Serious Subscriber Decline Bodes Ill for Sirius XM

Sirius XM (SIRI) satellite radio service faces tough competition from free services plus the challenge of keeping and adding subscribers despite a pullback in consumer spending.

The company, the result of a merger of Sirius Satellite Radio and XM Satellite Radio Holdings last July, has been struggling. And Thursday morning's quarterly results were worse than expected. Sirius XM finished the third quarter with 18.6 million subscribers, and while that's an increase of 3.5 percent from last year, it's also down by 400,000 from just three months earlier.

Satellite radio's shrinking subscriber base indicates satellite radio is not a necessity in this recession. When paid promotional trials expired, many people just didn't renew them. And the decline in auto sales to a multi decade low decimated one of the company's main sources of growth. Still, the company has managed to take advantage of economies of scale from the merger to narrow its losses. Its pro-forma net loss narrowed to 62.9 million from $233 million a year earlier, while pro-forma revenue grew 5 percent.

While just a few months ago the company warned investors it might have to file for bankruptcy protection, an injection of cash from Liberty Media (LCAPA) last month made a world of difference, allowing it to refinance. Last month Standard & Poor's raised its credit rating for the satellite radio maker, saying its liquidity position has improved.

The merger of the two satellite radio giants took so long and faced a slew of anti-trust concerns. But the performance of the merged company just goes to show that in this digital world there are so many different ways to consume media, that different formats compete with each other. Satellite radio is up against Internet radio and online music. Sirius XM is now counting on new distribution platforms to move away from its reliance on auto sales and to make its service a must-have no matter what the economy.

Comments

[Sirilover]

This gal's another dope. Just proves that in America you can be anything you want to be, dosen't mean you know what the heck your talking about.

2009 May 08 06:03 AM

[bill blattner]

I have 4 SIRI radios and wouldn't be without them, all the people I know that have SIRI say the same. Once people use SIRI they are HOOKED, never have to keep turning the dial to find a non fade station.
Just a matter of time, and it will happen, just give it a couple more years.

2009 May 08 06:29 AM

[bill blattner]

All the annalists are game players they don't understand how business operates, they are just guessers, and most of the time they are wrong.
I just amazes me how stupid they are.

2009 May 08 06:34 AM

[sl62]

Julia...

I hate to tell you this (because you're kinda hot) but you're also kinda an idiot. Your opening thesis immediately is senseless..if you actually knew what the company was about.

>>Sirius XM (SIRI) satellite radio service faces tough competition from free services plus the challenge of keeping and adding subscribers despite a pullback in consumer spending.<<

Here's a news flash, News Babe. The only way to grow subs during a recession (when people are pulling back on spending money) is to raise your costs to obtain or retain those subs. That is not what SIRI was about in Q1 (in case it has escaped you). It is critical to for Mel and Co to keep operating costs lean right here, keep COH at good levels..and just be smart about the bottom line. The company's focus (as it should be) is now turning to positve cash flow, COH, and still bringing together the synergies fo the two merged companies of Sirius and XM. Q1 was most likely as bad as autos will get..although Q2 won't be any picnic either..but these things are tenporarily out of the company's control. As Autos right themselves, so will SIRI's sub growth..and concurrently they will start now working on new sub channels to augment autos in the future through advertising, et al.

Your part about competition from "free" services is ludicrious. How many things worthwile in life are actaully free Julia? Is a "free" model really your answer to compete with a content rich supplier like SIRI? When you're a free model Julia..tell me. How exactly do you pay for talent and content? That's just you doing the party line MSM thing because it sounds good.

p.s. how about an updated pic? What, is that picture from when you just graduated college?

p.p.s. SA..your manufactured negative headline for this article sucks. Her article is actually not that negative. IMHO you take censhorship, spin, and manipulation to new levels. But then I know how much you hate SIRI. Can you handle that criticism?

2009 May 08 07:20 AM

[relmar2003]

You know sl62 i was going to rip her too, but you did such a good job, im just going to pile on. Just so everyone reading her articles knows, that in 1.5 years she has NEVER written anything positive about sirius, and only writes articles at crucial times to bash the stock so we sell our shares, in my opinion. Sorry Julia, but go cover something you know, like Avon or something.

2009 May 08 08:00 AM

[relmar2003]

Julia the only reason you get the Avon comment is because your article didnt have any facts in it, and as a writer, its easy to spot a piece designer to do nothing more than harm this companies image, all my opinion of course. I have no proof other than the words you write, and your timing. Enough for me.

2009 May 08 08:01 AM

[User 368600]

On May 08 08:00 AM relmar2003 wrote:

Just so everyone reading her articles
> knows, that in 1.5 years she has NEVER written anything positive
> about sirius, and only writes articles at crucial times to bash the
> stock

DUH
1.5 years ago SIRI was $2.50.
Get yourself a calculator and a brain.

2009 May 08 08:07 AM

[hernje]

You're an ass.


On May 08 07:20 AM sl62 wrote:

> Julia...
>
> I hate to tell you this (because you're kinda hot) but you're also
> kinda an idiot. Your opening thesis immediately is senseless..if
> you actually knew what the company was about.

2009 May 08 08:38 AM

[jmsithy]

here is soemthing to look at www.proxyvote.com/0119...

