Also, be careful in the next month and a half. Very dangerious times coming in the market.
Also, be careful in the next month and a half. Very dangerious times coming in the market.
Last edited by airman; 07-14-2010 at 11:12 PM.
Hey, airman, I didn't mean to sound critical... I appreciated reading the link and was glad you shared it. Also, I am sure Howard will use it to any advantage it may give him and I wouldn't ber surprised to read some negative news articles about how this may lead to howard leaving...thanks again..l.
1) Tune Into Jay Thomas Tomorrow afternoon. I will be on the show sometime after 5 PM EST.
2) If you did not get a chance to listen to the satellite radio round table last night, give it a listen. The show had me, Demian and Cos from Sat Rad Playground, and Ryan Saghir from Orbitcast.
Ryan and I have been trying to collaborate on something several times over the last few years. The satellite Radio Round Table has been in development for months, and I am glad that Ryan and I are working together in some fashion. Look for more collaboration in the future.
Spencer interviewed by Motley Fool
Will Slumping Auto Sales Put the Brakes on Sirius XM?
By Mac Greer
July 16, 2010
What does a slowdown in auto sales mean for Sirius XM (Nasdaq: SIRI)? Which automakers hold the keys to satellite radio's success? In this first part of a four part series, I ask Sirius Buzz writer Spencer Osborne. Sirius Buzz covers satellite radio news but is not affiliated with Sirius XM. Spencer owns shares of Sirius XM.
Mac Greer: OK, Spencer, let's start out with retail sales. The Commerce Department reported this week that retail sales in June fell for the second straight month. A big drag on that number was motor vehicle sales, which fell 2.3%. What does a slowdown in auto sales mean for Sirius XM?
Spencer Osborne: It is predominantly where Sirius XM garners the most exposure for consumers for satellite radio. It is predominantly not a retail-driven model, but a promotional-subscriber model. So when car sales are down or car sales are up, Sirius XM is going to have their promotional pool of subscribers either go up or down. Typically what the company has been dealing with is anywhere between 44% and 48% take rate. In other words, after the promotional period expires, somewhere between 44% and 48% of those consumers will opt to become a self-paying subscriber of the service. The satellite radio business model is predominantly driven through someone's experience when they buy a new car.
Greer: And Spencer, if I am looking at the big auto makers, which company or companies are the best proxy for Sirius XM? Is it Ford (NYSE: F), or who are the companies that you are looking at?
Osborne: Well, that is an interesting question. There are three categories of OEM (original equipment manufacturers) subscriber in terms of Sirius XM and satellite radio that I look at. You have your leading companies, and by "leading" I mean when the company manufactures the car or produces the car, that is when the subscriber is counted -- that's your Fords, your Chryslers, your Mercedes, and BMWs. So, while it is still on the assembly line and a satellite radio gets installed, those OEMS are paying for a subscription to Sirius XM radio and are being counted as subscribers at that point.
The second category is what I would call point-of-sale contributors. That is your General Motors, your Honda (NYSE: HMC), and companies along those lines. That becomes a promotional subscriber at the point of sale, when a consumer actually buys the car, the promotional subscription starts.
Then the last category is what I would call our trailing subscriber. That encompasses Toyota (NYSE: TM), Nissan, Hyundai, Kia, and those brands. In essence, what happens when a person goes and buys a Toyota, it comes with satellite radio. They get a three-month subscription, promotional subscription, and they are not counted as a subscriber at that point. They are only counted as a subscriber if they elect to become a self-paying subscriber at the end of the promotional period.
And all of those OEMs, all those deals, are structured a little bit differently. Some of them are cash-flow friendly, like the Ford and Chrysler deals with longer promotions and the subscription getting paid for, some are more churn friendly, like the Toyota, the trailing subscribers, because it was never counted as a promotional subscriber. If the person elects not to keep the service, they are not counted in the churn number. Then some just fall right in the middle like your General Motors and your Honda.
So I would say that the preferred partners right now for Sirius XM are the ones with the highest penetration of installation, that would be General Motors, Honda, Ford, Chrysler and you have Hyundai and Kia doing 100% installations. So those are probably the preferred partners right now. It is just a matter of which way things shape up and work for the mix. Usually we are about a 33% mix there. Lately with Toyota taking it on the chin with recalls, and Ford kind of picking up that slack, you have got the leading subscribers taking up about 37% of the category, the point of sale taking up about 33%, and the trailing taking up about 27%. The healthiest thing for satellite radio is to have that in balance.
BTW auto sales are "not" slumping...just sayin...lousy headline...
Thanks Boom . . . appreciate your posting those!
Part 2 of Spencer's interview with MF's Mac Greer. Personally, I don't think Howard is going anywhere...this drawn out process is to maximize exposure for Howard and free visibility for SXM. But, if he does leave, the only threat is if he competes directly against SXM? JMHO Interesting comments also about Liberty's interest in SXM... Good read...
Howard's End on Sirius XM?
