Sirius XM Radio Inc. released their financial and operating results today showing that 3Q09 total revenue grew 3 percent from the third quarter last year, while total subscribers decreased by 2 percent year over year.Last year's quarter was the first that both Sirius Satellite Radio and XM Satellite Radio posted results as a combined company.
Pro forma total revenue was $630 million - a 3 percent year-over-year increase from pro forma total revenue of $613 million. Subscription revenue came in at $587 million - also up 3 percent from the same period last year.
Sirius XM also announced a 19 percent decrease in pro forma total cash operating expenses compared to the same quarter last year.
Monthly average revenue per subscriber (ARPU) was $10.87 in the third quarter 2009, up 3% from $10.51 in the third quarter 2008.
Subscriber acquisition costs decreased 17 percent, or $23 million, and SAC per gross addition declined by 7 percent to $69 from $74 in the year ago period.
Sirius XM ended the third quarter 2009 with 18,515,730 total subscribers - a decrease of 2 percent from last year but an increase of 102,295 from the 2Q09 subscribers. Self-pay subscribers were 15,456,748, up 266,160 from last year.
The self-pay monthly customer churn rate was 2.0% in the third quarter, in-line with Q2, and up from a pro forma 1.7% churn rate in the 3Q08. Ending promotional subscribers were 3,058,982 in the third quarter 2009.
Sirius XM also announced a 19 percent decrease in pro forma total cash operating expenses compared to the same quarter last year.
Monthly average revenue per subscriber (ARPU) was $10.87 in the third quarter 2009, up 3% from $10.51 in the third quarter 2008.
Subscriber acquisition costs decreased 17 percent, or $23 million, and SAC per gross addition declined by 7 percent to $69 from $74 in the year ago period.
Sirius XM ended the third quarter 2009 with 18,515,730 total subscribers - a decrease of 2 percent from last year but an increase of 102,295 from the 2Q09 subscribers. Self-pay subscribers were 15,456,748, up 266,160 from last year.
The self-pay monthly customer churn rate was 2.0% in the third quarter, in-line with Q2, and up from a pro forma 1.7% churn rate in the 3Q08. Ending promotional subscribers were 3,058,982 in the third quarter 2009.
Check out the full financials below...
Unaudited
------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2009 2008 2009 2008
---- ---- ---- ----
(Actual) (Pro Forma) (Actual) (Pro Forma)
Beginning subscribers 18,413,435 18,576,830 19,003,856 17,348,622
Gross subscriber
additions 1,606,446 1,843,785 4,325,532 5,997,096
Deactivated
subscribers (1,504,151) (1,499,704) (4,813,658) (4,424,807)
---------- ---------- ---------- ----------
Net additions 102,295 344,081 (488,126) 1,572,289
------- ------- -------- ---------
Ending subscribers 18,515,730 18,920,911 18,515,730 18,920,911
========== ========== ========== ==========
Retail 7,925,904 9,036,420 7,925,904 9,036,420
OEM 10,488,530 9,777,704 10,488,530 9,777,704
Rental 101,296 106,787 101,296 106,787
------- ------- ------- -------
Ending subscribers 18,515,730 18,920,911 18,515,730 18,920,911
========== ========== ========== ==========
Retail (309,972) (149,417) (979,298) (202,295)
OEM 407,131 492,216 492,692 1,744,436
Rental 5,136 1,282 (1,520) 30,148
----- ----- ------ ------
Net additions 102,295 344,081 (488,126) 1,572,289
======= ======= ======== =========
Self-pay 15,456,748 15,190,588 15,456,748 15,190,588
Paid promotional 3,058,982 3,730,323 3,058,982 3,730,323
--------- --------- --------- ---------
Ending subscribers 18,515,730 18,920,911 18,515,730 18,920,911
========== ========== ========== ==========
Self-pay 35,405 361,438 (92,838) 1,317,242
Paid promotional 66,890 (17,357) (395,288) 255,047
------ ------- -------- -------
Net additions 102,295 344,081 (488,126) 1,572,289
======= ======= ======== =========
