yoyoYO

Sirius/XM Merger: What Happens if It Doesn’t Happen?

don't think you should so strictly construct the 10-Q statement above as to read that just because it's a 'revenue sharing' agreement that XM's booking the charges as contra-revenue.

...i'd say that quote's designed to describe the nature of the deal and the dependencies; what drives payments, for what and when.

the better, more practiced and significantly more reasonable explanation is that those charges are being booked as expenses...at which time they are not part of ARPU.

888 -- "He did not believe that XMSR was paying GM that much more then SIRI was to their OEMs."

i think this is a great example of why you and i can't get along...don't paint my words with such a broad brush. i was very clear in my argument that i wouldn't get into a discussion about the plusses and minuses on any of the operators' OEM deals because unless you have great inside information, it's all a bunch of supposition and conjecture.

as a matter of fact, i DON'T disagree with your point about XM's GM deal being "bad." to do so would mean that i had an opinion on the subject...which i don't because i don't know enough about it.

separately, your arguing that SIRI's ARPU's "degradation" from $12.95 is explained by its parking lot subs (aside from family plan dilution, and multi-year plans)? and that XM's HAS to be at the same level because there's something diff in its calculus given it doesn't count parking lot subs?

think that's erroneous. suppose for a minute that the SIRI OEM deals are structured in such a way that the revenue they realize for a parking lot sub is at or near the revenue they receive from a new retail subscriber? THEN the transaction wouldn't dilute ARPU at all (maybe some but not much from the perspective of an outside investor) & you'd be neat & tidy on the GAAP compliance side.

isn't that at all possible?

Sirius/XM Merger: What Happens if It Doesn’t Happen?

screw your 3rd grade education...the only thing i'm interested in is getting you to admit expenses aren't in XM's ARPU.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

OK...so you're filling a vacuum with theories and suppositions. so, we're on the same page that expenses aren't taken out of ARPU? and we're on the same page that revenue sharing is not affecting XM's ARPU?

...i'll take your silence as confirmation. thanks for that.

now, why did XM's ARPU decline in Q1 v. same period a year ago? look no further than the 10-K...

"Three Months Ended: March 31, 2008 vs. March 31, 2007. ARPU decreased slightly due to an increase in the percentage of subscribers on discount plans (annual, multi-year and family) and promotions. The percentage of subscribers as of March 31, 2008 on ‘annual and multi-year plans’ and family plans increased to 45.1% and 23.5% from 44.0% and 23.2%, respectively, compared to March 31, 2007."

...and from elsewhere in the filing:

"...Average monthly subscription revenue per subscriber will fluctuate based on promotions, changes in our rates, as well as the proportion of subscribers on annual and multi-year prepayment plans, multi-radio discount plans (such as the family plan) and premium services."

great. succinct and to the point...

it doesn't appear (because it's not noted as a driver) that promotional rates, rate changes or premium services, so i'd venture to guess that it's the multi-year and family plans that are to blame as more in the subscriber base take advantage of them.

...all that said, not sure why a YoY fluctuation of 1% in ARPU is all that to get worked-up over. not sure i'm even seeing your broader point that XM's is degrading at any particular rate.

...or is it just in comparison to SIRI? if so, it's probably explained by SIRI's inclusion of ad revenue in its ARPU calculation. whereas XM chooses not to. $0.30 in ARPU over 8MM subs isn't a ton of ad revenue...

Sirius/XM Merger: What Happens if It Doesn’t Happen?

huh? where does nate say that ARPU pressure is coming from the cost of revenue sharing with auto partners?

oh...he doesn't because it can't.

i never said you said "all expenses were included." question 2 above is attempting to get you to come down off that silly ledge; confirming that NO expense -- irrespective of how large or trivial -- is part of the ARPU calculation.

can you PLEASE ascent to the point in question? what else do we have to kick around here to get you to friggin say that there are NO EXPENSES IN XM'S ARPU CALCULATION?!?

NO EXPENSES; INCLUDING THOSE ASSOCIATED WITH REVENUE SHARING DEALS WITH ITS AUTOMOTIVE PARTNERS

at that point, we'll have come full circle...

cos - understood. on the same page with you...i can understand the argument SIRI is making re: including ad revenue in its ARPU calc. it's a nuance and a departure that requires def'n (which is why the notes are there), but as they've explained, it makes sense to me.

and TOTALLY agree with your point above...contra-revenue does in fact decrease revenue on the income statement. my larger point was, for the rev sharing w/ auto partners to at all negatively affect XM's ARPU...those "charges" would have to be recognized as contra-revenue...which would totally buck all accounting trends in service/subscription-b... industries.

since they're NOT (unless someone can get XM to admit they book those charges as contra-revenue), then they must be booking them as expenses...at which time they have z-e-r-o impact on ARPU.

