In the midst of this season of joy and happiness for those of you in radio who still have jobs, let’s again consider our brethren in other parts of the media world. Last week, we reviewed the problems in the world of cable, except that according to one high level cable person, we should expunge the word “cable” from our vocabulary.
This week let’s be happy that we’re not SiriusXM. In a release last Tuesday, SiriusXM CEO Jennifer Witz said the company was “…taking steps to drive profitability and cash flow as we face marketplace headwinds impacting the company’s growth trajectory.” Have you ever used the term “growth trajectory” when chatting with business colleagues at the water cooler, whether real or virtual?
In so many words, SiriusXM decided that streaming audio is a tough business if your company is not named Spotify, Apple, or Amazon. The satellite service is still in millions of vehicles although my suspicion is some of the owners of those vehicles don’t realize what they’re paying for the service each month.
My reason for writing about SiriusXM is my personal interactions with the company this year. Many of you who have the service know the drill. If you want it but don’t wish to pay the full monthly price, you call the toll-free number, get in touch with a human (regardless of the continent where they reside), and point out that unless they give you the service for five dollars per month plus the copyright fee and sales tax, you’ll join the ranks of former subscribers. Typically, you’ll get your way. If you end up dropping the service, expect emails expressing SiriusXM’s sadness (“Missing you!”) within a couple of weeks with a similar offer. Depending on your location, you’ll pay around $6 to $6.50 per month, probably for a year and then the process is repeated.
One of the reasons that Donald Trump won the 2024 US presidential election was inflation. While the headline rate has been dropping over the past year or so, the average American could see the price increases in their local stores. However, had the Bureau of Labor Statistics included satellite radio initial offers in the Consumer Price Index, we might be awaiting the inauguration of President-elect Harris next month.
I’ve purchased two vehicles in 2024. One was the “old guy” second car for me. If you’re not familiar, old guys who have some cash are good prospects for sports cars. In my case, it was a 2013 Porsche Boxster S with about 42,000 miles and I love driving it. Meanwhile, we had to replace a car that was totaled in a wreck (thankfully no one was hurt). We now have a 2023 Volvo XC40 Recharge electric SUV in our garage as well.
Based on those vehicles, we found that SiriusXM has found ways to defeat inflation! I can’t count how many email and direct mail pleas came from SiriusXM with a great offer for the Boxster. It was always three dollars a month plus sales tax (no copyright fee). The deal would last for 36 months with no automatic renewal.
Meanwhile, SiriusXM offered four dollars a month plus copyright fee and sales tax for the Volvo. In other words, the service was now less expensive than it was years ago when five dollars a month was the going “negotiated” rate! I checked an online inflation calculator and the increase over the last ten years is about a third. That “five dollar deal” from 2014 should be pushing seven dollars today. In my case, SiriusXM was dealing with serious deflation rather than inflation!
SiriusXM’s release says the company will “double down” on the automotive subscriber segment. The rest sounds like broadcast radio companies. Streaming will be a “companion” to the core offering. The content is unrivaled (according to SiriusXM), the company will leverage its advertising strength, and of course, they will “increase efficiency”, perhaps in the way that iHeart and Cumulus have been getting more “efficient” of late. Unlike most radio companies, SiriusXM does pay a dividend on their stock (currently 27 cents per share on a quarterly basis) and the company plans to maintain that dividend.
Back when Sirius and XM started over twenty years ago, broadcast radio was fearful of this new competition in vehicles. Arbitron chose to include satellite radio in the diary service over some serious (no pun intended) objections and continues to do so today. However, SiriusXM is never reported (you can see the mentions in the diaries themselves) and the company does not encode their channels for PPM.
While SiriusXM is doing its part to prevent inflationary spirals in the US, it’s clear that the company is facing a tough road ahead. Giving up on streaming means a harder push for their place in the vehicle and that means more competition for broadcast radio. As you determine your plans for 2025, expect that SiriusXM is going to beat inflation with offers to take listeners from your stations.
Let’s meet again next week.
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