Daily weighted average
number of subscribers 18,393,678 18,710,940 18,514,041 18,187,927
========== ========== ========== ==========
Unaudited Pro Forma
-----------------------------------------
Three Months Ended Nine Months Ended
(in thousands, except September 30, September 30,
for per subscriber --------------- ----------------
amounts) 2009 2008 2009 2008
---- ---- ---- ----
Average self-pay monthly
churn (1)(7) 2.0% 1.7% 2.1% 1.7%
Conversion rate (2)(7) 46.8% 47.0% 45.3% 49.2%
ARPU (3)(7) $10.87 $10.51 $10.67 $10.53
SAC, as adjusted,
per gross subscriber
addition (4)(7) $69 $74 $63 $76
Customer service and
billing expenses, as
adjusted, per average
subscriber (5)(7) $1.01 $1.05 $1.04 $1.08
Total revenue $629,607 $612,776 $1,842,924 $1,792,632
Free cash flow (6)(7) $26,724 $(97,594) $35,772 $(577,648)
Adjusted income (loss)
from operations (8) $106,140 $(36,851) $347,198 $(168,096)
Net loss $(181,935) $(217,010) $(416,090) $(653,867)
Unaudited Pro Forma
------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ----------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Subscriber revenue,
including effects
of rebates $587,442 $572,355 $1,740,477 $1,669,700
Advertising revenue,
net of agency fees 12,418 17,867 37,287 54,156
Equipment revenue 10,506 12,856 31,343 38,687
Other revenue 19,241 9,698 33,817 30,089
------ ----- ------ ------
Total revenue 629,607 612,776 1,842,924 1,792,632
Operating expenses:
Satellite and
transmission 18,676 25,136 57,077 76,336
Programming
and content 93,230 131,630 277,614 341,422
Revenue share
and royalties 123,531 120,800 362,463 355,251
Customer service
and billing 55,795 58,857 173,517 177,159
Cost of equipment 11,944 16,179 27,988 48,020
Sales and marketing 52,827 78,178 152,039 260,583
Subscriber
acquisition costs 109,384 132,477 274,082 444,396
General and
administrative 48,481 75,981 142,812 215,440
Engineering, design
and development 9,599 10,389 28,134 42,121
Depreciation and
amortization 47,997 64,111 145,596 196,051
Share-based
payment expense 18,799 29,809 71,301 99,673
Restructuring,
impairments and
related costs 2,554 7,430 30,167 7,457
----- ----- ------ -----
Total operating expenses 592,817 750,977 1,742,790 2,263,909
------- ------- --------- ---------
Income (loss) from
operations 36,790 (138,201) 100,134 (471,277)
Other expense (217,610) (77,086) (512,880) (178,777)
-------- ------- -------- --------
Loss before income taxes (180,820) (215,287) (412,746) (650,054)
Income tax expense (1,115) (1,723) (3,344) (3,813)
------ ------ ------ ------
Net loss $(181,935) $(217,010) $(416,090) $(653,867)
========= ========= ========= =========
Unaudited Actual
-------------------------------------------
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
(in thousands, except ----------------- -----------------
per share data) 2009 2008 2009 2008
---- ---- ---- ----
Revenue:
Subscriber revenue,
including effects of
rebates $578,304 $458,237 $1,699,455 $980,396
Advertising revenue,
net of agency fees 12,418 14,674 37,287 31,413
Equipment revenue 10,506 11,271 31,343 25,290
Other revenue 17,428 4,261 28,379 4,710
------ ----- ------ -----
Total revenue 618,656 488,443 1,796,464 1,041,809
Operating expenses
(depreciation and
amortization shown
separately below) (1):
Cost of services:
Satellite and
transmission 19,542 19,526 59,435 34,800
Programming
and content 78,315 106,037 230,825 222,975
Revenue share
and royalties 100,558 85,592 296,855 177,635
Customer service
and billing 56,529 47,432 175,570 97,218
Cost of equipment 11,944 13,773 27,988 28,007
Sales and marketing 52,530 63,637 152,647 151,237
Subscriber acquisition
costs 90,054 86,616 230,773 257,832
General and
administrative 56,923 57,310 182,953 148,555
Engineering, design
and development 11,252 10,434 32,975 28,091
Impairment of goodwill - 4,750,859 - 4,750,859
Depreciation and
amortization 72,100 66,774 231,624 120,793
