A Look at Satellite Radio Earnings, Subscribers

Sirius (SIRI) and XM (XMSR) both reported earnings Monday, and while the results were not stellar, there are many metrics which are scaling in a manner that helps demonstrate the viability of the SDARS business model. Costs are under better control and both companies are seeing the benefits of their respective OEM deals bring in subscribers.

For XM, the contribution of Nissan and Hyundai are beginning to pan out as the installations in these brands are beginning to contribute to the subscriber rolls. For Sirius, the promise of a Ford ramp-up will be substantial in Q3 and beyond.

Sirius outpaced XM in the subscriber tally, coming in with a bit over 19,000 more subscribers than XM. Sirius is seeing an increase in churn, but sector watchers have been anticipating this with the churn-out of DCX and to a lesser extent, Ford promotional periods beginning to expire.

The retail channel remains a tough channel. XM had a negative 51,000 subscribers in the retail channel. Sirius, which does not break out these numbers, remains positive in this area by our estimation. One can arrive at this conclusion by estimating that XM had a stronger OEM quarter on a gross additions basis, as well as some previous trends. Assuming that NPD captured 55% of Sirius’ retail, then I would estimate Sirius had 302,000 gross retail additions vs. 233,000 for XM. This would leave Sirius at 701,000 in the OEM channel compared to XM’s 802,000.

The subscriber numbers are the numbers, and the charts speak for themselves.

Position - Long Sirius, Long XM

Comments

[4play2]

Hey Tyler, I'm impressed. Good work. Where do you think Siri will climb immediately after the FCC annouces their approval and then after the official merger?

[Doug13]

Just wondering... Do the subscriber numbers for either of XM or Sirius include the free trial subscriptions provided with Sirius or XM equiiped new vehicles? If so, the numbers are skewed and not trustworthy. I'd like to see the number of subs who opt for the services after the trial period ends.

[killerkaul]

TYLER, I would also like your input on that climb. What type? Maybe an initial bounce, then dropping back to a position, and finally a steady climb to a certain position at one year, and two years? I think your crystal ball is probably more accurate than most! Long Siri!!!

[fly4u]

Great article and research Tyler. We really appreciate your comments and your due diligence. I too would like your take on what you anticipate the pps climb to be immediately after merger announcement, and also your projection on timing for the merger approval. Don't worry, we're not going to hold you to this projection... just want your honest opinion. You're one of the very few that says it "like it is". Thanks in advance for your response. All the best, Glenn

[dissapointedAmerican]

Thanks Tyler for your fine work. Id like to say somthing to the FCC if possible?
To FCC;
You all should be embarrassed, and fired! You have lied and stalled enough. 180 day clock =a scam, by the end of the year=a Lie, by the end of the first quarter=another Lie. DOJ has proven this is not a monopoly! Allow the licenses to be combined and stop pandering to every group out there! They have no right trying to get my Company for free, I paid for shares of my company and you have no right to give anybody anything that I own. If the minorities want more radio exposure let them go buy a radio station with their own money. This is a free country, not a socialist state. So allow the combo with no concessions other than what the companies agreed to begin with. I hope you are all investigated for this disgrace, you are going far beyond what the FCC was intended for and now you are using this unassigned power to destroy American confidence in our government, and any company you choose to destroy. Your stalling of this decision has cost me personally and many more I am sure, I hope the companies file suit for your stall tactics, the empire state building was built in less time. And both companies have now lost the Millions/ Billions due to your indecision. You have no right to cost companies so much. This is America, free market capitalism, remember? This is not a necessity it is a pay luxury service. Mr. Martin do you have a Boss that oversees you, or are you a free-bird with no one to answer to? I would like to speak to your boss because no common sense decision can take over a year to make. I don’t know of any company, employee, or anybody that can take so long to do a job and still have a job after showing this amount of incompetence. I want you and you group all fired. Here is a link to a video that shows how irrelevant you group is; www.youtube.com/watch?...
So in ending you appear to be protecting your buddies at the NAB, and pandering to any special interest group wanting something for free. How about the Americans you supposed to be protecting? By the length of time you have been taking means one thing to this American and that is you are saying FU to ME. And I want you Fired. I will be sending this to anyone that will read it, the sad thing about that is that unless it is accompanied with a check, I assume no government official will read it.

Signed; One disappointed American.

[Tyler Savery]

For Doug....

Both Sirius and XM count subscribers that they have received a payment for. This group includes GM, Honda, Chrysler, Ford, VW/Audi, and Mercedes, etc. Some OEM's such as Chrysler and Ford pay the subscription at manufacture. Some such as GM and Honda pay when the car is sold.

