I am reciting this sad sad story, because lost amid the the doom and gloom headlines, most have ignored that the lower subscriber adds will be the result of lower spending to acquire retail customers. I may be totally hallucinating, but IMHO the latter is the really important news item.
Pip Coburn says that Satellite Radio is quickly approaching an inflection point:
The point of idiocy is extremely important in most cultures, we suspect, and the change in society is often most apparent at the very point where a new common wisdom strangles the old common wisdom. Just a few years ago it was considered lunacy to spend real cash money on radio service when you got it for free. Lunacy.
Old Common Wisdom: Spending on satellite radio is lunacy
Within a year or two anyone not plunking down JC’s three Starbucks coffee drinks for XM or Sirius will be viewed as the idiot.
Next Common Wisdom: Radio is Satellite Radio… duh? Only idiots tolerate ads!
If we are right, subscriber additions will be much quicker than most industry forecasts. Our old friend Lucas Binder at UBS has figures near 2x some industry guess. Lucas “gets” that straight lines don’t happen. Inflection points, idiot points, and Malcolm Gladwell’s Tipping Points are what happen.
Just as no one says “Internet” anymore since its just assumed to be there like “air,” just as “TV” means “cable TV” … inside a few years no one will bother saying “satellite radio” cuz “radio” will equal “satellite radio,” and us old-timers will one day remind the Digital Natives how radio used to be free… kinda like—tah-dah—television.
We don’t doubt that’s true, and we haven’t looked at the fundamentals ourselves (though we soon should) and so we won’t comment on the investment case other than to point the Barry Ritholtz‘ piece cautioning against buying at a 52-week low.
(NASDAQ:DELL): Which 52 Week Bottom Did You Buy?