A glimmer of hope.
I was having a discussion about the low auto sales and its effect on sat rad subs. It dawned on me that Mel is a pretty smart guy, who knows how to run a radio business. Having given it some thought, I've come to these conclusions:
The downturn in auto sales didn't just happen in June. It's been happening all year. A good CEO would not sit back and allow this to deter growth. Anyone looking at an oil chart with an auto sales chart can see a trend. That's easy. So putting myself in a board room, armed with all the negative data, what do we do to combat the negative oem numbers? Keep in mind the install rates have risen. So that's a partial offset.
First. We go after our current subscribers and offer them second subscriptions. This occurred a lot in Q2.
Second. We go after more retail growth. Q2 saw a return to retail advertising that has been missing for the last 2 quarters.
Third. We go after more business subscriptions. We saw this in Q2 also with an announced auto deal (I forget which one). Sirius now has 4 marketing partners in this area, where only AMTC existed before. They have added Dynamic Media, Info-hold and Turnkey Media Solutions to promote the business subs and go after Muzak.
AMTC - http://www.amtc.com/
Dynamic Media - http://www.dynamicmedia-us.com/
Info-Hold, Inc - http://www.infohold.com/
TurnKey Media Solutions- http://www.tkmsolutions.com/
I think they just might surprise us this quarter. I'm not saying they will surprise to the upside, but they very well may come in-line in a very poor market environment.
Hard to come in-line when they never gave guidance, but I agree with you.
Increased install rates will help to offset the decrease in vehichles sold, and as you state, I have been getting a LOT of email from XM trying to get me to buy another radio and start up additional subscriptions.
Another factor that may or may not be there yet is the used car market. A lot of cars are coming back to lots, especially leases. In these economic times, new cars may not be selling well, but we are also not given details on used sales. That could be a plus.
I just purchased a new 2008 vehichle from GM, complete with XM. I traded in my truck, which also has XM. Will it sell? Who knows, it is a gas guzzler. But my area is famous for its population of large trucks, so who knows. It is one of the "missing links" that many people do not think about when it comes to sales.
As far as estimates go, there is always a consensus estimate from the street. The consensus for Q2 is favorable at -.07...same as it was last quarter...with the range being -.09 to -.05. That means if they just maintained last quarters numbers, we should be all right...
One more potential source of good news is the explosive growth in canada, of which sirius owns 20%...