Neither company counts Toyota promotional subscribers. XM does not count Nissan, and Hyundai. Sirius will not count Kia. Neither company counts Subaru. The numbers are what they are. You will see the impact of how subscribers are counted in the ARPU metric. This is why you will see a differing ARPU between the two companies. I have written about the subject on Sirius Buzz many times.

The OEM take rate for XM is above 53%. Sirius does not disclose the take rate, but it is likely in the same neighborhood.

[Tyler Savery]

For Others.....

I am not a financial advisor, so my opinion is only that....an opinion.

There will be selling pressure on anything between $3.30 and $3.90. If it can pass $3.90, then the selling pressure will ease. Those looking for $5 IMO may have a long wait.

I covered this subject on Sirius Buzz Radio on April 10th which is available for replay at www.blogtalkradio.com/...

Sirius Buzz Radio airs live each Thursday at 10:00 PM Eastern. You can see all Sirius Buzz Radio shows at blogtalkradio.com/siri...

[jswede]

3G and 4G, internet radio will be available to anyone at any place at any time. I see this as the death of sat radio - and soon.

Last time I posted this I was dismessed by "content is, and always will be, king" --- well what content is this? For every type of music channel on SR, there's 100 on internet radio. As far as sports, I can always get the local feed so I don't need the "exclusive satellite radio home" of whatever league. As far as specific topic talk shows etc, they are (will) also all be on internet radio. moreso all the time. I guess I won't get Howard Stern - luckily I grew out of that.

Tell me what I'm missing.

[Newman98]

You are not missing much...

Oh, except for the fact that RIAA is going after all of the internet radio people. They are going to have to start paying subsidies to the RIAA, and increase in subsidies means an increase in COMMERCIALS.

Thats what you are missing with SatRad. The commercials. I have listened to SatRad for the past 3 years, and any time I ride with a friend, having commercials playing for half of my drive drives me CRAZY.

Plus, when is this mobile internet technology going to happen? I have heard a lot about it... mostly how agreements are falling apart. You are going to trust Sprint - the biggest looser in the cell phone business - to be in charge of developing this technology? Good luck... Do they have their walkie-talkie phones working yet? I bought one 4 years ago, is it working yet?

[killerkaul]

Re: Dissapointed American, I Feel Your Pain. Well Said.

[mgv11]

I'm confused by the internet radio comment, I listen in my car (which is where the SATS are focusing, at home I have multiple options so the car is my concern. Is the arguement the internet will be accessible via car?

Another point, I have an old radio and want a new one, but why buy it until this is resolved and new equipment is out there? I would think the retail chain is experienciing a lot of wait and see purchasers whereas the auto world comes equiped so you don't have a choice, unless you make your auto purchase on which SAT they carry.... I'm thinking no.

[jswede]

"Is the arguement the internet will be accessible via car?"

yes. it doesn't take all too much imagination. passengers will have PCs built into the car in no time. It's just a logical step forward from video screens in the headrest. you'll be downloading movies for your kids in the back, updating weather and traffic, googling whatever you may need to know when pulling into a town (or to settle a trivia bet), sending car performance data to your shop, and (if the RIAA is going to "win"), then instead of getting internet radio they may object to, you'll get user created content of all sorts (ie YouTube etc and future YouTube type platforms).

Point is, RIAA and commercials isn't going to stand in the way from the internet becoming a major part of cars in the near future. If the RIAA is going to create a fuss, then it'll be subscription services like the new Zune thing or whatever....

I think the satellite model is going to - at best - be working side-by-side with internet in the car in the very near future. Then all of a sudden the satellite infrastructure is worthless and wide open to competition.

[163888]

Newman98, well said, I think it was me jswede was talking about with the "content is and will always be king". Then again it is a well known statement and is true. What jswede does not seem to understand is that statement not only has to deal with what is on but how much of it you get of it. Lets also not forget that not to long ago the internet radio industry was just saying if the RIAA was able to raise rates to what they wanted, that would make it impossable for them to stay in bussiness. Basically there is no difference between terrestrial and internet when it comes to that. Newman you are also right about these deals all falling apart I have said the same thing before, everyone is pulling out because of the cost is much too high for the return.

mgv11, That is what is falling apart, it will be a long time before you will be able to get internet in your car. Cities cant find the financing for it anymore, the one time backers are all pulling out.

[163888]

The only way you are going to get anything like you are talking about in a car, without have it being a broken signal is via satellite.

