Sirius XM Radio Inc. has released their 4th quarter and full-year 2008 earnings results two days ahead of this Thursday's scheduled conference call. Full year revenue grew 18 percent year-over-year to $2.44 billion, while net loss widened to $245.8 million from $166.2 million. Thanks to fewer shares outstanding, the per-share loss narrowed to 8 cents from 11 cents. Analysts' estimates were for a loss of 7 cents a share, according to a Thomson Reuters poll.
Sirius XM ended 2008 with a total of 19,003,856 subscribers, that's up 10% from 17.3 million subscribers the year prior.
In the fourth quarter 2008, ARPU grew YoY to $10.60 from $10.42, while monthly self-pay customer churn rate increased slightly from 1.7 percent in 4Q07 to 1.8 percent in the 4Q08.
SAC per gross add improved 16 percent to $70 in the fourth quarter of 2008, down from $83 in SAC in the fourth quarter of 2007.
Q4 pro forma revenue grew 16 percent YoY to $644 million, fourth quarter 2007 pro forma revenue of $558 million.
In the Q408, Sirius XM also achieved positive pro forma adjusted income from operations of $31.8 million - that's not bad compared with the loss from operations of $224 million the same period last year.
Full financials below...
In the fourth quarter 2008, ARPU grew YoY to $10.60 from $10.42, while monthly self-pay customer churn rate increased slightly from 1.7 percent in 4Q07 to 1.8 percent in the 4Q08.
SAC per gross add improved 16 percent to $70 in the fourth quarter of 2008, down from $83 in SAC in the fourth quarter of 2007.
Q4 pro forma revenue grew 16 percent YoY to $644 million, fourth quarter 2007 pro forma revenue of $558 million.
In the Q408, Sirius XM also achieved positive pro forma adjusted income from operations of $31.8 million - that's not bad compared with the loss from operations of $224 million the same period last year.
Full financials below...
SIRIUS XM RADIO INC. AND SUBSIDIARIES
SUBSCRIBER DATA, METRICS AND OTHER NON-GAAP FINANCIAL MEASURES
(Dollars in thousands, unless otherwise stated)
(Unaudited)
Subscriber Data:
Pro Forma Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Beginning
subscribers 18,920,911 16,234,070 17,348,622 13,653,107
Gross
subscriber
additions 1,713,210 2,336,640 7,710,306 8,077,674
Deactivated
subscribers (1,630,265) (1,222,088) (6,055,072) (4,382,159)
Net additions 82,945 1,114,552 1,655,234 3,695,515
Ending
subscribers 19,003,856 17,348,622 19,003,856 17,348,622
Retail 8,905,087 9,238,715 8,905,087 9,238,715
OEM 9,995,953 8,033,268 9,995,953 8,033,268
Rental 102,816 76,639 102,816 76,639
Ending
subscribers 19,003,856 17,348,622 19,003,856 17,348,622
Retail (131,333) 314,908 (333,628) 791,444
OEM 218,249 791,356 1,962,685 2,860,722
Rental (3,971) 8,288 26,177 43,349
Net additions 82,945 1,114,552 1,655,234 3,695,515
Pro Forma Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Average self-pay
monthly
churn (1)(7) 1.8% 1.7% 1.8% 1.7%
Conversion
rate (2)(7) 44.2% 51.4% 47.5% 50.9%
ARPU (3)(7) $10.60 $10.42 $10.51 $10.61
SAC, as adjusted,
per gross
subscriber
addition
(4)(7) $70 $83 $74 $86
Customer service
and billing
expenses, as
adjusted,
per average
subscriber
(5)(7) $1.18 $1.30 $1.11 $1.18
Total revenue $644,108 $557,515 $2,436,740 $2,058,608
Free cash
flow (6)(7) $25,877 $5,405 $(551,771) $(504,869)
Adjusted income
(loss) from
Operations (8) $31,797 $(224,143) $(136,298) $(565,452)
Net loss $(248,468) $(405,041) $(902,335) $(1,247,633)
SIRIUS XM RADIO INC. AND SUBSIDIARIES
PRO FORMA CONSOLIDATED RESULTS OF OPERATIONS
(Unaudited)
Pro Forma Pro Forma
Three months ended Twelve months ended
December 31, December 31,
(in thousands, except
per share data) 2008 2007 2008 2007
Total revenue $644,108 $557,515 $2,436,740 $2,058,608
Operating expenses:
Satellite and
transmission 22,851 23,697 99,185 101,721
Programming and content 105,215 109,076 446,638 401,461
Revenue share and
royalties 122,711 163,541 477,962 403,059
Customer service and