Restructuring,
impairments and
related costs 2,554 7,430 30,167 7,457
----- ----- ------ -----
Total operating expenses 552,301 5,315,420 1,651,812 6,025,459
------- --------- --------- ---------
Income (loss) from
operations 66,355 (4,826,977) 144,652 (4,983,650)
Other income (expense):
Interest and
investment income 962 4,940 2,602 9,167
Interest expense, net
of amounts
capitalized (78,527) (49,216) (240,062) (83,636)
Loss on extinguishment
of debt and credit
facilities, net (138,053) - (263,767) -
(Loss) gain on
investments (58) (3,089) 457 (3,089)
Other income (expense) 1,246 (3,870) 2,505 (3,935)
----- ------ ----- ------
Total other expense (214,430) (51,235) (498,265) (81,493)
-------- ------- -------- -------
Loss before
income taxes (148,075) (4,878,212) (353,613) (5,065,143)
Income tax expense (1,115) (1,215) (3,344) (2,301)
-------- ---------- -------- ----------
Net loss (149,190) (4,879,427) (356,957) (5,067,444)
Preferred stock
beneficial conversion
feature - - (186,188) -
--- --- -------- ---
Net loss
attributable
to common
stockholders $(149,190) $(4,879,427) $(543,145) $(5,067,444)
========= =========== ========= ===========
Net loss per common share
(basic and diluted) $(0.04) $(1.93) $(0.15) $(2.76)
====== ====== ====== ======
Weighted average common
shares outstanding
(basic and diluted) 3,621,062 2,527,692 3,577,587 1,836,834
========= ========= ========= =========
-------------------------
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and transmission $1,086 $1,331 $3,020 $2,887
Programming and content 3,037 3,529 7,418 7,477
Customer service and
billing 734 596 2,052 1,137
Sales and marketing 2,722 3,672 10,081 11,376
Subscriber acquisition
costs - - - 14
General and administrative 8,442 12,904 40,141 36,359
Engineering, design and
development 1,653 1,973 4,841 4,167
----- ----- ----- -----
Total share-based payment
expense $17,674 $24,005 $67,553 $63,417
======= ======= ======= =======
September December
30, 2009 31, 2008
(in thousands, except share and -------- ---------
per share data) (Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $380,372 $380,446
Accounts receivable, net of allowance for
doubtful accounts of $9,872 and $10,860,
respectively 87,148 102,024
Receivables from distributors 41,755 45,950
Inventory, net 20,996 24,462
Prepaid expenses 107,350 67,203
Related party current assets 109,172 114,177
Other current assets 64,317 58,744
------ ------
Total current assets 811,110 793,006
Property and equipment, net 1,694,235 1,703,476
FCC licenses 2,083,654 2,083,654
Restricted investments 3,400 141,250
Deferred financing fees, net 35,889 40,156
Intangible assets, net 629,288 688,671
Goodwill 1,834,856 1,834,856
Related party long-term assets 114,073 124,607
Other long-term assets 62,438 81,019
------ ------
Total assets $7,268,943 $7,490,695
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses $521,621 $642,820
Accrued interest 65,537 76,463
Current portion of deferred revenue 987,177 985,180
Current portion of deferred credit
on executory contracts 247,566 234,774
Current maturities of long-term debt 103,674 399,726
Related party current liabilities 90,869 68,373
------ ------
Total current liabilities 2,016,444 2,407,336
Deferred revenue 285,488 247,889
Deferred credit on executory contracts 851,955 1,037,190
Long-term debt 2,874,391 2,851,740
Long-term related party debt 265,659 -
Deferred tax liability 906,428 894,453
Related party long-term liabilities 21,928 -
Other long-term liabilities 39,005 43,550
------ ------
Total liabilities 7,261,298 7,482,158
--------- ---------
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value $0.001;
50,000,000 authorized at September 30,
2009 and December 31, 2008:
Series A convertible preferred stock
(liquidation preference of $51,370
at September 30, 2009 and December
31, 2008); 24,808,959 shares issued