[163888]

Dissapointed American, I have to disagree with you when blame the whole FCC for this hold up. Would you blame all of congress for not drilling in ANWR for oil, NO. Blame the people that are against it the democrats. Dont blame Martin for something that if he could he would vote yes on. Blame the 2 democrats for holding this thing up. Why do you think Martin said he saw a vote on this by the end of the year in 2007? MAYBE, JUST MAYBE he thought it should have been, because he does not find it to be that difficult of a decision ether. You must be a democrat yourself. Why would I say that well because only a democrat would try and blame the 3 republicans that are for this, along with the 2 democrats that are against it. Get a clue, blame the people that are against this, dont include the ones that would have approved this, if the 2 democrats would just shut up and call for a vote.

[jswede]

"The only way you are going to get anything like you are talking about in a car, without have it being a broken signal is via satellite."

Use a slight buffer. problem solved.

"What jswede does not seem to understand is that statement not only has to deal with what is on but how much of it you get of it."

I don't - pls explain.

"...if the RIAA was able to raise rates to what they wanted, that would make it impossable for them to stay in bussiness."

again, once the internet is in the car, why not use the same subscription model over the internet? and with next to no barrier to entry as far as infrastructure, you think there'll be some competition?...

[mgv11]

I guess I'm missing the infrastructure for internet radio, my car still needs something to receive and something to send a signal ( clearwire and Sprint? the ATT version?). I can see this happening but a time frame vs SAT availability now and it only seems to represent another alternative hence further arguement to consolidate SAT. I think in the end, you have content and who has the best signal issues.

[163888]

jswede, a buffer and a shit load of infrastructure that had, but no longer has the funding for. Lets get at least that funding issue cleared up, then we can talk about how long it will take to get the infrastructure.


When you replace content with commercials there is less content.

These are things that need to happen for internet radio to even start to be competition for satellite radio. The funding is needed, the infrustructure needs to be built. You say it is a no barrier, but if it were that way it would be relatively cheap enough that the cities would not even have to bother with getting extra funding from seperate companies to finance the building of it. We know that is not the case though. Then they need to start getting it into cars it has taken satellite radio 5 years and a huge expense to get this far with their OEMs. What you are talking about is so far out, one could say, by that time satellite radio will also have unlimited opportunities to improve and expand from a platform they have already built as of now.

[163888]

P.S. jswede, dont you think if the satellite industry thought that internet in cars was even remotely close to being a reallity they would have said screw this, putting these expensive satellites into space we will just wait.

[jswede]

"P.S. jswede, dont you think if the satellite industry thought that internet in cars was even remotely close to being a reallity they would have said screw this, putting these expensive satellites into space we will just wait. "

you'd hope so, right? anyway, I'm just bouncing ideas -- I apprec the discussion and retorts. best to all

[163888]

Jswede, well I have to say they have been right. They got a 7 year jump on it already, and by the looks of things I would say we are looking at at least 5 more.

[Merger Mania]

Jim Cramer mentioned on his Lightening Round a couple of weeks ago that if XM and Sirius merge, you will have a $5 stock. I think it will be sooner than most people think.

[killerkaul]

RE: 16388, Your, point, that the blame is to fall on the two demacrats on the FCC is 100% accurate!!!!!!!! I missed that, as I was taken in by the strength of the rest of the comments. You, however did not. Thanks. So- we all now know just exactly who is to blame. Stop draggin your fat carpet baggin asses!!!!!!!!!!!!!!!!!...

[163888]

Merger Mania, did you forget that less then month before he switch it to 5, he was saying it would be a 6 dollar stock. All I am saying is he has been wrong before and he was wrong on SIRI before on calling a price. He about 2 years ago said it would hit 8 but it only got as high as 6 something and then said OPPS I guess that was the high and not 8.

[163888]

No problem Killerkaul, I just cant stand it when people blame the wrong people. I am sure when Martin sees these kinds of comments like Dissapointed Americans he then says to himself no shit nem-rod now try telling that to Adelstein and Cobb. They are the ones who just dont get it.

I believe these democrats would be better off writing their democrat congressmen and telling them they were long time democrats but after seeing the democrat idiots at the FCC they can no longer be apart of a party that looks to be full of a bunch of dumb asses.

[killerkaul]

RE: 163888, Better off, would have to be related to bright. What are the percentages on that?

[ripped]

Tyler:

Please tell me (I'm hoping you know) what the official mandate is regarding the FCC.

What exactly does it need to discern in order to rule on the XM / Sirius front. I understand the stuff about consumers. But what else is in it's sphere exactly relative to this merger.

Thank you.

Ripped.

[Tyler Savery]

The FCC needs to determine public interest, and whether one of the licenses can be transferred. The problem is that sometimes the FCC commissioners have trouble agreeing on what their own mandate is.