billing 67,036 65,006 244,195 217,402
Cost of equipment 18,084 37,334 66,104 97,820
Sales and marketing 81,712 123,711 342,296 413,084
Subscriber acquisition
costs 132,731 180,767 577,126 654,775
General and
administrative 51,591 64,223 267,032 271,831
Engineering, design and
development 10,380 14,303 52,500 62,907
Depreciation and
amortization 49,519 75,045 245,571 293,976
Share-based payment
expense 24,945 52,897 124,619 165,099
Restructuring and
related costs 2,977 - 10,434 -
Total operating
expenses 689,752 909,600 2,953,662 3,083,135
Loss from operations (45,644) (352,085) (516,922) (1,024,527)
Other expense (202,649) (52,055) (381,425) (221,610)
Loss before income
taxes (248,293) (404,140) (898,347) (1,246,137)
Income tax expense (175) (901) (3,988) (1,496)
Net loss $(248,468) $(405,041) $(902,335) $(1,247,633)
SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Actual Actual
Three months ended Twelve months ended
(in thousands, except per December 31, December 31,
share data) 2008 2007 2008 2007
(Unaudited) (Unaudited)
Revenue:
Subscriber revenue, including
effects of rebates $565,435 $227,658 $1,543,951 $854,933
Advertising revenue, net of
agency fees 15,776 9,770 47,190 34,192
Equipment revenue 30,712 12,065 56,001 29,281
Other revenue 10,260 323 16,850 3,660
Total revenue 622,183 249,816 1,663,992 922,066
Operating expenses
(depreciation and
amortization
shown separately below) (1)
Cost of services:
Satellite and transmission 24,481 5,175 59,279 27,907
Programming and content 89,214 62,735 312,189 236,059
Revenue share and royalties 103,217 56,762 280,852 146,715
Customer service and billing 67,818 29,288 165,036 93,817
Cost of equipment 18,084 15,886 46,091 35,817
Sales and marketing 80,699 56,866 231,937 183,213
Subscriber acquisition costs 113,512 100,062 371,343 407,642
General and administrative 64,586 37,212 213,142 155,863
Engineering, design and
development 12,404 7,946 40,496 41,343
Impairment of goodwill 15,331 - 4,766,190 -
Depreciation and amortization 82,958 27,638 203,752 106,780
Restructuring and related
costs 2,977 - 10,434 -
Total operating expenses 675,281 399,570 6,700,741 1,435,156
Loss from operations (53,098) (149,754) (5,036,749) (513,090)
Other income (expense)
Interest and investment
income (90) 4,171 9,079 20,570
Interest expense, net of
amounts capitalized (61,196) (19,887) (144,833) (70,328)
Loss from redemption of debt (98,203) - (98,203) -
Loss on investments (27,418) - (30,507) -
Other (expense) income (5,664) 17 (9,599) 31
Total other expense (192,571) (15,699) (274,063) (49,727)
Loss before income taxes (245,669) (165,453) (5,310,812) (562,817)
Income tax expense (175) (770) (2,476) (2,435)
Net loss $(245,844) $(166,223) $(5,313,288) $(565,252)
Net loss per common share
(basic and diluted) $(0.08) $(0.11) $(2.45) $(0.39)
Weighted average common
shares outstanding
(basic and diluted) 3,160,223 1,468,210 2,169,489 1,462,967
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and transmission $1,349 $364 $4,236 $2,198
Programming and content 4,672 2,786 12,148 9,643
Customer service and billing 783 165 1,920 708
Sales and marketing 2,165 539 13,541 15,607
Subscriber acquisition costs - 156 14 2,843
General and administrative 12,995 10,261 49,354 44,317
Engineering, design and
development 2,023 625 6,192 3,584
Total share-based payment
expense $23,987 $14,896 $87,405 $78,900
SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
Actual
(in thousands, except share and As of December 31,
per share data) 2008 2007
ASSETS
Current assets:
Cash and cash equivalents $380,446 $438,820
Accounts receivable, net of
allowance for doubtful
accounts of $6,746 and
$4,608, respectively 102,024 44,068
Receivables from distributors 45,950 60,004
Inventory, net 24,462 29,537
Prepaid expenses 67,203 31,392
Related party current assets 114,177 2,161
Restricted investments - 35,000
Other current assets 58,744 37,875
Total current assets 793,006 678,857
