Sirius XM Radio Inc, home to programs by Howard Stern and NFL football, reported a net loss for the fourth quarter and forecast weaker-than-expected revenue for next year, sending its shares down 5.5 percent.

The satellite radio company expects full-year revenue to be about $3 billion, which falls short of Wall Street's expectations of full-year revenue of $3.02 billion to $3.1 billion.

For 2011, the company projected free cash flow to be $300 million, which fell short of Wunderlich Securities analyst Matthew Harrigan's estimate of $430 million.

Their free cash flow figure is light, Harrigan said. Free cash flow refers to profit that excludes depreciation and amortization, but includes capital expenditures.

Excluding costs for paying off debt early and restructuring charges, the company said net income would have been $62 million, up from $18 million a year earlier. The company did not provide a per-share amount following these adjustments.

Sirius XM has been steadily adding subscribers and distancing itself from years of huge losses and concerns about its business model. It ended the quarter with 20.2 million subscribers, up from 18.8 million a year earlier. It expects to sign on another 1.4 million subscribers next year.

We are no longer a long shot concept and company, Chief Executive Mel Karmazin told analysts on a conference call.

Sirius XM said it paid less to attract subscribers than it did last year. Programing costs will continue to fall, it said, even as it continues to sign high profile programing deals.

In December, Sirius XM struck a new contract with Howard Stern that will have the shock jock on air at least until 2015. Stern's previous contract was a five-year $500 million contract but terms of the new contract were undisclosed.

While Sirius XM has vastly improved its finances in recent quarters, some analysts worry it faces a competitive threat from Pandora, the Internet radio company.

Last week, Pandora filed to raise up to $100 in an initial public offering and analysts have said it could steal market share away from Sirius XM, especially as new devices and smartphones allow Pandora to be used in cars.

Much of Sirius XM's subscriber growth comes from buyers of new cars that have the radios installed. Nearly half of the customers who receive trial subscriptions when they buy a new car become full-paying subscribers after their promotions end.

When asked about Pandora on the conference call, Sirius XM executives were quick to point out critical flaws in the strategy of free online radio.

Nothing is really free because the way they make their money. They make you listen to commercials, Karmazin said, referring to Pandora and other free online radio services.

Sirius XM reported a net loss of $81.4 million, or 2 cents per share, versus a profit of $11.8 million, or nil per share a year earlier.

Revenue rose $735.9 million, which falls shy of the $739.9 million that analysts were expecting, according to Thomson-Reuters I/B/E/S.

Shares were down 10 cents at $1.73 in midday Nasdaq trading.

(Reporting by Liana B. Baker, editing by Maureen Bavdek and Derek Caney)