streamlined presence in India to launch a successful mobile service there. Over all, we remain confident in the long-term viability and opportunities that our business represents and are encouraged by our initial discussions with a series of potential investors about additional financing."

Subscriber Growth

Gross subscriber adds of 20,132 in India were down from 25,092 in the second quarter of 2007. Net subscriber losses in India of 8,713 continued the downward trend from net additions of 3,261 in the second quarter of 2007, as the Company continued to minimize its marketing efforts this year. Subscriber declines outside of India primarily reflected the cessation of marketing outreach in Europe, as WorldSpace prepares for testing for its planned mobile offering in that region starting with Italy.

Revenue

For the third quarter of 2007, WorldSpace reported revenues of approximately $3.3 million, roughly flat with revenues of approximately $3.3 million for the third quarter of 2006. Subscription revenue was approximately $1.9 million for the third quarter of 2007, up slightly from approximately $1.8 million in the third quarter of 2006. On a sequential basis, subscription revenues in the third quarter of 2007 were flat with the approximately $1.9 million recorded in the second quarter of 2007.

Net Loss and EBITDA Loss

WorldSpace recorded a net loss for the third quarter of 2007 of $36.7 million, or $0.91 per share, compared with a net loss of $28.9 million, or $0.77 per share for the third quarter of 2006. WorldSpace had an EBITDA (earnings before interest income, interest expense, income taxes, depreciation and amortization) loss of $20.3 million for the third quarter of 2007, compared with an EBITDA loss of $27.1 million for the third quarter of 2006.

SAC and CPGA

Subscriber Acquisition Costs (SAC) were $10 in the third quarter of 2007 on a blended basis (India and the rest of the world) and $12 in India, compared with $21 on a blended basis and $22 in India for the second quarter of 2007. Cost Per Gross Addition (CPGA) decreased in the quarter to $80 on a blended basis, down from the $110 CPGA in the prior quarter, reflecting the lower marketing spend in India, where the CPGA decreased to $75 for the third quarter of 2007 from $108 in the second quarter of 2007. WorldSpace's CPGA is the fully-loaded cost to acquire each new subscriber, including SAC, as well as advertising and marketing expenses. SAC also represents a subsidy on equipment sales.

                                    Three months ended    Nine months ended                                       September 30,        September 30,                                       2007     2006        2007      2006   SAC                                $10      $37         $24       $40     SAC (India)                       12       38          25        41     SAC (ROW)                          0        5           0         0    CPGA                               $80     $137         $89      $134     CPGA (India)                      75      126          85       126     CPGA (ROW)                       162      271         134       240    CPGA expense ( in millions)       $1.7     $5.4        $6.5     $16.2     CPGA (India)                     1.4      4.7         5.8      14.5     CPGA (ROW)                       0.3      0.7         0.7       1.7     Nine Months' Results  

For the first nine months of 2007, WorldSpace recorded net revenues of approximately $10.0 million, compared with net revenues of approximately $10.6 million in the same period in 2006. The net loss for the first nine months of 2007 was $123.5 million, or $3.12 per share, compared with a net loss of $94.8 million, or $2.54 per share, in the 2006 period. EBITDA in the first three quarters of 2007 was a loss of $70.0 million; in the 2006 period, EBITDA was a loss of $89.2 million.

Conference Call

WorldSpace plans to hold a conference call to discuss these results and other developments on Thursday, November 8, 2007 at 4:30 pm. The call will also be available as a webcast, which can be accessed via the Company's website, http://www.worldspace.com/, by following the links to investor relations and webcasts. To participate in the call, please dial 1-866-770-7129, using passcode 91730183; internationally, the call may be accessed by dialing 1-617-213-8067, using the same passcode. The call will be available as an archived webcast beginning approximately one hour after completion in the investor relations section of the Company's website.