ARPU as a calc is meaningless in terms of EPS...other metrics to track it. but ARPU is definitely a good proxy for the "health" of your business from a top-line standpoint. it's one tool in a large toolbox to assess operating performance in a subscription business...

definitely used in operating the business...coming from a cellular background...it was a big operating target.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

i DID read cos's last comment...that's why i clarified that my problem with your knuckleheaded post wasn't regarding whether ad revenue was included or not. it was the cosmic insanity that expenses would somehow show up in an ARPU calc.

now, PLEASE answer the questions:

1) are XM's revenue share deals "contra-revenue?"

2) if not, is XM bucking every generally accepted accounting principle by including expenses associated with said revenue share deals in its ARPU calculation?

with your agreement that the answer to both questions is NO, this community can put to rest that any fluctuation you're seeing in XM's ARPU number has ABSOLUTELY NOTHING to do with its automotive partnerships.

n'est-ce pas?

Sirius/XM Merger: What Happens if It Doesn’t Happen?

PERFECTO! so, 888, are you going to acknowledge that any ARPU "degradation" you're seeing from XM is, in fact, NOT related to any of its automotive revenue sharing deals?

...and let's be clear, my argument re: ARPU was ALWAYS based on de-bunking 888's concept that expenses were included in the calculation. to me, true ARPU is defined as cos describes, but i can see making an argument that ad revenue can/should be included.

tks, cos, for stepping in...your insightful & well-placed comments avoided 13 addl posts i'd have had to make to get the point across.

sticks & stones, 888, sticks & stones.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

i'm losing IQ points in here. let me see if i can do this quickly enough that i don't lose consciousness from lack of oxygen...

wasn't suggesting a comparison of a given week against itself in the previous year...but when you take NPD's own weekly data and "calendarize it" into effective months it shows a COMPLETELY different picture than NPD's own monthly reporting. that's not at all interesting to you?

second, let me PUBLICLY AMEND my previous statement on exclusive contracts to read: XM has "effectively exclusive" contracts with automotive manufacturers that comprise 60% of domestic automotive sales." k? nuf said? if you can find 1,000 people who directed a dealer to rip out an already-installed XM radio from their new TOYOTA car, truck or van...then i'll mail you a twinkie.

look. i'm going to break the financial accounting piece down into its most digestible components in hopes of getting the point across... there are a couple primary concepts to accounting called "revenue" and "expenses."

revenue is money you collect for products sold or services rendered

expenses are the costs you incur in selling said products or services

an expense is not revenue and revenue is not an expense. you don't mix and match the two. you keep your hot side hot and your cool side cool, so to speak.

now, with all that laid bare for the world to inspect, how in the freakin world can (or would) ARPU -- which btw stands for "average revenue per unit" -- include any expense? answer: it can't. it doesn't and it won't.

it's a measure of the average amt of $ collected for services rendered. IT DOES NOT CONSIDER THE COST PROFILE OF SUBS IN A USER BASE...

can i get some help here? there's gotta be someone else trolling the water here who can step in and give you some unbiased, 3rd party feedback on this... or at least freakin google or wiki it for yourself & then come back here and admit defeat; that its revenue share payments to auto manufacturers are NOT dilutive to XM's ARPU?

i'll concede the final point. you're right...you're a complete dope.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

i already conceded your point on net gains (see post from 5/22 @ 10:58am)...i was referencing sales and you were referencing net gains. two different points entirely, so nothing more to add here.

now, let's just say that weekly NPD and monthly NPD are two different animals altogether (since they are). what you (and mr savery) are quoting is NPD's monthly reporting. and let's also say that NPD's weekly data flies in the face of the monthly data it publishes. weekly data shows industry declines of 20% for SDARS in mar and apr on a YoY basis. don't believe me? just give them a call and ask them to reconcile their weekly data with their monthly data for the SDARS space. let us know what you find out.

from the same post, i believe i said: "locking up exclusive contracts with auto mfrs that make up 60% of domestic auto sales, tho, is a tremendously valuable position..." pick that apart as you please, but i don't think you'll find anywhere in there that i ever said that XM had 60% of the OEM mkt.