2009 May 08 08:46 AM

[sparky]

perhaps the fact that SIRI was on the brink of failure contributed to the decline of subs. Many existing subs may have delayed renewal, and would-be subs waited to ensure that the company would exist.

2009 May 08 09:01 AM

[sl62]

hernia..

well thought-out post...you're use of the word 'you're' is amazing. Then you bring in the venerable 'an'...that's just artistic...and if all that weren't enough...you top it all off with a third word!!! Ass!. Sweet. I just don't know how you do it. and..so I'm an ass. what's your point?


On May 08 08:38 AM hernje wrote:

> You're an ass.

2009 May 08 09:02 AM

[connorport]

Hey Homo! Back up! The bus left along time ago for you. Lets not waist anyones time today with your lack of business sense and babble. You're a clown.


On May 08 08:07 AM FloorHomo wrote:

>
>
> Just so everyone reading her articles

2009 May 08 09:03 AM

[I'm Not Jim Cramer]

Oops, be carefull the paranoia is growing again. It means you're not looking at this as a business anymore. What difference does it make if YOU love the service, or if everybody you know loves the service. It's a BUSINESS. I defended the quarter yesterday, but I also sold the day before because we had come a long way. That's what you do. So I'm guessing the bottom is once again between .35 - .40. Pick up more in that area, and quit whining. Jesus, you're up this year anywhere from 200% to 400% and that still isn't enough. Mel has done a terrible job running this company, and that is what is reflected in the stock price. Maybe in the future he digs his way out, maybe not. What do you care if you're standing beside the hole selling him shovels and getting paid for hauling away the dirt?

2009 May 08 09:04 AM

[connorport]

Agree! Whats one more Q. I've waited several so far. We were told Q2 or Q3 it would come. Lets see what SIRI brings us!


On May 08 09:04 AM I'm Not Jim Cramer wrote:

> Oops, be carefull the paranoia is growing again. It means you're
> not looking at this as a business anymore. What difference does
> it make if YOU love the service, or if everybody you know loves the
> service. It's a BUSINESS. I defended the quarter yesterday, but
> I also sold the day before because we had come a long way. That's
> what you do. So I'm guessing the bottom is once again between .35
> - .40. Pick up more in that area, and quit whining. Jesus, you're
> up this year anywhere from 200% to 400% and that still isn't enough.
> Mel has done a terrible job running this company, and that is what
> is reflected in the stock price. Maybe in the future he digs his
> way out, maybe not. What do you care if you're standing beside the
> hole selling him shovels and getting paid for hauling away the dirt?

2009 May 08 09:15 AM

[sl62]

connor...

glad to see you over at sw...and I see you've had your hands full here at SA...appreciate your efforts....

INJC...

Hope all is well with you too...


On May 08 09:03 AM connorport wrote:

> Hey Homo! Back up! The bus left along time ago for you. Lets not
> waist
anyones
> time today with your lack of business sense and babble. You're
a
> clown.

2009 May 08 09:18 AM

[Randall Pink Floyd]

SELL SELL SELL!!!!!!!!!! It's a sinking ship and you idiots are going to drown with mel as your captain.

siri to .25 by next week

position----reverse cowgirl

2009 May 08 09:21 AM

[relmar2003]

This article is so short, has no facts, and is nothing more than a slam. Its not journalism, because if she was reporting about the company, then why report ONE metric of it. Its so obvious it should work against her, people will realize that shes a hack writer, and buy on the contrarian view that if the media doesnt want me to buy this stock, seems like a good buy to me. NEVER had advice from the main stream media make me money. Never. If i listened to the Main stream media I never would have bought enough low shares to even have a chance to break ever. Hey floor homo, remember 4 BILLION is snyergeris every analist was touting per merger, and why I bought the stock. Well, we havent even be able to come close to 1 billion so far. They overestimated savings, in fact every analyist did, with a buy rating on the stock going into the merger. Now they say sell at the bottom. Do you see the game yet? Making sense to you? Readers out there reading this post, as yourself the last time a hack article like this has MADE you money.

2009 May 08 09:25 AM

[Neal Barkett]

Where I think she missed the boat is where she said that the company is waiting on new distribution platforms. I don't think they are doing enough in that area. But I give her credit of pointing out the hell that Sirius Xm has had to face over the last 2 years. It shows how Sirius Xm is percieved by so many. It's time has come where some of the negative perception has to lay at Sirius Xm's doorstep. If you read Brandon's article from today I think he makes some great points.

2009 May 08 09:35 AM

[sl62]

good post rel...

2009 May 08 09:37 AM

[357519]

sl62,
It's good to see you out on the streets again with Rel. I always love reading your comments, and your opening line on this one?....Priceless. For those of you out there on the sidelines thinking, but are hesitant of buying, do yourself a favor and read sl62's comment again. Those of us that are involved with this stock know three things. 1. This stock still has tremendous short term upside from its value correction off of BK risk pricing. 2. The guidance provided in Q1 sheds a good light on the SP's direction after revaluation is complete.(hint... UP!) & 3. The company has its regulatory battles behind them. When the royalty can of worms is fully opened on the "free" services, bye, bye. The so-called competition is on the verge of running into a Sirius Buzzsaw.

Julia, Serve us up another round of stupid. I'm buying!

2009 May 08 09:45 AM