Exactly how many "Car Lot Subscribers" does Sirius have?
Friday, September 29, 2006 at 10:56 AM
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Recently the topic of Sirius' "Car Lot Subscribers" seems to have been picking up steam with terrestrial radio. The source of this frenzy is based on comments by Sirius CFO David Frear at the Merrill Lynch Media & Entertainment Conference.
At the conference, Frear was asked exactly how many subscribers are "cars just sitting on the lot" - of which Frear responded that in Q4 2005 the number was about 10% of subscribers, and this past quarter it was in the 8% range.
Listen to the Audio here.
Now, the terrestrial radio has taken this and ran with it. David Rehr's keynote at the NAB Radio Show, specifically highlighted "those 500,000 subscribers in empty car lots." Inside Radio (which sometimes seems like a good resource, while at other times is just a megaphone for the NAB) was actually the first publication I could find that threw out the solid 500,000 number after Frear's speech. Even Jacob's Media has gone so far as to compare Sirius' "half million unsold vehicles on car dealer lots" to Sarbanes-Oxley compliance. (wha?! Apples... meet Oranges.) UPDATE: Check out this PDF by Inside Radio (pictured) to see how this propaganda is being pushed (page 26 - or you can read the full thing and see a photo of Mancow in a monkey suit)
But let's break this down for a minute. Is the number really 500k? In 2Q 2006, Sirius reported something like 4,678,000 subscribers. At 8% that's around 374,000 "car lot" subscribers. And as Frear pointed out, the average days these vehicles spend on the lots is around 90 days (culmatively... Bimmer's have a tendency to fly off the lots whereas Fords and Chryslers stick around longer).
Now, just for the record, I'm not criticizing Siruis' policy for reporting unsold cars as subscribers - I'm actually disputing the NAB's propaganda of a "half million subscribers" that they seem to be enjoying. The practive is almost understandable from an accounting standpoint since Sirius gets paid at the time of production. The only thing it does is make it difficult to compare Sirius net subscribers with XM's net subscribers - which is a comparison that only Wall Street does (and those who are running the numbers should be factoring in that percentage anyway). Other than that, why does it matter? As if Arbitron reports exact numbers.
OK, so the burning question, what about the year's to come? Frear said that the percentage of car lot subscribers is shrinking. That makes sense when you consider that Sirius' subscriber count continues to grow. According to Bank of America estimates: in 2007 the percentage will drop to 6%, with car lot subs equaling 542,000. By 2010? Maintaining the 6% rate, you're looking at a total of 964,000 car lots subscribers.
[more on TheStreet]
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Comments
In addition to those 350k phantom subs, Sirius also gives 1 year subscribtions out with many new cars. Half of these will churn out.
So, there is yet another factor that artificially inflates Sirius' subscriber count when compared to XM, which counts subs more conservitively & only offers a 3 month subscription to OEM subs.
When those 1 year promo subs start expiring, Sirius' churn will spike.
Westfall
Posted by: Westfall ? | September 29, 2006 11:42 AM
they both give out a ton of freebies.
If the subs are being paid for, lot or not, should they not be counted?
are they being paid for? so you front end the subs instead of backloading them? big deal
Posted by: PNess ? | September 29, 2006 12:08 PM
Everything you were saying was correct until you got to 6% in 2010. The number of parking lot subs will continue to shrink indefinetly. Once it gets down to 6% it doesn't just stop and say "thats low enough."
Bottom line is ARPU though. As long as Sirius is generating $11.15 per sub who cares if they are parking lot subs. Sirius could probably generate 11.75 per sub if they didn't count parking lot subs. Its really a moot point because subscriber numbers are way less important than, REVENUE, LOSS AND PROFIT.
Posted by: Joe Blow | September 29, 2006 12:19 PM
It'll all come out in the wash. $$$$ is what will matter in the end, not how they fudge subscriber counts.