you are one confused pup when it comes to financial accounting...the ARPU calculation is very simple...service revenue from paying subscribers divided by the number of paying subscribers. nowhere in that formula is there a place for expenses. can we agree?

that said, the only things that can make an ARPU number fluctuate are changes in the topline service revenue number and the size of the subscriber base. it's a good comparative, because the only way you can grow the average is by selling more expensive stuff to your customers.

it will decline in value, though, if you sell less expensive stuff to more of your customers (like fam plans, for instance) OR you take away some of the revenue you collected in what's called a contra-revenue move...it's really similar to an expense, but it's technically not a cost. instead of taking it out of "cost of service" on the income statement, you take it directly out of your revenue line.

if you can get XM to tell you that they treat their rev share deals like contra-revenue (which makes no sense), then you'll be correct on the broader point that the OEM deals are dilutive to their ARPU position. but, if they treat the revenue sharing as an operating expense (which would be the conventional way of treating this), then i will be right. either way, looking forward to you defending your original point on dilution while helping conclude this part of our wonderful dialogue.

lastly, you and i will not agree on whether people can/do distinguish between XM & SIRI. you haven't seen the confusion...ok. i'll take the flier and say "i believe you."

but, i've been to many a social gathering where, just in passing conversation, people mix up "which one that Howard Stern is on." or mistake that you can get MLB and/or NFL on both. and, since they're largely centered on commercial-free music offerings, basically arriving at the conclusion that they're both the same...we don't have to agree here. i tend to believe there's more confusion than you do.

let's just move on.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

but it is drivel...poorly thought out and intellectually incoherent. i will agree with you on that front.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

you know, you just fall right into their trap when you follow-through on your threats to not show up anymore.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

888 - total ignorance. you shift your arguments about as often as you screw up spelling and grammar in your posts.

"1%," as anyone can discern, is my opinion. if you needed me to say it, well, there you have it. but i'd argue that if you needed me to say it, you should probably head back to 6th grade and learn a little more how to deconstruct the written word.

so what if they don't release the numbers? so what if the dealers don't know what the %s are? the larger point being articulated (which i think stands to good reason) is that the way the TOYOTA deal is structured -- not to mention folks' general inability to separate the two carriers from one another (how many conversations have you had with folks who can't remember which one "Howard's on?" if people can't tell the two apart at that level, there's a pretty strong indication that the two are seen as pretty interchangeable) -- means that, for all intents and purposes, the deal provides a pretty high level of insulation for XM...effectively making it exclusive for them. that's it. no one's arguing that you CAN'T get SIRI in your ride...if you're willing to pay, why not? what i'm arguing is that NO ONE DOES THAT. locking up the mfrs first was a really smart thing to do because it drives your starts and your conversion. SIRI lost that one...it won the Howard sweepstakes...but lost in automotive.

so, no point arguing it any more...it's my opinion. i think any reasonable individual who reads my position would tend to agree...there is such a small chance that ANYONE is going thru the kinds of hoops you describe to buy a TOYOTA label and having the factory (or port) installed XM ripped out and replaced with a SIRI box is bordering on silliness...

so, that one's put to bed.

next...you know, you come off as a guy who appears to think about things...but it's apparent that you stop short of thinking things all the way through. maybe once you have the answer you want, you stop looking?

the ARPU's affected by OEM (yes). GM's the largest piece of the OEM puzzle for XM (yes)...but your conclusion -- that it MUST be that gosh-darned rev share with GM that drills the ARPU -- is way off the mark.

nuts. sorry to rain on your parade, but you're off the reservation again.

the revenue collected by XM on its subscriptions in GM vehicles has to be part of its topline revenue number. however, in order for any rev share payments (to any auto partner) to negatively impacting to ARPU, they would have to come off the same, said, revenue top-line...in accounting circles, that's called "contra-revenue." is that what you're saying? did someone in XM's investor relations give you that data point?

if it's not treated as contra-revenue, then i dare say it's not impacting ARPU calculations one bit. and if that's the case, then you...'ol rope-a-dope...are 100% flat-out wrong...again.

would venture a guess that SIRI is booking its rev share payments similarly...so, would categorize rev-share as a MOOT point since both are in the same bucket.

both offer and drive family plans...so, impact to ARPU from this space is also a MOOT point.

both have impacts from royalties...but this category is MOOT, too, but not because they both deal with it...but because these should be accounted for as expenses (not contra-revenue).

