Sirius XM Radio on Wednesday posted better-than expected quarterly revenue, citing a sharp jump in subscribers to its pay-radio service and customers' desire for premium programing.

The company, lead by media industry veteran Mel Karmazin, nudged its full-year revenue estimate up to $2.8 billion from $2.7 billion, after it added 583,000 net subscribers in the second quarter.

Sirius' shares rose about 3 percent to $1.04 in premarket trading after it said revenue in the second quarter rose 16 pct to $699.7 million. That beat analysts' average estimate of $691.4 million, according to Thomson Reuters I/B/E/S.

Net income at Sirius XM, home to programs by Howard Stern and Oprah Winfrey as well as Major League Baseball, was $15.3 million, or nil per share, compared with a loss of $159.6 million, or 4 cents a share, one year ago.

Fueled by healthier auto industry sales, which lifts demand for satellite radio, Sirius XM ended the period with 19.5 million subscribers, up 6 percent from a year ago. It repeated its target of 1.1 million net subscriber additions this year, which is double its initial forecast.

The outlook shows that Sirius has found a stable path to growth, even though the auto industry recovery appears to be more uneven.

Our business has improved substantially in the past year, and we look forward to a strong second half and 2011, Karmazin said in a statement.

On average, each of the company's subscribers paid about $11.81 per month, up 11 percent from the same period in 2009, as customers signed up for Best Of programing packages that pool premium content from the Sirius and XM systems.

Born of the 2008 merger that united rivals Sirius Satellite Radio and XM Satellite Radio, Sirius XM has been resurgent after receiving a life-saving loan in February 2009 from Liberty Media . The transaction bought Liberty head John Malone a 40 percent equity stake in Sirius XM.

Since then, the company has seen a rise in average revenue per user, lower costs to woo subscribers to the service and an increase in new-car buyers who sign up for satellite radio after their trial subscriptions lapse.

(Reporting by Franklin Paul, editing by Maureen Bavdek)

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