Property and equipment, net 1,703,476 806,263
FCC licenses 2,083,654 83,654
Restricted investments, net
of current portion 141,250 18,000
Deferred financing fees, net 40,156 13,864
Intangible assets, net 688,671 -
Goodwill 1,834,856 -
Related party long-term
assets, net of current
portion 124,607 3,237
Other long-term assets 81,019 90,274
Total assets $7,490,695 $1,694,149
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIT)
Current liabilities:
Accounts payable and accrued
expenses $877,594 $464,943
Accrued interest 76,463 24,772
Deferred revenue 985,180 548,330
Current maturities of long-term debt 399,726 35,801
Related party current liabilities 68,373 1,148
Total current liabilities 2,407,336 1,074,994
Long-term debt, net of
current portion 2,851,740 1,278,617
Deferred revenue, net of
current portion 247,889 110,525
Deferred credit on executory
contracts 1,037,190 -
Deferred tax liability 894,453 12,771
Other long-term liabilities 43,550 9,979
Total liabilities 7,482,158 2,486,886
Commitments and contingencies - -
Stockholders' equity (deficit):
Series A convertible
preferred stock, par value
$0.001 (liquidation
preference of $51,370 and $0 at
December 31, 2008 and 2007,
respectively); 50,000,000
authorized at December 31,
2008 and 2007, 24,808,959 and
zero shares issued and outstanding
at December 31, 2008 and 2007,
respectively 25 -
Common stock, par value
$0.001; 8,000,000,000 and
2,500,000,000 shares
authorized at December 31,
2008 and 2007, respectively;
3,651,765,837 and 1,471,143,570
shares issued and
outstanding at December 31,
2008 and 2007, respectively 3,652 1,471
Accumulated other comprehensive loss,
net of tax (7,871) -
Additional paid-in capital 9,724,991 3,604,764
Accumulated deficit (9,712,260) (4,398,972)
Total stockholders' equity
(deficit) 8,537 (792,737)
Total liabilities and
stockholders' equity
(deficit) $7,490,695 $1,694,149
SIRIUS XM RADIO INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Actual
For the Years Ended December 31,
2008 2007
(in thousands)
Cash flows from operating
activities:
Net loss $(5,313,288) $(565,252)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Depreciation and amortization 203,752 106,780
Impairment of goodwill 4,766,190 -
Non-cash interest expense, net
of amortization of premium (6,311) 4,269
Provision for doubtful accounts 21,589 9,002
Non-cash loss from redemption of
debt 98,203 -
Amortization of deferred income
related to equity method
investment (1,156) -
Loss on disposal of assets 4,879 (428)
Loss on investments, net 28,999 -
Share-based payment expense 87,405 78,900
Deferred income taxes 2,476 2,435
Other non-cash purchase price
adjustments (68,330) -
Other 1,643 -
Changes in operating assets and
liabilities:
Accounts receivable (32,121) (28,881)
Inventory 8,291 4,965
Receivables from distributors 14,401 (13,179)
Related party assets (22,249) -
Prepaid expenses and other
current assets (19,953) 11,459
Other long-term assets (5,490) 12,109
Accounts payable and accrued
expenses (65,481) 66,169
Accrued interest 23,081 (8,920)
Deferred revenue 55,778 169,905
Related party liabilities 34,646 -
Other long-term liabilities 30,249 1,901
Net cash used in operating
activities (152,797) (148,766)
Cash flows from investing activities:
Additions to property and equipment (130,551) (65,264)
Sales of property and equipment 105 641
Purchases of restricted and
other investments (3,000) (310)
Acquisition of acquired entity
cash 819,521 -
Merger related costs (23,519) (29,444)
Purchase of available-for-sale
securities - -
Sale of restricted and other
investments 65,869 40,191
Net cash provided by (used in)
investing activities 728,425 (54,186)
Cash flows from financing
activities:
Proceeds from exercise of
warrants and stock options 471 4,097
Long term borrowings, net of
related costs 531,743 244,879
Payment of premiums on
redemption of debt (18,693) -
Payments to minority interest
holder (1,479) -
Repayment of long term
borrowings (1,146,044) (625)
