Orbitcast is live blogging the full-year 2008 and fourth-quarter 2008 investor conference call. Keep hitting the refresh button to see the latest updates.
- Regular old introductions of "forward looking statements"
- David Frear is on right now talking about how the company still managed to grow despite this terrible economy
- Total subscribers grew 10% for the full year
- Q4 subscribers adds fell thanks to "absolutely awful" OEM and retail market
- Top line revenue grew 16 percent
- For the first time Sirius XM had a positive adjusted EBITDA
- Overall costs were improved thanks to cheaper installations in automobiles and more efficient headunits in OEM installed units
- Consolidated net loss improved 39 percent
- Frear is now covering the financing deal with Liberty
- Discussing both the phases of financing with Liberty
- Sirius XM has prepaid all obligations to MLB to March 2011
- "In the past six months, the world has changed dramatically"
- "We have put our 2009 liquitidity issues behind us"
- Due to the bad economy: Many companies are no longer providing guidance. and Sirius XM will not provide guidance either
- Sirius XM ended 2008 with over 19 million subs
- While
there was a lot of "distraction" on the corporate side due to the
merger, the operations team has moving forward at full speed
- Switched to Audiovox as aftermarket distributor
- Pleased to announce the MiRGE is now available for sale
- Seeing real tracking on the tiered packages, and a vast majority of new subs are at higher tiers
- Sirius XM is working on an application to stream the internet content to the iPhone and iTouch
- Allows the estimated 7 million iPhone users to access SXM on the iPhone
- They plan to launch the iPhone app in Q2
- Automotive sales rate declined (~9 million) but OEM penetration rate has improved to 52%
- Poor economy has affected the aftermarket
- Recession has not affected self-paid churn, but customers have cited "financial troubles" as being reasons to deactivate
- Now over to Mel
- With the poor economy, all expectations should have been that Q4 would be terrible
- Not only did we not have a terrible fourth-quarter, we had a very good fourth-quarter
- It's the first full operating quarter since the merger was consummated
- Reduced costs by 22% in Q4
- Combination of double-digit revenue growth with cost reductions created a positive EBITDA
- Q4 was the first time that Satellite Radio was EBITDA positive
- Mel is now explaining the series of events that led to the refinancing issue
- "We got it done, and many many companies did not get it done"
- In the process, we brought in a very strategic partner in Liberty Media
- Liberty Media received 40 percent in the company, that means that our investors still own a majority in the company
- Now onto the future...
- "2009 will be a terrible year for auto sales"
- Consumer electronics will also suffer from the poor economy
- "We have a plan" to combat these factors
- All the benefits will come from the synergies of the Sirius-XM merger
- Our advantage is that our consumers love our service
- The competition, including terrestrial radio, is suffering - and we will capitalize on this
- 2009 will be the first year of our merger, it will also be the first year of positive EBITDA and positive cash flow
- Q&A begins
- Q: David Bank, from RBC (one of Orbitcast's favorite analysts)
Can you give some clarity as to the structure of the preferred shares that go to Malone? And why was it structed that way instead of common stock? You said that 400k subscribed to the "Best of" package?
A: The details of the Liberty transaction are in the 10k - if there's any additional details you want to know, you can follow up offline. On the subject of the packages/tiers, it continues to grow - adding subs all the time. The majority of subs are opting for the "Best of" packages - roughly 75% are XM subs opting for "Best of Sirius" packages. Still in talks with MLB, and baseball will drive the "Best of XM" package from the Sirius side.
Follow up Question: Can you offer a guess/range for the "Best of" package for the year, so we can estimate ARPU better?
Follow up Answer: It's a fair question, but we really can't give estimates in this economy. - Q: Will there be a bundle with DirecTV?
A: Yeah, we think there are a number of opportunities for us to work together. Remember, that these are two distinct public companies - Liberty has a minority interest in both DirecTV and Sirius XM. We think there ARE opportunities, but right now at "an arms length basis." We think there are opporunities for DirecTV to offer Sirius XM at a discount. Right now we're focused on the top-line, and partnering with DirecTV would help towards that.
Follow up Q: What areas will be cut?
Follow up A: Pretty much across the board. There's areas of synergies for every single line item. Whether or not we can do that this year is the questions (i.e., call center operations, programming contracts, etc.). You should expect to see meaningful improvements in the P&Ls and every line item
ANOTHER Follow up Q: Could you tell if there was confusion from the merged entity/products? or was the general economic environment?
Follow up A: Mel says that the doom-and-gloom covering Sirius XM dampened consumer confidence. David adds that the Circuit City bk really hurt satellite radio aftermarket. And finally, overall store traffic has been poor. - Q: Tuna Amobi from Standard &
Poors. You had an alternative offer from EchoStar/DISH, and what was
the consideration for going with Liberty instead?
A: We had "a lot of companies" that were interested in working with us. The Board was concerned with both the entire enterprise and with shareholder interests, and Liberty had both in the best interests. Tuna is pushing for more details. (Whoa! Mel just got snippy with Tuna!)
Follow up Q: Tuna is pushing for more guidance in terms of subscriber growth
Follow up A: David is now pushing back and reiterating to Tuna that they're not issuing guidance - (Crap, I missed a series of Q&A with one analyst - they covered the MLB payments, which SXM have settled for 2009-10 and the Loral credits.)
- Q: Penetration of 52% OEM. What the difference with the 44% listed in press release?
A; The 44% was for the full year average, while the 52% auto penetration was for exiting 2008. (A nice improvement) - Q: Was there any changes in conversion rate and churn in the past 4 months?
A; It's a tough question to answer because we've never seen an economy like this before. There definetly was a headwind - both with the confusion of putting the 2 companies and the unbelievable amount of news/press on Sirius XM's financial situation. Mel adds that this bad news has an impact on the pre-pay subscribers who they are asking for long term subs from.
