Sirius XM's Subscriber Numbers Grow, Despite Economy 44 comments
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It should come as no surprise to anyone that the moment Sirius XM (SIRI) announced that its total subscriber base had plummeted by 400,000 in a single quarter, its stock began a 33% fall from the high it had achieved just moments before. A closer look at the reality however, reveals that the lost subscribers are anything but lost subscribers.
As I outlined in my article Time For a New Beginning, the pre merger competitiveness of the then separate Sirius Satellite Radio and XM Satellite Radio, created a situation in which the companies began counting promotional subscribers as regular subscribers. Most long time followers are familiar with this fact, as these "promotional" subscriptions have sometimes been referred to as "parking lot subs."
The individual companies justified these as subscribers since these promotional subscriptions were paid for by the auto manufacturers, such as GM, Ford (F) and Chrysler. Once paid for, the company could then report that subscription, even though as yet the cars remained unsold on dealer lots across the country.
In that article I had suggested that it was perhaps time for Sirius XM to do away with this concept, and theorized that the drop in auto sales could have a negative impact on the overall tally.
Taking a closer look at the subscriber totals that were reported by Sirius XM last week, we discover that out of the 400,000 subscribers lost in the first quarter of 2009, 300,000 of these were not truly subscribers at all, but rather "parking lot" subs. Sirius reports that:
...net subscriber loss of approximately 400,000 since year-end, the company’s first quarter of negative net subscriber additions, was driven by a decline of approximately 300,000 subscriptions in paid promotional trials, reflecting the dramatic fall-off in North American auto sales. Self-pay subscriptions declined less than 1% in the quarter from 15.5 million to 15.4 million.
Taking into consideration the overall economy in the first quarter of 2009, an actual subscriber loss of less than 1% is much better in fact than anyone could anticipate.
According to Sirius XM, subscriptions in paid promotional trials in Q1 2008 were approximately 3.6 million and peaked at 3.7 million in the second quarter of 2008, and have dropped to 3.2 million at the end of the first quarter of 2009. This would indicate that the bulk of promotional subscription losses has already occurred, and is not likely indicative of a longer term problem.
In fact, year over year results indicate that Sirius XM's self-paid subscriber base has grown from 14.3 million to 15.4 million, indicating that despite a sluggish economy, Satellite Radio continues to gain in popularity.
Position: Long SIRI.
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On May 11 08:18 AM relmar2003 wrote:
> wholesalecd, I did answer your question. Many many posts ago. I
> said count them only as selfpay, like sirius canada does. You dont
> even mention promo subs. They will reflect in your ARPU, so there
> really is no point too. It was used by sirius and xm as a gimick
> to gain stock price. Now we are taking the hit for that.
> Im not kissing up to jim, since your knew here, we have been discussing
> siriusxm for over 1 year now. He is not a basher, and is overall
> negative, but still plays the stock because hes not dumb, like you.
> You offer nothing to the discussion.
Nasty stutter. Do that all the time or only when you get excited?
On May 11 10:14 AM El Guapo jefe wrote:
> MEGA-PWN! C-C-C-C-C-Combo Breaker!
JAY BOY BILLY
On May 11 10:11 AM between the hedges wrote:
> The train is really about ready to leave the station. I have to put
> in a full disclosure. I bought thousands of shares all the way down
> to .05 betting on no bankrupcy. Feel free to review my posts. The
> stock was hammered due to bankrupcy. What people don't seem to be
> getting in their scared lemming heads is that bankrupcy is off the
> table. Get on the train or be run over by it. It's about to leave
> the station.tt
Back to .30 by friday.
JAY BOY BILLY
I have never stated that "parking lot subs" are a radio(or subscription) that has not been installed yet and sitting on a shelf. To be clear here, the company counts only those radios for which they have received payment.