Net cash (used in) provided by
financing activities (634,002) 248,351
Net (decrease) increase in cash
and cash equivalents (58,374) 45,399
Cash and cash equivalents at
beginning of period 438,820 393,421
Cash and cash equivalents at end
of period $380,446 $438,820
FOOTNOTES TO PRESS RELEASE AND TABLES FOR NON-GAAP FINANCIAL MEASURES
This press release, including the selected financial information above, includes the following non-GAAP financial measures: average monthly churn; SAC per gross subscriber addition; customer service and billing expenses per average subscriber; free cash flow; average monthly revenue per subscriber, or ARPU; adjusted income (loss) from operations; adjusted net loss; and adjusted net loss per share. The definitions and usefulness of such non-GAAP financial measures are as follows (dollars in thousands, unless otherwise stated):
(1) Average self-pay monthly churn represents the average of self pay
deactivations by the period divided by the average self pay subscriber
balance for the period.
(2) We measure the percentage of subscribers that receive the service and
convert to self-paying after the initial promotion period. We refer
to this as the "conversion rate." At the time of sale, vehicle owners
generally receive between three and twelve month prepaid trial
subscriptions and we receive a subscription fee from the OEM.
Promotional periods generally include the period of trial service
plus 30 days to handle the receipt and processing of payments. We
measure conversion rate three months after the period in which the
trial service ends. Based on our experience it may take up to 90
days after the trial service ends for subscribers to respond to our
marketing communications and become self-paying subscribers.
(3) ARPU is derived from total earned subscriber revenue and net
advertising revenue divided by the daily weighted average number of
subscribers for the period. ARPU is calculated as follows (in
thousands, except for per subscriber amounts):
Unaudited Pro Forma Unaudited Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Subscriber revenue $585,534 $499,109 $2,247,334 $1,879,766
Net advertising
revenue 15,776 20,571 69,933 73,340
Total subscriber and
net advertising
revenue $601,310 $519,680 $2,317,267 $1,953,106
Daily weighted
average number of
subscribers 18,910,689 16,629,079 18,373,274 15,342,041
ARPU $10.60 $10.42 $10.51 $10.61
(4) SAC, as adjusted, per gross subscriber addition is derived from
subscriber acquisition costs and margins from the direct sale of
radios and accessories, excluding stock-based compensation, divided
by the number of gross subscriber additions for the period. SAC, as
adjusted, per gross subscriber addition is calculated as follows (in
thousands, except for per subscriber amounts):
Unaudited Pro Forma Unaudited Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Subscriber acquisition
cost $132,731 $190,090 $577,140 $666,785
Less: stock-based
compensation granted
to third parties and
employees - (9,323) (14) (12,010)
Add: margin from direct
sales of radios
and accessories (12,628) 12,201 (3,294) 40,206
SAC, as adjusted $120,103 $192,968 $573,832 $694,981
Gross subscriber
additions 1,713,210 2,336,640 7,710,306 8,077,674
SAC, as adjusted, per
gross subscriber
addition $70 $83 $74 $86
(5) Customer service and billing expenses, as adjusted, per average
subscriber is derived from total customer service and billing
expenses, excluding stock-based compensation, divided by the daily
weighted average number of subscribers for the period. Customer
service and billing expenses, as adjusted, per average subscriber is
calculated as follows (in thousands, except for per subscriber
amounts):
Unaudited Pro Forma Unaudited Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Customer service and
billing expenses $67,906 $65,991 $248,176 $220,593
Less: stock-based
compensation (870) (985) (3,981) (3,191)
Customer service and
billing expenses, as