btw, once i saw what kind of board this was...i got with the program. you guys are all about battering people into submission...forcible shutdown in hopes of getting them to close up shop and not come back. it's not apparent at all that you enjoy intelligent discourse or the trading of ideas. what is apparent is that you only want folks that agree with you to prowl these sites. very weak, indeed.

and i like how you must totally own killerkaul...i start jabbing back at you with your own tools and i'm the one that gets called out...nice.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

better yet...why don't you call your buds at SIRI and ask them just how many times a Toyota dealer's able to convince a prospective buyer to rip out a factory-installed radio equipped with XM for one capable of grabbing SIRI signal? or better yet, call any Toyota dealer and ask them how many XM-enabled vehicles they sell each month and compare that to the number of requests they actually get to rip the device out and replace it with a SIRI-enabled device...for an additional fee.

the fact of the matter is, SIRI can't even be sniffing 1% of total Toyota satellite radio starts, jackwad...for all intents and purposes THAT is an exclusive deal.

regarding your second "point," maybe you should take an accounting class or two, because there are myriad ways you can (and SIRI does) recognize deferred revenue today to not overly depress an ARPU calculation.

regarding your third "point," if you've read that XM's ARPU's "depressed" wholly as the result of the GM rev share, you really should take the onus to cite it rather than force anyone "less knowledgeable" to do the work on their own. after all, isn't this all about knowledge transfer? it seems that we're very similar in that we don't want to take each other's word for it.

me, i wouldn't even be trying to MAKE that argument...the largest reason for ARPU being below $12.95 (for both players) is the % of family plan subscribers.

you should be a little more discerning & critical about "expert" opinion that you regurgitate so easily when it supports whatever skewed perspective you have. you'd sound a LOT more intelligent if you put a little more balance in your step.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

it helps to have the facts squared-away before you step too far off the reservation: GM, Toyota, Honda, NIssan, Hyundai and Subaru comprised 60% of US sales in April 2008...(source: WSJ Markets Data Center, published 5/1/2008). every one of those manufacturers is locked into an exclusive satrad deal with XMSR.

now, i imagine you've influenced quite a few people on this and other blog sites with what amounts to inaccurate data & "facts" based on your opinion, but it's a less-than-fruitful discussion (not to mention harder to find the truth) if it's centered around myopic opinions dressed to look like facts. there have been several things you've been fundamentally wrong on in just this comment thread:
- us auto sales share,
- rev share payments to auto mfrs by ea satrad player,
- status of XMSR's ownership position in XM Canada,

...so, until you're able to improve the veracity of your sources, maybe you should consider sitting some of these conversations out.

2) probably the most likely reason for XMSR Canada's poor performance is that it enjoys significantly less-gifted executive leadership than it's peer at SIRI Canada.

Sirius/XM Merger: What Happens if It Doesn’t Happen?

163888...my comments re: retail share are accurate. it's NPD data that measures YoY declines in monthly sat rad sales. pretty consistently off btwn 30% - 40%. while a given month may fall out of that range, it's generally what's been seen in this space since summer 2006.

but your argument was total net share, so let's not digress further here.

not sure where you're going re: retail being a free choice. no one's arguing it. locking up exclusive contracts with auto mfrs that make up 60% of domestic auto sales, tho, is a tremendously valuable position, irrespective of whether people can "freely" choose their sat rad svc in retail (i'd argue, that like virtually anything else in retail you're influenced significantly beyond the specific benefits of the product, but that's another discussion).

it was a good business move & will play out over the next couple years whether XM will be able to capitalize on its OEM position well enough to move the business forward...

Sirius/XM Merger: What Happens if It Doesn’t Happen?

163888...if there's ever a red herring in satrad it's retail market share...in this space, that's the furthest thing from a bellwether you can find.

- retail sales are down 30% - 40% year over year in each of the last 18 mos
- automotive penetration continues to grow as new models carrying satellite-enabled radios roll off the lines
- as a result, automotive trials continue to grow at a rate that's outpacing the overall automotive slowdown

...both companies have a long way to go before this market's saturated.

so, we're back to the apples & oranges comparatives again...XM gives you a broken-out view of retail & automotive, SIRI gives you a consolidated widget view...it's not easy [read: impossible] to break this down in its component parts for comparative analysis.

this is where i like XM's position, though...much better situated from an automotive standpoint. while SIRI continues to demonstrate strength in retail, that's a pie that's shrinking quickly...the number of folks interested in/willing to self-install a plug and play radio with all the wires and antennae and hassle, etc has diminished to the point of ridiculousness. that train left the station in mid 2006 and both providers continue to chase it foolishly.

my 2 cents...