Posted by: Chipper ? | September 29, 2006 1:05 PM
xm does the same number crunching as sirius so it should be both.his point is meaningless.is he angry. is he jealous. whats his point.should the NAB count for all the radios in the cars that are on 88.7.
oh westfall we get that its you. we can read at the bottem of the post
Posted by: sternfan73 ? | September 29, 2006 1:17 PM
Both XM and Sirius do this, the only difference is that Sirius addressed the issue where as XM has remained silent. So you cant contrast xm and sirius on this matter. You can contrast satellite and terrestrial, though.
These subs are paid for by the auto manufacturers so they should show up in the books. As for the churn... I do not think there is much. All of my friends who purchased cars have kept their sat radio after the "free" period (actually paid for but included int the price of the car) ends. One friend has an XM radio and actually prefers Sirius but he kept XM because he does not want to buy a new radio.
Posted by: Jimmy Carter | September 29, 2006 1:35 PM
Why does the PDF file show that Sirius has 51% of the total satellite subs and XM has 49%?
Also it says that sirius assumes 2.3 listeners per sub and XM assumes 1.5
Interesting, but I think these numbers might be a little fake
Posted by: MarkS ? | September 29, 2006 1:56 PM
Re: the 51 vs 49% thing, it could be a typo.
Whomever created the table didn't do it with any kind of structure. They started out with XM in the first column and Sirius in the second column, but then it started to switch. Doing it in this fashion is a recipe for disaster in terms of errors and typos.
Posted by: theicepik ? | September 29, 2006 2:03 PM
what does it matter? well for one thing...Advertizers will be pissed to know 8% of the recivers counted as subscribers are really just unsold cars. How the hell can you sell advertizing if your base line number of listeners is not a real number. Sirius turns around with their total subscriber number and says there are 2.2 listerners for each receiver or so and that makes the 375,000 become over 750,000 that are not really listening. The total listeners is how they price adds. I persomally would pull any of my advertizing from sirius if I found this out after putting adds there.
Posted by: jeff | September 29, 2006 2:42 PM
"xm does the same number crunching as sirius so it should be both.his point is meaningless.is he angry. is he jealous. whats his point.should the NAB count for all the radios in the cars that are on 88.7."
Hey Cunt, thanks for telling me what my point "Should be". Nice job leaving out the "be" though...XM does not count subscribers (or crunch numbers) the same way as Sirius, so you're wrong. You'll learn of Sirius' aggressive accounting soon enough...
"oh westfall we get that its you. we can read at the bottem of the post"
Really, because as a Stern fan, I would have assumed you were illiterate. Go worship your poodle-wig-wearing, vacation-taking, god. Then die.
Westfall
Posted by: Westfall ? | September 29, 2006 3:23 PM
Oh, excuse me. Your lack of proper punctuation allowed me to misinturupt your incoherent ramblings.
Somehow, in the same post, you manage to admit you don't know what my point is, but at the same time you say my point is meaningless.
A Stern fan indeed.
Westfall
Posted by: Westfall ? | September 29, 2006 3:25 PM
Who's the biggest douchebag at Orbitcast?
Westfall
Posted by: Stan ? | September 29, 2006 3:35 PM
Who's the biggest ass licker at Orbitcast?
Westfall
Posted by: Stan ? | September 29, 2006 3:35 PM
i should of made myself clear in my first post. the last line was just about westfall.the rest was about david frear.
sorry westfall. the world does not revolve around you.
Posted by: sternfan73 ? | September 29, 2006 3:54 PM
i should of made myself clear in my first post. the last line was just about westfall.the rest was about david frear.
sorry westfall. the world does not revolve around you.
Posted by: sternfan73 ? | September 29, 2006 3:55 PM
they both give out a ton of freebies.
"If the subs are being paid for, lot or not, should they not be counted?
are they being paid for? so you front end the subs instead of backloading them? big deal"
Just because they're "paid for" doesn't mean they are a sub. If the car sits on the lot for 6 months with a 6 month promo and no customer behind the wheel, than it falsely portrays a higher demand for the product.
Also, if the promo is up before the car is sold, the money goes back to Ford/DCX and not Sirius, so it also effects churn.
It's poor business ethics at the very least. It doesn't matter the number of subs, it's the fact they're doing it.
XM doesn't do it that way.
Posted by: SatelliteRadioFan ? | September 29, 2006 4:35 PM