adjusted $67,036 $65,006 $244,195 $217,402
Daily weighted
average number of
subscribers 18,910,689 16,629,079 18,373,274 15,342,041
Customer service and
billing expenses, as
adjusted, per average
subscriber $1.18 $1.30 $1.11 $1.18
(6) Free cash flow is calculated as follows (in thousands):
Unaudited Pro Forma Unaudited Pro Forma
Three months ended Twelve months ended
December 31, December 31,
2008 2007 2008 2007
Net cash used in
operating activities $64,195 $30,957 $(403,883) $(303,496)
Additions to property
and equipment (27,846) (18,954) (161,394) (198,602)
Merger related costs (10,472) (6,680) (23,519) (29,444)
Restricted and other
investment activity - 82 37,025 26,673
Free cash flow $25,877 $5,405 $(551,771) $(504,869)
(7) Average monthly self-pay churn; conversion rate; ARPU; SAC, as
adjusted, per gross subscriber addition; customer service and billing
expenses, as adjusted, per average subscriber; and free cash flow are
not measures of financial performance under U.S. generally accepted
accounting principles ("GAAP"). We believe these non-GAAP financial
measures provide meaningful supplemental information regarding our
operating performance and are used by us for budgetary and planning
purposes; when publicly providing our business outlook; as a means to
evaluate period-to-period comparisons; and to compare our performance
to that of our competitors. We also believe that investors also use
our current and projected metrics to monitor the performance of our
business and to make investment decisions.
We believe the exclusion of stock-based compensation expense in our
calculations of SAC, as adjusted, per gross subscriber addition and
customer service and billing expenses, as adjusted, per average
subscriber is useful given the significant variation in expense that
can result from changes in the fair market value of our common stock,
the effect of which is unrelated to the operational conditions that
give rise to variations in the components of our subscriber
acquisition costs and customer service and billing expenses.
Specifically, the exclusion of stock-based compensation expense in
our calculation of SAC, as adjusted, per gross subscriber addition is
critical in being able to understand the economic impact of the
direct costs incurred to acquire a subscriber and the effect over
time as economies of scale are reached.
These non-GAAP financial measures are used in addition to and in
conjunction with results presented in accordance with GAAP. These
non-GAAP financial measures may be susceptible to varying
calculations; may not be comparable to other similarly titled
measures of other companies; and should not be considered in
isolation, as a substitute for, or superior to measures of financial
performance prepared in accordance with GAAP.
(8) We refer to net income (loss) before taxes; other income (expense)
- including interest and investment income, interest expense,
depreciation and amortization, restructuring and related costs and
impairment of goodwill; and stock-based compensation expense as
adjusted income (loss) from operations. Adjusted income (loss) from
operations is not a measure of financial performance under GAAP. We
believe adjusted income (loss) from operations is a useful measure of
our operating performance. We use adjusted income (loss) from
operations for budgetary and planning purposes; to assess the relative
profitability and on-going performance of our consolidated operations;
to compare our performance from period-to-period; and to compare our
performance to that of our competitors. We also believe adjusted
income (loss) from operations is useful to investors to compare our
operating performance to the performance of other communications,
entertainment and media companies. We believe that investors use
current and projected adjusted income (loss) from operations to
estimate our current or prospective enterprise value and to make
investment decisions.