and outstanding at September 30, 2009
and December 31, 2008 25 25
Convertible perpetual preferred stock,
series B (liquidation preference of
$13 and $0 at September 30, 2009 and
December 31, 2008, respectively);
12,500,000 and zero shares issued
and outstanding at September 30, 2009
and December 31, 2008, respectively 13 -
Convertible preferred stock, series C
junior; no shares issued and outstanding
at September 30, 2009 and
December 31, 2008 - -
Common stock, par value $0.001; 9,000,000,000
and 8,000,000,000 shares authorized at
September 30, 2009 and December 31, 2008,
respectively; 3,858,186,839 and
3,651,765,837 shares issued and
outstanding at September 30, 2009 and
December 31, 2008, respectively 3,858 3,652
Accumulated other comprehensive
loss, net of tax (6,598) (7,871)
Additional paid-in capital 10,265,752 9,724,991
Accumulated deficit (10,255,405) (9,712,260)
----------- ----------
Total stockholders' equity 7,645 8,537
----- -----
Total liabilities and
stockholders' equity $7,268,943 $7,490,695
========== ==========
Unaudited For the Nine Months
Ended September 30,
-------------------
(in thousands) 2009 2008
---- ----
Cash flows from operating activities:
Net loss $(356,957) $(5,067,444)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 231,624 114,923
Impairment of goodwill - 4,750,859
Non-cash interest expense,
net of amortization of premium 32,909 (1,933)
Provision for doubtful accounts 23,879 11,125
Amortization of deferred income
related to equity method investment (2,082) (471)
Loss on extinguishment of
debt and credit facilities, net 263,767 -
Restructuring, impairments and
related costs 26,954 -
Loss on disposal of assets - 4,879
Loss on investments 10,967 3,089
Share-based payment expense 67,553 63,417
Deferred income taxes 3,344 2,301
Other non-cash purchase
price adjustments (142,487) (23,770)
Other - 1,643
Changes in operating assets
and liabilities:
Accounts receivable (9,002) 1,575
Inventory 3,466 2,952
Receivables from distributors 4,195 9,595
Related party assets 15,539 (1,357)
Prepaid expenses and other
current assets 30,188 3,528
Other long-term assets 64,034 37,110
Accounts payable and accrued expenses (68,135) (122,969)
Accrued interest (6,600) (2,810)
Deferred revenue 11,569 (4,577)
Related party liabilities 44,424 3,315
Other long-term liabilities 3,958 (1,972)
----- ------
Net cash provided by (used in)
operating activities 253,107 (216,992)
------- --------
Cash flows from investing activities:
Additions to property and equipment (217,335) (102,705)
Sales of property and equipment - 105
Purchases of restricted and
other investments - (3,000)
Acquisition of acquired entity cash - 819,521
Merger related costs - (13,047)
Sale of restricted and other investments - 65,642
--- ------
Net cash (used in) provided by
investing activities (217,335) 766,516
-------- -------
Cash flows from financing activities:
Proceeds from exercise of warrants
and stock options - 471
Preferred stock issuance costs, net (3,712) -
Long-term borrowings, net 579,936 533,941
Related party long-term borrowings, net 364,964 -
Short-term financings 2,220 -
Payment of premiums on redemption of debt (17,075) (18,693)
Payments to minority interest holder - (61,880)
Repayment of long-term borrowings (610,932) (1,082,428)
Repayment of related party long-term
borrowings (351,247) -
Other - (98)
--- ---
Net cash used in
financing activities (35,846) (628,687)
------- --------
Net decrease in cash and cash equivalents (74) (79,163)
Cash and cash equivalents at beginning of period 380,446 438,820
------- -------
Cash and cash equivalents at end of period $380,372 $359,657
======== ========
FOOTNOTES TO PRESS RELEASE AND TABLES FOR NON-GAAP FINANCIAL MEASURES
(1) Average self-pay monthly churn represents the monthly average of
self-pay deactivations by the quarter divided by the average self-pay
subscriber balance for the quarter.