"Parking lot subs" was a term coined by an analyst to describe subscriptions relating to deals like Chrysler, and Ford. Specifically, "parking lot subs" refers to the period of time between the manufacture of a car, and when it sells to an end user. The company has been paid for a subscription (at manufactur and thus it is counted as a sub), but as yet, there is not an end user (the car has not been sold). These cars (subs) are literally sitting in ports or on dealer lots and thus the term "parking lot sub". This group would be considered a subset of the promotional subscriber metric. The importance of the separation is in how this group impacts metrics such as ARPU and churn.
It is an important non-official metric to understand because it bears an impact on other offical metrics.
On May 10 12:26 PM relmar2003 wrote:
> Tyler is trying to rip you for your "diction". He has broken down
> promo subs even further, saying parking lot subs are different than
> Promo subs. Parking lot sub tyler writes is a radio that hasnt even
> been installed yet. Yet is still counted. Its on the shelf. But you
> know what Brandon, its irrelevant. Because the loss in subs is purely
> math, and has ZERO to do with demand. As your article states very
> well. You can call it a Crackpot sub, a jerkoff sub, whatever. fact
> is they should never have been counted in the first place, and we
> finally took the hit for that TERRIBLE decision.
JAY BOY BILLY
ok ok...
Brandon forget that.... Parking lot sub is a sub that hasnt been activated by a customer(basically unsold car sub)... Tylers point in chrsyler bk hurting subs is the fact that no new cars coming off the line, so they dont need more radios. Radios on the shelf still in stock, and not being installed. But this will 100 percent NOT AFFECT SELF PAY numbers.
"PARKING LOT SUBSCRIBER - A term that was used to describe subscriptions that are in promotional periods, but not yet being utilized by the end user. This is actually a subset of the promotional subscriber. This subset typically applies to Chrysler and Ford. The company gets paid on a subscription at manufacture, and there is a period of time where the vehicle is on dealer lots, and still being counted as a subscriber. This is NOT a company metric and is NOT interchangeable with the term promotional subscribers"
I got confused on another topic about actually why they lost more subs than i thought, and why a chrysler bk would further hurt sub growth from chrysler in the future. Simply the need for no more radios to be installed on cars that just sit there basically.
"parking lot subs was a completely different term..
Sorry tyler, i thought you were just ripping brandon for diction...ANd i forgot that radios are never paid for by chrysler or ford apparently until they are actually installed into the cars, whether they sell or not. But if they arent making new cars, then they arent selling cars on the lot, then their current inventory wont be replaced to levels in the past... hence a huge drop off in PARKING LOT SUBS.... A small percentage of their promo sub total however, but significant nontheless if your trying to get an accurate sub total for q2 for instance...
once again non of this affects self pay customers. Those had the promo already, and decided to keep it, or are from the retail sector altogether.
On May 11 10:57 AM wholesalecd wrote:
> THIS STOCK IS OVERVALUED.....Should sell now...the downtrend is continuing
> and will continue through the week.
>
> Back to .30 by friday.
>
> JAY BOY BILLY
On May 11 01:05 AM Brandon Matthews wrote:
> In the beginning there was Howard Stern, and people who talked about
> Howard Stern; copied Howard Stern; Made fun of Howard Stern.
>
> Now there is Brandon Matthews; and people who talk about Brandon
> Matthews, Copy Brandon Matthews and make fun of Brandon Matthews.
JAY BOY BILLY
On May 11 12:16 PM relmar2003 wrote:
> I got confused on another topic about actually why they lost more
> subs than i thought, and why a chrysler bk would further hurt sub
> growth from chrysler in the future.
193 Comments
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OK, We will all see if i'm "LUCKY" AGAIN this week. My predictions:
Friday close - .4089
Monday - drop .04c Actual down - .0089 missed by 77.25%
Tue - drop .03
Wed - drop .03
Thurs - up .02
Friday to end week down to .30
That's my take for this week.
We will see,
JAY BOY BILLY
May 10 09:33 PM |Report abuse| Link | Reply
00
Strike one.
I've lost money in the past on this company only because I sold. Now I believe in their growth model and will stick with it.
Just bought 5k more today.
Frank