Because we fund and build-out our satellite radio system through the
periodic raising and expenditure of large amounts of capital, our
results of operations reflect significant charges for interest and
depreciation expense. We believe adjusted income (loss) from
operations provides useful information about the operating performance
of our business apart from the costs associated with our capital
structure and physical plant. The exclusion of interest and
depreciation and amortization expense is useful given fluctuations in
interest rates and significant variation in depreciation and
amortization expense that can result from the amount and timing of
capital expenditures and potential variations in estimated useful
lives, all of which can vary widely across different industries or
among companies within the same industry. We believe the exclusion of
taxes is appropriate for comparability purposes as the tax positions
of companies can vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
various jurisdictions in which they operate. We believe the exclusion
of restructuring and related costs and impairment of goodwill is
useful given the one-time nature of these transactions. We also
believe the exclusion of stock-based compensation expense is useful
given the significant variation in expense that can result from
changes in the fair market value of our common stock. To compensate
for the exclusion of taxes, other income (expense), depreciation and
stock-based compensation expense, we separately measure and budget for
these items.
There are material limitations associated with the use of adjusted
income (loss) from operations in evaluating our company compared with
net loss, which reflects overall financial performance, including the
effects of taxes, other income (expense), depreciation and
amortization, restructuring and related costs, impairment of goodwill
and stock-based compensation expense. We use adjusted income (loss)
from operations to supplement GAAP results to provide a more complete
understanding of the factors and trends affecting the business than
GAAP results alone. Investors that wish to compare and evaluate our
operating results after giving effect for these costs, should refer to
net loss as disclosed in our unaudited consolidated statements of
operations. Since adjusted income (loss) from operations is a non-GAAP
financial measure, our calculation of adjusted income (loss) from
operations may be susceptible to varying calculations; may not be
comparable to other similarly titled measures of other companies; and
should not be considered in isolation, as a substitute for, or
superior to measures of financial performance prepared in accordance
with GAAP.
The reconciliation of the pro forma unadjusted Net loss to the pro
forma Adjusted income (loss) from operations is calculated as follows:
Unaudited Pro Forma Unaudited Pro Forma
Three months ended Twelve months ended
December 31, December 31,
(in thousands) 2008 2007 2008 2007
Reconciliation of
Net loss to
Adjusted loss from
operations:
Net loss as
reported $(248,468) $(405,041) $(902,335) $(1,247,633)
Add back Net loss
items excluded
from Adjusted loss
from operations:
Interest and
investment income 90 (6,978) (12,092) (34,654)
Interest expense,
net of amounts
capitalized 71,274 48,703 235,655 186,933
Income tax expense 175 901 3,988 1,496
Loss from
redemption of debt 98,203 728 98,203 3,693
Loss on investments 27,418 3,768 43,517 56,156
Other expense
(income) 5,664 5,834 16,142 9,482
Loss from
operations (45,644) (352,085) (516,922) (1,024,527)
Restructuring and
related costs 2,977 - 10,434 -
Depreciation and
amortization 49,519 75,045 245,571 293,976
Stock-based
compensation 24,945 52,897 124,619 165,099
Adjusted income
(loss) from
operations $31,797 $(224,143) $(136,298) $(565,452)
So for those of us who don't interpret financials like Warren Buffet, does this count as good or bad news?
I think that they did thier best to word around the fact that they only added 85K net subs in the fourth quarter. I am pleased that the stock is moving up a little after hours. So I guess all in all it is good news.
Damn wish XM411.com didnt die. They used to decyfer this stuff like it was their job.
So it's not offically 20 million subs?
At this point I'll take anything.
At least they grew.
I can tell you one thing — "pro forma" usually means nobody really knows what's going on, or the company only tells you what they want you to know, or what they wish waz true.
Silly headline - Loss Widened. The loss widened because this is now SiriusXM combined vs just Sirius losses last year 4Q.
Taken from my posts @ XMFan...
