Sirius Subscribership Injured in Chrysler, GM Bankruptcy Pile-Up
by John Paczkowski
Posted on May 11, 2009 at 9:12 AM PT
If you thought the decline in subscribers Sirius XM Radio posted in its first quarter was ugly, you ain’t seen nothing yet. With the souring economy weighing heavily on the auto industry–a mainstay of Sirius’s business–and partner Chrysler navigating bankruptcy, the struggling company is bracing itself for continued subscriber losses in its second quarter.
“Chrysler’s bankruptcy and announced factory shut-down will impact second quarter numbers by reducing the number of prepaid bundled subscriptions associated with the production and shipment of new cars,” Jim Meyer, Sirius’s President of Operations and Sales, said during a conference call last week. “There will be a noticeable hit to subscribers in the second quarter, as a result of these production halts.”
A noticeable hit. What does that mean? Sirius didn’t say at the time, but a filing the company made with the SEC today gives us a clearer picture–and it’s not a pretty one. Chrysler sent quite a bit of new business Sirius’s way. From the Risk Factors item in the company’s 10-Q filing:
We do not expect to generate a significant number of new subscribers from Chrysler while its plants are closed. During the year ended December 31, 2008, Chrysler produced approximately 900,000 vehicles which included a satellite radio and a prepaid subscription to our service. These subscribers represented approximately 16% of our gross subscriber additions in 2008.”
Now, there’s no telling how long the Chrysler factory shutdown will last, so it’s impossible to know how much of an impact it will have on Sirius. That said, if the company’s bankruptcy proceedings drag on for any length of time, it obviously does not bode well for Sirius, especially since XM is potentially facing a similar scenario with General Motors (GM). Again, from the Sirius 10-Q:
There is also significant uncertainty surrounding General Motors’ future and potential filing for bankruptcy protection. A bankruptcy filing by General Motors could have similar effects on our subsidiary, XM.
And that would be grim news indeed. Because while Sirius has stopped counting on its auto partnerships to drive sales, it hasn’t yet established other means of driving subscriptions.
Comments
You DO know that the Sirius OEM deal with General Motors is by far the worst constract that they have. With no leverage, XM had to make a deal with GM that includes profit sharing. Sirus makes very little to nothing off GM installations. Better if GM folded and other automakers with better deals took over their share.
Posted by Bill Keating at May 11th, 2009 at 9:47 am“it hasn’t yet established other means of driving subscribership.”
He must not know about the “APPLE
NEWS”
I hate when reporters are inside their own box..OUTSIDE THE BOX
Posted by roger hunter at May 11th, 2009 at 10:18 ampeople..:-)
Well, considering Sirius hasn’t yet release the iPhone app it’s developing, I’d say that particular revenue channel is far from established.
Posted by John Paczkowski at May 11th, 2009 at 10:40 amSo the assumption your painting is that Chysler auto and truck buyers are brand loyal and will wait for them to resume production before they buy a new vehicle?
Posted by Jeff Stevens at May 11th, 2009 at 12:22 pmBrilliant, simply brilliant!
sirius is failing because they sold out to clowns like howard stern and continue to raise prices. I have been an xm subscriber for 5 years but I will not pay the high prices they charge when my sub end in august. why are you writing about a company with a stock price less than 50 cents anyway? nothing going on at yahoo?
Posted by Robert Freeman at May 11th, 2009 at 11:09 pmThis is my first post to any such website regarding sirius stock and its services. Could someone please exlplain to me why sirius cares so nuch about the auto industry failing. I understand that new radios in new cars will generate some new subsribers, buttt.. I have been a sirius subsriber for over 6 years now.. I have owned 3 new cars in that time and have NEVER had the radio factory installed? I put the antena on my roof and hide a few wires and I am done.. I also have one at work and one at home. My girlfreind and 3 of her daughters do the exact same thing. All in all I have counted freinds and family that have sirius and not one of them has it hardwired to their car? That adds up to over 35 radios and not one of them actually has the radio installed in the their car?
Posted by Michael Kralick at May 13th, 2009 at 8:02 ammost of the people i know own iphones and cant wait for the APP. and have no problem shelling out whatever sirius charges to get it on their iphone. My point is i think SIrius should concentrate on people like myself my family and freinds. Once people hear commercial free uncesencored radio they are hooked… I know this first hand , thats all I bought as christmas presents 3 years ago and not only have none of them cancelled after the free trial they added more non factory installed radio into their lives.