(2) We measure the percentage of subscribers that receive our 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 number of months in the period,
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
----------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Subscriber revenue $587,442 $572,355 $1,740,477 $1,669,700
Net advertising revenue 12,418 17,867 37,287 54,156
------ ------ ------ ------
Total subscriber and net
advertising revenue $599,860 $590,222 $1,777,764 $1,723,856
======== ======== ========== ==========
Daily weighted average
number of subscribers 18,393,678 18,710,940 18,514,041 18,187,927
ARPU $10.87 $10.51 $10.67 $10.53
(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 share-based payment expense 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
--------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
2009 2008 2009 2008
---- ---- ---- ----
Subscriber acquisition cost $109,384 $132,477 $274,082 $444,410
Less: share-based payment
expense granted to third
parties and employees - - - (14)
Less/Add: margin from direct
sales of radios and
accessories 1,438 3,323 (3,355) 9,333
----- ----- ------ -----
SAC, as adjusted $110,822 $135,800 $270,727 $453,729
======== ======== ======== ========
Gross subscriber additions 1,606,446 1,843,785 4,325,532 5,997,096
SAC, as adjusted, per gross
subscriber addition $69 $74 $63 $76
(5) Customer service and billing expenses, as adjusted, per average
subscriber is derived from total customer service and billing
expenses, excluding share-based payment expense, divided by the
number of months in the period, 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
------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
---------------- ----------------
2009 2008 2009 2008
---- ---- ---- ----
Customer service and
billing expenses $56,644 $59,786 $175,928 $180,270
Less: share-based
payment expense (849) (929) (2,411) (3,111)
---- ---- ------ ------
Customer service and
billing expenses, as
adjusted $55,795 $58,857 $173,517 $177,159
======= ======= ======== ========
Daily weighted
average number of
subscribers 18,393,678 18,710,940 18,514,041 18,187,927
Customer service and
billing expenses, as
adjusted, per average
subscriber $1.01 $1.05 $1.04 $1.08
(6) Free cash flow is calculated as follows:
Unaudited Pro Forma
--------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----
Net cash provided by
(used in) operating
activities $116,248 $(101,983) $253,107 $(468,078)
Additions to property and
equipment (89,524) (32,403) (217,335) (133,548)
Merger related costs - 1,796 - (13,047)
Restricted and other
investment activity - 34,996 - 37,025
--- ------ --- ------
Free cash flow $26,724 $(97,594) $35,772 $(577,648)
======= ======== ======= =========
(7) Average self-pay monthly 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 share-based payment 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 share-based payment 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 loss before interest and investment income, interest
expense net of amounts capitalized, income tax expense, loss from
redemption of debt, loss on investments, other expense (income),
restructuring and related cost, depreciation and amortization, and
share related payment expense as adjusted income (loss) from
operations. Adjusted income (loss) from operations is not a measure
of financial performance under U.S. 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 is useful given the non-recurring
nature of these transactions. We also believe the exclusion of share-
based payment 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 amortization and share-based payment
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, and share-based
payment 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 condensed 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
(see footnotes for reconciliation of the pro forma amounts to their
respective GAAP amounts):
Unaudited Pro Forma
--------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------- ---------------
(in thousands) 2009 2008 2009 2008
---- ---- ---- ----
Reconciliation of Net loss to
Adjusted income (loss) from
operations:
Net loss $(181,935) $(217,010) $(416,090) $(653,867)
Add back Net loss items
excluded from Adjusted
income (loss) from
operations:
Interest and investment
income (962) (5,534) (2,602) (12,180)
Interest expense, net
of amounts capitalized 81,707 70,153 254,677 164,380
Income tax expense 1,115 1,723 3,344 3,813
Loss on extinguishment
of debt and
facilities, net 138,053 - 263,767 -
Loss (gain) on investments 58 7,549 (457) 16,099
Other (income) expense (1,246) 4,918 (2,505) 10,478
------ ----- ------ ------
Income (loss)
from operations 36,790 (138,201) 100,134 (471,277)
Restructuring, impairments
and related costs 2,554 7,430 30,167 7,457
Depreciation and
amortization 47,997 64,111 145,596 196,051
Share-based payment expense 18,799 29,809 71,301 99,673
------ ------ ------ ------
Adjusted income (loss)
from operations $106,140 $(36,851) $347,198 $(168,096)
======== ======== ======== =========
There are material limitations associated with the use of a pro forma
unadjusted results of operations in evaluating our company compared
with our GAAP results of operations, which reflects overall financial
performance. We use pro forma unadjusted results of 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 results
of operations as disclosed in our unaudited condensed consolidated
statements of operations. Since pro forma unadjusted results of
operations is a non-GAAP financial measure, our 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.