There are a pair of figures in the report that indicate that there wasn't widespread subscriber outrage over the merger programming changes:
The first is self-paying churn, ie the rate of subscribers that liked the service enough to be paying out of their pocket for it that decided not to continue:
Fourth quarter: 1.8% per month
Full-year: 1.8% per month
Now, those figures are rounded to the tenth of a percent. So maybe the rate through October was 1.75% and the rate for the whole fourth quarter was 1.84%. In that case (and given a likely very flat overall self-paying subscriber count), it implies that the November and December self-pay churn rate was roughly 1.89%. Over about 17 million self-pay subs, that works out to an increase in deactivations of 24 thousand a month. Maybe 50k subs cancelled (and how many of those subs were family plan subs?).
Now, of course, SXM offered discounts to those who wanted to cancel. So let's look at average subscriber revenue over both the quarter and the year.
For the quarter, subscriber (subscription plus amortized activation) revenue was $585.534 million, which divided over 18.911 million subscribers on the average day in the quarter was $10.32 a month. For the whole year, the revenue was $2,247.334 million, divided over 18.373 million average subs gives $10.19 a month. For the nine months ending September, the revenue was thus $1,661.800 million, over 18.194 million average subs to give $10.15 a month.
So the retention discounts given weren't even enough to cancel out the improvement in subscription revenue attributable to the Best Of packages.
I concur with SXM, the headline is misleading and is typical of the negative press this company gets on a daily basis.
Compared to the rest of the world, I would say they did VERY WELL - UNDER THE CIRCUMSTANCES!!!
By a long shot!!
I was prepared for a much larger loss, given they were going Bankrupt. You have to be kidding me to say that a loss, of this magnitude, is anything - BUT - outstanding!
Way to go Siri!! You are a beam of HOPE in these very tough times. My hat is off to you!
Please release, or give us a date for, the iPhone app! Tomorrow, the new internet rates apply!!! and the new subs will be great for the bottom line!!! Go Siri Go!
iPhone App!! :)
Caveats about the "pro forma" nature of the data are noted, but one thing I see here is the loss of retail subscribers, particularly in the last three months of 2008. For full-year 2008, there was a loss of 334,000 retail subscribers, with 131,000 of those bailing out in the last three months, of the year. So, over 39 percent of the retail subscribers who left in 2008 did so in the last 25 percent of the year.
Before drawing any conclusions, consider total deactivations, 27 percent of which took place in the year's last quarter, so the fourth quarter is only very slightly over-represented in total deactivations. This would tend to refute an argument that the excessive fourth-quarter loss of retail subscribers was fueled by the economic downturn, since total deactivations increased only slightly during this period.
I believe it's reasonable to conclude from this that channel merging was unpopular with retail subscribers, and the company may have lost 50,000 to 100,000 retail customers as a result of it. Obviously that is a guess, but I arrive at it by considering that the merging of channels took place roughly at the halfway point in fourth-quarter 2008, so if retail subscriber loss had been running steadily for the year up until then, which would be logical, the loss had to accelerate sharply to cause quarter four to be so over-represented in retail subscriber loss.
The loss in OEM subscriptions as a result of channel merging may not be as significant, but it's hard even to guess because of so many confounding variables, such as the soft auto market on one hand and the growing percentage of cars that come with OEM satellite radios on the other.
If you take the lower figure of 50,000 potential channel merger-motivated cancellations, it represents about 0.3 percent of their subscribers, and the company may well consider that acceptable given the cost savings from the elimination of XM programming. So, while I hate to say it, it would seem that management may be right that listeners, as a whole, are okay with the new channel lineup.
I'm with Mike. WTF does that bore fest above mean? I started reading it and noticed that I was fantasizing about smothering the elderly, so I had to stop. Someone please shed some light.
I tried.
Everything is going to work out in the long run. This company is a mess because of horrendous decision making, fiscal irresponsibility, and an economy that is in the crapper. Did I even mention the most corrupt merger delay in history? There is a lot of untapped potential for this technology that current management will never exploit. With the recent blood transfusion - Liberty - I feel that finally some creative minds will not only think outside the box.... but think, period!
