The recent advertising campaign by Mercury that prominently promotes a free 3-years of Sirius Satellite Radio, is being called into question - by Jacobs Media.
Jacobs Media, of course, is a terrestrial radio supported organization. But let's ignore that.
The whole reason why the campaign is being questioned, is because Jacobs own research shows that MP3 player integration and GPS navigation are more popular new car features than satellite radio. Now, the research was based off of a survey that polled "Rockers" specifically, which may (or may not) be Mecury's target audience. But let's ignore that.
Using this research, we see that 16% of respondents are "very interested" in seeing satellite radio in their next vehicle. Compare this to the 19% of respondents "very interested" in GPS navigation - and the relative costs incurred between satellite radio and GPS nav - and you can figure out exactly why Mercury is promoting Sirius instead. (Hint: $195 vs. $2,295) But let's ignore that too.
Instead, let's question whether Fred Jacobs would be taking the same accusing tone (hinting that partnerships like this artificially inflate satellite radio's subscriber numbers) if the promotion was for... oh I don't know, maybe HD Radio instead? Would Jacobs would take issue with Ford's partnership with Sirius, if it weren't for the Big Three automakers saying that there's no interest in HD Radio? Nah, of course not.
Let's just ignore all that.
[Jacobs Media Blog]
Perhaps Jacobs would not question it were it HD Radio.
But it is a valid point -- Sirius has used its 1 year agreements with DCX to artificially inflate its subscriber numbers, and they continue to materially overstate their subscriber numbers. Now, they come along with three-year service agreements on this deal, which will only exacerbate the problem. Sirius has effectively extended the time during which it counts its 1-year DCX subscribers by some 5-7 months with the ploy of counting unsold cars. Their continued refusal to disclose a conversion rate suggests that after the year is up, less than XM's 51% may be signing up.
Hopefully, Sirius will follow XM's lead and begin to move toward MORE CONSERVATIVE subscriber counting (XM counts many of its new OEM subs only after their OEM sales become self-paying subscribers, and never counts OEM installs as subscribers until the car is actually sold). Based on their history of misleading the investment community on this issue, there is no reason to anticipate they will do so, however.
What's wrong with Sirius doing what it can to promote it's product? Every car comes with an FM radio, whether you really use it or not. What if every car came with a standard HD Radio? Should Satellite customers complain? I can understand the questionable subscriber counting is of concern, but Sirius giving away subscriptions doesn't seem like a problem to me.
I started with 2 XM accounts, one for the wife, one for me, and now the mother in law, and my two best friends have an account (or two). I can only imagine a 3 year subscription might generate atleast 1 or 2 additional subscriptions outside of the car.
Sirius does not "give away" a 3 year subscription. Ford pays up front for the service.
Sirius does not "give away" a 3 year subscription. Ford pays up front for the service.
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That is a valid point and hence, I have no problem with sirius counting them as subscribers.
Where is becomes a problem is when Sirius claims to have a lower churn and higher net adds than XM. Both can not be compared and do not tell the true consumer demand behind Sat Rad. This becomes an injustice to Sirius shareholders.
Also of interest is that Ford is the only of the Big 3 to have made any sort of HD Radio arrangement.
Many of the Jacobs surveys aren't worth the paper they're written on, but the article does make a legitimate point if you consider the fact that the auto manufacturers purchase these promotional "subscriptions" at heavily discounted rates.
Fudging the numbers like this is just Standard Operating Procedure (SOP) for Sirius. The white-haired shyster and Hoo Hoo, his toilet-paper-twin, have always "bumped" ("banged" would be the better word) the numbers to make themselves seem more successful than they really are.
Unfortunately, XM is beginning to resort to the same deceptive practice when it comes to counting these promotional "subscriptions." Could this possibly be due to the fact that the white-haired shyster is going to be the CEO of both companies if the merger is approved? Did Hoo Hoo take credit for 6,000,000 subscriptions during his last Letterman performance? Does the Pope fart, do bears shit in the woods?
The SEC should investigate this deceptive practice at both companies. In the meantime, watch that Sirius stock drop - from less than $3.00/share to $0.00.
Zero point Zero Zero.