(9) The following tables reconcile our GAAP results of operations to our
non-GAAP pro forma unadjusted results of operations (in thousands):
Unaudited For the Three Months Ended
September 30, 2009
-----------------------------------------
Allocation
of
Purchase Share-
Price based
As Accounting Payment Pro
Reported Adjustments Expense Forma
-------- ----------- -------- -----
Revenue:
Subscriber revenue,
including effects of
rebates $578,304 $9,138 $- $587,442
Advertising revenue,
net of agency fees 12,418 - - 12,418
Equipment revenue 10,506 - - 10,506
Other revenue 17,428 1,813 - 19,241
------ ----- --- ------
Total revenue 618,656 10,951 - 629,607
Operating expenses
(excludes depreciation
and amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 19,542 331 (1,197) 18,676
Programming
and content 78,315 18,117 (3,202) 93,230
Revenue share
and royalties 100,558 22,973 - 123,531
Customer service and
billing 56,529 115 (849) 55,795
Cost of equipment 11,944 - - 11,944
Sales and marketing 52,530 3,155 (2,858) 52,827
Subscriber acquisition
costs 90,054 19,330 - 109,384
General and administrative 56,923 374 (8,816) 48,481
Engineering, design and
development 11,252 224 (1,877) 9,599
Depreciation and
amortization 72,100 (24,103) - 47,997
Share-based payment expense - - 18,799 18,799
Restructuring, impairments
and related costs 2,554 - - 2,554
----- --- --- -----
Total operating expenses 552,301 40,516 - 592,817
------- ------ --- -------
Income (loss) from
operations 66,355 (29,565) - 36,790
Other income (expense)
Interest and investment
income 962 - - 962
Interest expense, net
of amounts capitalized (78,527) (3,180) - (81,707)
Loss on extinguishment of
debt and facilities, net (138,053) - - (138,053)
Loss on investments (58) - - (58)
Other income 1,246 - - 1,246
----- --- --- -----
Total other expense (214,430) (3,180) - (217,610)
-------- ------ --- --------
Loss before income taxes (148,075) (32,745) - (180,820)
Income tax expense (1,115) - - (1,115)
------ --- --- ------
Net loss $(149,190) $(32,745) $- $(181,935)
========= ======== === =========
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and transmission $1,086 $111 $- $1,197
Programming and content 3,037 165 - 3,202
Customer service and billing 734 115 - 849
Sales and marketing 2,722 136 - 2,858
Subscriber acquisition costs - - - -
General and administrative 8,442 374 - 8,816
Engineering, design and
development 1,653 224 - 1,877
----- --- --- -----
Total share-based payment
expense $17,674 $1,125 $- $18,799
======= ====== === =======
Unaudited For the Three Months Ended
September 30, 2008
------------------------------------------------
Purchase Allocation
Price of
Predecessor Accounting Share-
Financial Adjust- based
As Inform- ments Payment Pro
Reported ation (a) Expense Forma
-------- ----- ----- ------- -----
Revenue:
Subscriber revenue,
including effects
of rebates $458,237 $95,684 $18,434 $- $572,355
Advertising
revenue, net of
agency fees 14,674 3,193 - - 17,867
Equipment revenue 11,271 1,585 - - 12,856
Other revenue 4,261 4,242 1,195 - 9,698
----- ----- ----- --- -----
Total revenue 488,443 104,704 19,629 - 612,776
Operating expenses
(excludes depreciation
and amortization
shown separately
below) (1)
Cost of services:
Satellite and
transmission 19,526 6,644 638 (1,672) 25,136
Programming
and content 106,037 15,991 13,912 (4,310) 131,630
Revenue share
and royalties 85,592 24,198 11,010 - 120,800
Customer
service and
billing 47,432 12,249 105 (929) 58,857
Cost of
equipment 13,773 2,406 - - 16,179
Sales and marketing 63,637 17,268 2,081 (4,808) 78,178
Subscriber
acquisition costs 86,616 33,366 12,495 - 132,477
General and
administrative 57,310 33,209 777 (15,315) 75,981
Engineering,
design and
development 10,434 2,611 119 (2,775) 10,389
Impairment
of goodwill 4,750,859 - (4,750,859) - -
Depreciation and