Mel is closing that there is a "laser like focus" for financial improvements for the year and that not many companies can make the claims of positive EBITDA that they are dedicated to doing.
It's so OVER, this earnings call was for newbs, suckers, and Melvin Alan "Mel" Karmazin's ignorant bitches. All fluff and little truth. It's so OVER.
Our advantage is that our consumers love our service.
We're doomed.
I have yet to hear-the-Call, but it appears encouraging, despite the external-hardships; The brightest news is Apple-Iphone-Ipod! So many people want this service, that it is about time it is given to consumers! I think it will crack-the-egg of isolation of having Sirius-XM Radio only in the car and little elsewhere; The next step will be pre-loaded on compters, with a free-introductory players and trial period! Still, there are massive avenues for further sat-rad dissemination!
Long, re-upped-locked-in my subs, and enjoying!
Best to all, thanks Apple for hearing-the-voice-of-demand!
"Our advantage is that our consumers love our service"
Ryan... I think that should read "loveD"
did he announce MLB on sirius yet?
Hey at least this confirms we're getting an iPhone app for us users, didnt hear about you WinMo users though
Did they report on the O and A fight this morning. Oh my God.
Here's an idea MEL.
There must be millions of 'satellite radio-ready' cars out there right now - that are NOT Sirius customers yet! (the people who think it's way too expensive)
Allow these new customers to enable their car radio for some ridicuously low fee - let's say $50 for the first 'introductory' year (or $4.15/month).
Anyone that has a SAT-ready car and doesn't sign up for that is mentally-challenged. It's less than one big MAC for crying out loud.
Sirius must get people listening to SAT radio ... Only then, will they hear what they have been missing ... and become long-term fans !
At least they confirmed they're working on a iPhone app due out soon. After the way they screwed NiceMac, they better make it good.
Currently, I'm forced to stream Sirius from their site with the awful GUI and that shitty, unreliable wmv stream.
Ed Baxter: My sentiments exactly. I almost fell out of my chair when I heard that.
On line Dictionary
----------------
Delusional
Delusion
n.
1.
a. Mel
b. Karmazin
2. Nuff said
de-lu' sion-al adj.
Also see: Hallucination
satellite radio is for newbs and suckers. Newbs and suckers desperate for siriusxm app for iPhones more than prove they are truly newbs and suckers. There is better, free internet radio which is already available via the iPhone.
As for those with autos which have a installed sat radio, it's also already been proven that less than 25% continue their subscriptions for service after the free subscription period ends. People know a waste of money, people know a crutch when they see on.
Each and every day satellite radio proves it is for newbs and suckers
Hello. Anyone hear what they said on this call about baseball and this upcoming season?
As far as I know, MLB is still XM-only.
I'm weighing whether to trade my sirius in for an xm and just get the best-of sirius package to get howard, etc.
First of all, thanks for writing all that up, Ryan.
Obviously information given in this type of conference call is self-serving and slanted, but buried in the mounds of bullshit, I see this:
1. Of 19 million Sirius XM subscribers, 400,000 have opted for "best of" packages. Two percent. I would not call this impressive.
2. When someone says "People love our service," that's essentially a defensive comment, for if it were true, it wouldn't be stated in those terms. It would be stated in terms like this, "Our subscriptions are growing by 11 percent a year -- people love us that much." But when subscriptions barely grew at all, you resort to glittering generalities. As others above have posted, many people loved the service, past tense, and some still do.
3. The comment about Circuit City's bankruptcy hurting them is complete nonsense. All stores started phasing out satellite radio stuff way over a year ago; this past summer I went with a friend who was looking to find an XM radio, and Circuit City had a little rack of stuff that looked like it had been sitting there for ages -- tattered dust-coated boxes -- but their prices were still higher than those of competitors. What hurt them in the retail market is first, the merger delay, which spooked the uninformed into thinking they'd buy something and it'd quit working, and second, the elimination of good programming that made retail consumers like me (who aren't as well off as people who have satellite radio permanently installed in their cars) willing to pony up some of our limited cash to get it.
4. When asked about changes in the churn rate, the response is "it's a tough question to answer." Translation: Yes -- it's going up. And I'll tell you why: Because you screwed half of your customers over.
xcountry,
If only Mel could cut the bullshit and give us the low down in the vernacular that you just did; PLAIN ENGLISH! You keep it real, and I commend you for that - as always.
What if Sirius offers 100 shares of Sirius in exchange for signing up for 2 years for at the least the $9.99/year plan.
This plan is only good until the stock hits .40 cents. It would cost $20 -$40 to get a sub for 2 years that pays $240.
People would stick with service if they feel like they are part of the company and it's future growth.
1 million subs would cost 20 to 40 M, but would bring in over 240M revenue.
Hi Mike:
I just bought a 2010 Toyota Prius that includes Nav and satellite radio. Since then I have enjoyed listening to the Satellite music, which includes a 3-month free subscription from Sirius/XM.
However, signing up for a paid subscription is very doubtful.
I'm not the least bit interested in listening to Howard Stern or NASCAR races, and Martha Stewart is a nice lady - but home decor is not my thing either. So Sirius just has no appeal for me at all.
As far as sports is concerned, watching it on TV is my choice. I don't travel that much, and when I do I certainly don't want to listen to a ball game.
My pick would be music only. The trouble is - this choice costs $9.99 per month PLUS Fees PLUS Taxes. Way too much for what I would be getting.
Why? Because my vehicle also has a CD player, and I own a pretty good supply of up-to-date music CDs. The audio is always clear, the signal is never lost, and there is no monthly subscription fee.
Jim C.