Non GAAP Reconciliation

Earnings before interest income, interest expense, income taxes, depreciation and amortization is commonly referred to in our business as "EBITDA." EBITDA is not a measure of financial performance under generally accepted accounting principles. The Company believes EBITDA is often a useful measure of a Company's operating performance and is a significant basis used by the Company's management to measure the operating performance of the Company's business because EBITDA excludes charges for depreciation, amortization and interest expense that have resulted from our debt financings, as well as our provision for income tax expense. Accordingly, the Company believes that EBITDA provides helpful information about the operating performance of its business, apart from the expenses associated with its physical assets or capital structure. EBITDA is frequently used as one of the bases for comparing businesses in the Company's industry, although the Company's measure of EBITDA may not be identical to similarly titled measures of other companies. EBITDA does not purport to represent operating income or cash flow from operating activities, as those terms are defined under generally accepted accounting principles, and should not be considered as alternatives to those measurements as an indicator of our performance. A reconciliation of net loss to EBITDA has been provided in this release.

About WORLDSPACE(R) Satellite Radio

Based in the Washington, DC metropolitan area, WorldSpace, Inc. (NASDAQ:WRSP) is the world's only global media and entertainment company positioned to offer a satellite radio experience to consumers in more than 130 countries with five billion people, driving 300 million cars. WorldSpace delivers the latest tunes, trends and information from around the world and around the corner. WorldSpace subscribers benefit from a unique combination of local programming, original WorldSpace content and content from leading brands around the globe including the BBC, CNN International, Virgin Radio UK, and RFI.

WorldSpace's satellites cover two-thirds of the earth's population with six beams. Each beam is capable of delivering up to 80 channels of high quality digital audio and multimedia programming directly to WorldSpace Satellite Radios anytime and virtually anywhere in its coverage areas. WorldSpace is a pioneer of satellite-based digital radio services (DARS) and was instrumental in the development of the technology infrastructure used today by XM Satellite Radio. For more information, visit http://www.worldspace.com/.

Forward-looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Such forward-looking statements may be affected by inaccurate assumptions or by known or unknown risks or uncertainties. Actual results may vary materially from those expressed or implied by the statements herein. For factors that could cause actual results to vary, perhaps materially, from these forward-looking statements, please refer to the Company's Form 10-K, filed with the Securities and Exchange Commission, and other subsequent filings. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