amortization 66,774 10,828 (13,491) - 64,111
Restructuring,
impairments and
related costs 7,430 - - - 7,430
Share-based
payment expense - - - 29,809 29,809
--- --- --- ------ ------
Total operating
expenses 5,315,420 158,770 (4,723,213) - 750,977
--------- ------- ---------- --- -------
Loss from
operations (4,826,977) (54,066) 4,742,842 - (138,201)
Other income (expense)
Interest and
investment
income 4,940 594 - - 5,534
Interest expense,
net of amounts
capitalized (49,216) (14,130) (6,807) - (70,153)
Loss on
extinguishment of
debt and
facilities, net - - - - -
Loss on investments (3,089) (4,460) - - (7,549)
Other expense (3,870) (1,048) - - (4,918)
------ ------ --- --- ------
Total other expense (51,235) (19,044) (6,807) - (77,086)
------- ------- ------ --- -------
Loss before
income taxes (4,878,212) (73,110) 4,736,035 - (215,287)
Income tax
expense (1,215) (508) - - (1,723)
------ ---- --- --- ------
Net loss $(4,879,427) $(73,618) $4,736,035 $- $(217,010)
=========== ======== ========== === =========
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and
transmission $1,331 $305 $36 $- $1,672
Programming and content 3,529 586 195 - 4,310
Customer service and
billing 596 228 105 - 929
Sales and marketing 3,672 770 366 - 4,808
Subscriber acquisition
costs - - - - -
General and
administrative 12,904 1,634 777 - 15,315
Engineering, design and
development 1,973 510 292 - 2,775
----- --- --- --- -----
Total share-based
payment expense $24,005 $4,033 $1,771 $- $29,809
======= ====== ====== === =======
------------------------------
(a) Includes impairment of goodwill.
Unaudited For the Nine Months Ended
September 30, 2009
----------------------------------------
Allocation
of
Purchase Share-
Price based
As Accounting Payment Pro
Reported Adjustments Expense Forma
-------- ----------- ------- -----
Revenue:
Subscriber revenue,
including effects of
rebates $1,699,455 $41,022 $- $1,740,477
Advertising revenue,
net of agency fees 37,287 - - 37,287
Equipment revenue 31,343 - - 31,343
Other revenue 28,379 5,438 - 33,817
------ ----- --- ------
Total revenue 1,796,464 46,460 - 1,842,924
Operating expenses (excludes
depreciation and
amortization shown
separately below) (1)
Cost of services:
Satellite and
transmission 59,435 1,013 (3,371) 57,077
Programming and
content 230,825 54,708 (7,919) 277,614
Revenue share and
royalties 296,855 65,608 - 362,463
Customer service and
billing 175,570 358 (2,411) 173,517
Cost of equipment 27,988 - - 27,988
Sales and marketing 152,647 9,986 (10,594) 152,039
Subscriber acquisition
costs 230,773 43,309 - 274,082
General and administrative 182,953 1,252 (41,393) 142,812
Engineering, design and
development 32,975 772 (5,613) 28,134
Depreciation and
amortization 231,624 (86,028) - 145,596
Share-based payment
expense - - 71,301 71,301
Restructuring, impairments
and related costs 30,167 - - 30,167
------ --- --- ------
Total operating expenses 1,651,812 90,978 - 1,742,790
--------- ------ --- ---------
Income (loss) from
operations 144,652 (44,518) - 100,134
Other income (expense)
Interest and
investment income 2,602 - - 2,602
Interest expense, net
of amounts capitalized (240,062) (14,615) - (254,677)
Loss on extinguishment of
debt and facilities, net (263,767) - - (263,767)
Gain on investments 457 - - 457
Other income 2,505 - - 2,505
----- --- --- -----
Total other expense (498,265) (14,615) - (512,880)
-------- ------- --- --------
Loss before income taxes (353,613) (59,133) - (412,746)
Income tax expense (3,344) - - (3,344)
------ --- --- ------
Net loss $(356,957) $(59,133) $- $(416,090)
========= ======== === =========
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and transmission $3,020 $351 $- $3,371
Programming and content 7,418 501 - 7,919
Customer service and billing 2,052 359 - 2,411
Sales and marketing 10,081 513 - 10,594
