Excerpted from Marketing Daily, “Flying High: Sirius-XM Revs up 14%” by Eric Sass
* * * * *
In an ironic twist, Sirius-XM saw revenues and subscribers jump compared to last year…But there is some doubt that the good times will continue, as one of the satcaster’s major sources of new subscriptions–factory installations in vehicles–appears to be headed for a ditch in 2009…
First, the good news: Sirius-XM will finish 2008 with over 19 million subscribers, which is up 10% …and revenues of around $2.4 billion–up 14%.
Satellite radio is a niche medium, and may be somewhat immune to the sharp downward trend in the economy at large…the average satellite radio customer is relatively well-heeled, with an average household income of almost $80,000 versus a national average of about $45,000, so satellite subscribers may have more of a cushion for discretionary expenditures…
In 2008, the company added 500,000 new subscriptions through vehicle sales, despite the “dramatic” slowdown in the automobile industry, accounting for about 30% of all new subscriptions. At Sirius, the proportion was even higher during its last pre-merger quarter, with 87% of new subs coming from new vehicle sales…
The company is counting on continuing vehicle sales to bring in an equivalent proportion in 2009, in part by installing radios in a higher proportion of vehicles than before…Beneath the positive outlook, the satcaster has moved aggressively to limit costs since its merger…the merged company cut 22% of its total workforce…
Edit by SAC
* * * * *
Despite an increase in revenues Sirius is still expected to post a loss of around $200 million this year. While it will see temporary gains from merger efficiencies Sirius’ future success depends more on its ability to retain new subscribers and find channels outside of automobile sales to attract new subscriptions.
* * * * *
Want more from the Homa Files?
Click link => The Homa Files Blog
The Homa Files 
Leave a comment