                          FINANCIAL TABLES FOLLOW     Results of Operation                                  Three months ended     Nine months ended                                     September 30,           September 30,                                   2007        2006        2007        2006                              (in thousands, except share and per share data)   Revenue     Subscription revenue         $1,870      $1,810      $5,575      $5,340     Equipment revenue               581         659       1,595       2,433     Other revenue                   879         874       2,814       2,810   Total Revenue                   3,330       3,343       9,984      10,583    Operating Expenses     Cost of Services (excludes      depreciation shown      separately below)       Satellite and transmission,        programming and other      7,862       7,503      23,497      21,657       Cost of equipment             865       2,674       3,571       8,144     Research and development        541         265       2,066         756     Selling and marketing         2,611       5,403       8,596      17,199     General and administrative   11,786      14,312      41,885      48,860     Depreciation and      amortization                14,887      14,602      44,289      44,056   Total Operating Expenses       38,552      44,759     123,904     140,672   Loss from Operations          (35,222)    (41,416)   (113,920)   (130,089)    Other Income (Expense)     Interest income                 785       2,714       4,858       8,754     Interest expense             (2,987)     (1,991)     (7,748)     (5,857)     Write-off of deferred debt      issuance costs                   -           -      (11,516)         -     Deferred financing costs      and warrants amortization     (891)       (380)     (1,820)     (1,139)     Other                            52        (327)       (349)     (3,141)    Total Other Income (Expense)   (3,041)         16     (16,575)     (1,383)    Loss Before Income Taxes      (38,263)    (41,400)   (130,495)   (131,472)   Income Tax Benefit              1,569      12,468       7,023      36,686   Net Loss                      (36,694)    (28,932)   (123,472)    (94,786)   Loss per share-basic and    diluted                       $(0.91)     $(0.77)     $(3.12)     $(2.54)   Weighted Average Number of    Shares Outstanding        40,459,200  37,584,541  39,627,833  37,253,549      SUMMARY OPERATING METRICS                                      Three months ended   Nine months ended                                         September 30,       September 30,                                        2007      2006      2007      2006   Net Subscriber Additions (Losses)  (12,689)   16,866   (21,461)   61,525     India                             (8,713)   18,568     2,892    63,491     ROW (4)                           (3,976)   (1,702)  (24,353)   (1,966)   Total EOP Subs                     177,644   176,831   177,644   176,831     India                            164,902   138,065   164,902   138,065     ROW (4)                           12,742    38,766    12,742    38,766   ARPU (1)                             $3.41     $3.58     $3.29     $3.86     ARPU (India)                        3.15      2.93      3.02      2.97     ARPU (ROW)(4)                       6.43      5.74      5.85      6.27   SAC (2)                                $10       $37       $24       $40     SAC (India)                           12        38        25        41     SAC (ROW)(4)                           0         5         0         0   CPGA (3)                               $80      $137       $89      $134     CPGA (India)                          75       126        85       126     CPGA (ROW)(4)                        162       271       134       240   EBITDA                            $(20,283) $(27,141) $(69,980) $(89,174)     Notes:   1. Average Revenue per User (ARPU) is derived from the total of monthly      earned subscription revenue (net of promotion and rebates) divided by      the monthly average number of subscribers for the period reported. APRU      is a measure of operation performance and not a measure of financial      performance under generally accepted accounting principles.    2. Subscriber Acquisition Cost (SAC) includes the negative margins from      equipment sales to end customers, but does not include ongoing loyalty      payments to retailers and distribution partners, and payments under      revenue sharing arrangements to content providers.    3. Cost per Gross Addition (CPGA) includes amounts in SAC described above,      as well as advertising, media and other discretionary marketing      expenses, but does not include headcount related to sales and marketing      staff.    4. Rest of World (ROW)      SELECTED BALANCE SHEET DATA:                        As of                                      September 30, 2007    December 31, 2006                                           Unaudited                                                   (in thousands)   Cash and cash equivalents                      $13,200           $27,565   Restricted Cash and Marketable Securities       15,296           143,763   Satellites and Related Systems, net            309,576           345,046   Total Assets                                   376,087           568,645   Total Debt (including current portion)          96,642           155,368   Contingent Royalty Obligation                1,814,175         1,814,175   Total Liabilities                            2,089,069         2,172,000   Minority Interest                                  798               304   Total Shareholders' Deficit                 (1,713,780)       (1,603,659)      EBITDA Reconciliation:                                                    Three months ended                                                      September 30,                                                   2007          2006   Reconciliation of Net Loss to EBITDA   Net Loss as reported                           $(36,694)     $(28,932)   Addback non-EBITDA items included in net loss:   Interest income                                    (785)       (2,714)   Interest expense                                  3,878         2,371   Depreciation & amortization                      14,887        14,602   Deferred income tax benefit                      (1,569)      (12,468)   EBITDA                                         $(20,283)     $(27,141)                                                        Nine months ended                                                        September 30,                                                    2007          2006   Reconciliation of Net Loss to EBITDA   Net Loss as reported                          $(123,472)     $(94,786)   Addback non-EBITDA items included in net loss:   Interest income                                  (4,858)       (8,754)   Interest expense                                 21,084         6,996   Depreciation & amortization                      44,289        44,056   Deferred income taxes benefit                    (7,023)      (36,686)   EBITDA                                         $(69,980)     $(89,174)  

First Call Analyst:
FCMN Contact:

Source: WORLDSPACE(R) Satellite Radio

CONTACT: Media: Judith Pryor, +1-301-960-1242, jpryor@worldspace.com, or
Investors: Sridhar Ganesan, +1-301-960-2300, sganesan@worldspace.com, both of
WorldSpace, Inc.

Web site: http://www.worldspace.com/

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Profile: International Entertainment