By Mac Greer
July 16, 2010 | Comments (9)
How important is Howard Stern to the future success of Sirius XM (Nasdaq: SIRI)? How many subscribers would leave with Stern? In this second part of our four-part series, I ask Sirius Buzz writer Spencer Osborne. Sirius Buzz covers satellite radio news but is not affiliated with Sirius XM. Spencer owns shares of Sirius XM.
Mac Greer: If Howard Stern leaves, what does that mean for Sirius XM?
Spencer Osborne: It is kind of actually a two-fold question. If he retires, then it will hurt the company, but he is not anywhere else, so no one is gravitating somewhere else to listen to him. If he stays in the business, and now as a competitor to Sirius XM, Sirius XM has to have an answer for that. He has got the most popular channel on the satellite radio lineup and whether someone likes him or doesn't like him, you can't argue with the numbers that he is the most popular channel out there. There are a lot of ad dollars that run through that show. There is a lot of exposure that runs through that show and if he goes to a competing service, be it podcasting, be it terrestrial radio or something we haven't even really thought of yet that is a start-up, it would mean trouble for Sirius XM.
They would lose quite a few subscribers off the bat. I don't think the churn would be so massive that the company couldn't overcome it, because there are other things that people are listening to. It's just people have gotten used to listening to Howard Stern and they are going to continue to listen to him, and those fans are going to follow him wherever he goes. The best case scenario is Howard re-signs with Sirius XM for whatever, might be three years or so, and then when he is done with that, he retires. They don't really want to compete against him, in my opinion.
Greer: And what do you think is going to happen?
Osborne: I would say that he is going to re-sign for a two- or three-year deal and really start to; I think he is going to try to start wind it down. If he could, I think he would cut a deal for a three-day workweek, which we would all love to have. He has been around a long time. He has kind of earned it, and you know what? If they could sign him to a three-day workweek and Howard is happy, the channels could become kind of a minor league system, so to speak, of what is going to replace him when he is gone.
When Howard stops broadcasting on the microphone, I think he is going to be producing shows. The Howard brand production is going to become a name and he will still have a deal for the next ten years. He is going to be on the mic for a long time, but I think he is going to do a two- or three-year deal, let some of this stuff pan out in the technology marketplace and he will be in a great position two or three years from now to look over the landscape and say, These people are the winners. I am going to stick with this. If that is Sirius XM, then he will definitely benefit from having been there for as long as he has.
Greer: And if Howard Stern leaves, and by "leave" I mean he either retires or he takes his services elsewhere. How many subscribers do you think leave with him?
Osborne: Let's put it this way. This past quarter, 1.4 million subscribers deactivated. That was the churn for Sirius XM; in Q1, it was1.5 million. So if we take that and say, OK, 1.5 million subscribers are leaving anyway, all the time, the day Howard announces he leaves, for the quarter he announces he leaves, does that churn go up to 2.5 million? There is a very good chance it does, but you are going to have that instantaneous, passionate fan of, Oh, Howard left Sirius XM? I'm going to leave Sirius XM. And I think that passionate fan base could be about a million subscribers. So it was safe to lose that extra million? Yes. Is it something the company can overcome? Absolutely. With deeper penetration, more marketing and appealing to other demographics than they are appealing to now.
Greer: Liberty Capital (NYSE: LCAPA) has around at 40% preferred share stake in Sirius XM right now. If Sirius XM ends up getting acquired, do you think Liberty is the most likely suitor or is there another company out there?
Osborne: Very good question. I think that Liberty is a very likely suitor and right now they are the most likely because there is a poison pill in place that kind of shoots everybody else in the foot, but Liberty. Once that expires mid-next year, then you might have other potential suitors coming to the plate. Liberty is in a very good position. They have the 40% stake, it is preferred shares. Unlike other preferred shares, these are votable. Liberty can vote with these shares, so with this preferred stake they have a say in what happens and the question is, does Liberty see the value in buying the company outright or taking a larger position or does Liberty see value in trading that off
in a stock deal to acquire something else that they feel they are going to make more money with?
I think that at that point, that is where the Googles (Nasdaq: GOOG) of the world or the Yahoo!s (Nasdaq: YHOO) of the world might hop in and say, you know what? This is now finally a viable medium that is showing profits quarter after quarter; it is going to show us top line growth. Let's hop into that. Liberty, I think, if they can trade out that stake for something different that they feel is going to make them more money, which is probably their first choice in a move, just outright selling out the preferred. They own a bunch of the debt as well, of Sirius XM, so Liberty, in the short term, would be the most viable takeover candidate, but in the longer term, Liberty, I can see them using it as a play to acquire something bigger, or to become a partner in something bigger.
Nice interview Spencer and as always love the radio show!!!
kind of off topic. Anyone out there willing to give a realistic 3-5 year PPS prediction with and without an RS?
Take care everyone,
Thank you very much for the kind words. It is readers like you that made SiriusBuzz the highest traffic satellite radio website. Without all of you readers, interviews such as that would not happen.