With Sirius XM (SIRI) CEO Jim Meyer getting ready to speak at the Citi Internet, Media and Telecommunications Conference this evening, the company released 2013 subscriber activity and issued more detailed guidance for 2014. On the subscriber activity for 2013, Sirius XM reported:
1.66 million net subscriber additions in the year, exceeding the company's recently raised guidance of 1.6 million net additions. Self-pay net additions in 2013 were 1.5 million for the full year, bringing self-pay subscriptions to over 21 million.
The initial 2013 guidance released by the company last January was for 1.4 million total net additions and for 1.6 million self-pay net additions. At the same time, the company told investors to focus on self-pay net add growth rather than total subscriber growth. This past October, Sirius XM reduced the self-pay net add guidance to 1.5 million and increased total subscriber guidance to 1.6 million.
Meyer stated that the company expected "to meet or exceed all other guidance we have provided for the year." In after hours trading, the shares are largely unchanged after the news.
The miss on self-pay net adds was the first miss on any of the company's guidance figures in several years. I also suspect from the language in the press release that to reach the 1.5 million reported figure, the company rounded up the result. The year end total of subscribers reached 25.56 million, indicating that the company had a small loss of about 22,000 subscribers in Q4 due to the loss of paid promotional subscribers from one of its OEM partners.
Revenue and adjusted EBITDA guidance had been previously released and is included below with the rest of the company's guidance:
- Net subscriber additions of 1.25 million,
- Free cash flow approaching $1.1 billion,
- Revenue of over $4.0 billion, and
- Adjusted EBITDA of approximately $1.38 billion.
Once again, the company is projecting a decline in total net subscriber additions. Conspicuously absent from this list is the number of self-pay net additions. This is strange considering that the company had told investors to focus on self-pay net adds.
As noted above, Meyer will be speaking this afternoon at the Citi conference. Late last week, Liberty Media (LMCA) made an offer to acquire the 47% of Sirius XM that it does not already own, an offer that many considered inadequate. The stock has been trading above the current offer the past two days. With a focus on the Liberty offer, the issue of declining subscriber growth and the missing 2014 self pay net add guidance might be overlooked.
Meyer is sure to be quizzed on whether the offer by Liberty is considered adequate and when the company would respond. He may choose to avoid the issue entirely, claiming it is an issue for the board of directors and that he has a wonderful relationship with Liberty.
In any event, investors would be well advised to tune into the webcast at 6:45 PM this evening.
Additional disclosure: I actively trade SIRI. In addition to my long positions in SIRI, I have January 2014 $3.50 and January 2015 $4 covered calls written against many of these positions. As the January 18th options expiration date approaches, I may roll those $3.50 calls into $4 January 2015 calls. I may close out positions or open new positions, or trade blocks of SIRI at any time.