Everytime I turn my radio on, I think to myself "Goddamn this thing is cool!" I still think it kicks everybodies ass as a music delivery system, and it hasn't come close to reaching its potential.
I am in for the long hall, no matter what. I believe in satellite radio, and I don't give a shit what anybody else thinks. Dollar for dollar, it's the coolest thing I own, and it never fails to entertain and enthrall me. If only I could meet a chick as dependable and captivating!
THE biggest challenge this company has, in my opinion, is to convince the millions of satellite radio skeptics that it really is a must have product, and that it is, in fact, COOL. I know it is, you know it is, we all know it is (well, most of us - not counting the ubiquitous and innumerable "anonymous").
There is this thing that other companies do when they want you to know that they have a product or a service available and for sale. It's something that has been around for years, but it still works, and from what I hear most companies haven't abandoned the practice because rumor has it that it really helps a lot. Damn,,,. it's on the tip of my tongue! What the hell.... uh...um...oh shit, It just came to me!!!
ADVERTISING! Yeah, thats it. Sirius/XM should relly look into trying it, even though I know they've never heard of it. They have done studies on the subject, and I read in an article that advertising works better than complete silence. Can you believe that?! It's pretty far fetched, but at this point satellite radio might as well give it a shot. They have nothing left to lose. I mean, what do they have to lose; yeah, that's what I meant.
haul - that's - and really. Sleep deprivation, perhaps.
Okay, but just to play the devil's advocate, what do think of the idea that Sirius XM's market is starting to get tapped out? Most analyses I've read seem to say that satellite radio fans are generally, as you said, quite enthusiastic about it, but there's a large group of people who have no interest in it whatsoever.
And this could be a problem with the channel merger. As I said above, I think you can see a definite loss of retail subscribers as a result of that, and although that loss could be considered acceptable, given the cost savings, I think it's also true that retail subscribers are likely to be their most faithful customers. While there are obviously many exceptions, the typical person who goes out and buys a satellite radio is probably more committed to it than the average person who buys a car that just happens to have it.
xcountry,
It would be hard to argue that the market for satellite radio isn't approaching the saturation point - that I will grant you. Despite my enthusiasm, I am all too aware that this is a "niche" product, embraced and adored by some; shunned and detested by many. What accounts for this discrepancy, I have no idea. Actually, I do have a theory; the generation that listened to radio and had an appreciation for it is far removed from the young, hip techies of today, most of whom consider radio to be a fossilized dinosaur. To millions of people, radio, and satellite radio is about as cool as square dancing!
I have to believe, however, that with an injection of heretofore nonexistent creativity and advertising, by somebody who has something resembling a VISION for this technology, satellite radio can undergo a resurgence and be a viable competitor in the marketplace.
Your take on the the guy who "just happens to have it" in his new (or even older) car is rant proof, my good x man. I know several people who bought new cars, with in dash sat radio, and they never even listened to it during the free trial sub period. That is what you call no interest, and these people are a lost cause. No sense trying to woo those so adamantly opposed.
I am by nature a skeptic, and I don't usually get excited by something unless I believe in it. There is no doubt that I need to temper my enthusiasm at times and accept the reality of the situation. I know that many people are convinced that it is game over, and it's time to go home and lick the wounds from the last couple of years of hell. I say this is a good product that had the potential to become a great one, but unfortunate circumstances and gross mismanagement knocked the wind out of its sails. In the hands of some passionate, creative management - who pay attention to the subscribers - I envision a scenario where Sirius/XM rallies, forces overtime, and against all odds pulls it out with a three pointer at the buzzer! I know, it's pretty much a dream, but I have nothing left to lose at this point; my chick left me, my money is gone, my job sucks ass, my family thinks I'm a loser, and this hot chick I hit on the other day told me I was "creepy." I look forward to all the comments telling me I'm an asshole. That should bolster my low self esteem!