Subscriber acquisition costs - - - -
General and administrative 40,141 1,252 - 41,393
Engineering, design and
development 4,841 772 - 5,613
----- --- --- -----
Total share-based
payment expense $67,553 $3,748 $- $71,301
======= ====== === =======
Unaudited For the Nine Months Ended
September 30, 2008
---------------------------------------------------
Purchase Allocation
Price of
Predecessor Accounting Share-
Financial Adjust- based
As Inform- ments Payment Pro
Reported ation (a) Expense Forma
-------- ----- ----- ------- -----
Revenue:
Subscriber
revenue,
including
effects of
rebates $980,396 $670,870 $18,434 $- $1,669,700
Advertising
revenue,
net of
agency fees 31,413 22,743 - - 54,156
Equipment revenue 25,290 13,397 - - 38,687
Other revenue 4,710 24,184 1,195 - 30,089
----- ------ ----- --- ------
Total revenue 1,041,809 731,194 19,629 - 1,792,632
Operating expenses
(excludes
depreciation and
amortization
shown separately
below) (1)
Cost of services:
Satellite and
transmission 34,800 46,566 638 (5,668) 76,336
Programming
and content 222,975 117,156 13,912 (12,621) 341,422
Revenue
share and
royalties 177,635 166,606 11,010 - 355,251
Customer
service and
billing 97,218 82,947 105 (3,111) 177,159
Cost of
equipment 28,007 20,013 - - 48,020
Sales and
marketing 151,237 126,054 2,081 (18,789) 260,583
Subscriber
acquisition
costs 257,832 174,083 12,495 (14) 444,396
General and
administrative 148,555 116,444 777 (50,336) 215,440
Engineering,
design and
development 28,091 23,045 119 (9,134) 42,121
Impairment
of goodwill 4,750,859 - (4,750,859) - -
Depreciation and
amortization 120,793 88,749 (13,491) - 196,051
Restructuring,
impairments and
related costs 7,457 - - - 7,457
Share-based
payment expense - - - 99,673 99,673
--- --- --- ------ ------
Total operating
expenses 6,025,459 961,663 (4,723,213) - 2,263,909
--------- ------- ---------- --- ---------
Loss from
operations (4,983,650) (230,469) 4,742,842 - (471,277)
Other income
(expense)
Interest and
investment
income 9,167 3,013 - - 12,180
Interest
expense, net
of amounts
capitalized (83,636) (73,937) (6,807) - (164,380)
Loss on
extinguishment
of debt and
facilities, net - - - - -
Loss on
investments (3,089) (13,010) - - (16,099)
Other expense (3,935) (6,543) - - (10,478)
------ ------ --- --- -------
Total other expense (81,493) (90,477) (6,807) - (178,777)
------- ------- ------ --- --------
Loss before
income taxes (5,065,143) (320,946) 4,736,035 - (650,054)
Income tax
expense (2,301) (1,512) - - (3,813)
------ ------ --- --- ------
Net loss $(5,067,444) $(322,458) $4,736,035 $- $(653,867)
=========== ========= ========== === =========
(1) Amounts related to share-based payment expense included in operating
expenses were as follows:
Satellite and
transmission $2,887 $2,745 $36 $- $5,668
Programming
and content 7,477 4,949 195 - 12,621
Customer service and
billing 1,137 1,869 105 - 3,111
Sales and marketing 11,376 7,047 366 - 18,789
Subscriber acquisition
costs 14 - - - 14
General and
administrative 36,359 13,200 777 - 50,336
Engineering, design
and development 4,167 4,675 292 - 9,134
----- ----- --- --- -----
Total share-based
payment expense $63,417 $34,485 $1,771 $- $99,673
======= ======= ====== === =======
------------------------------
(a) Includes impairment of goodwill.
(10) The following table reconciles our GAAP Net loss per common share
(basic and diluted) to our non-GAAP Net loss per common share (basic
and diluted) excluding the following charges: (a) preferred stock
beneficial conversion feature, (b) loss on extinguishment of debt and
credit facilities, net, and (c) loss on impairment of goodwill.
Unaudited
-----------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
(per share data includes ------------------ -----------------
basic and diluted) 2009 2008 2009 2008
---- ---- ---- ----
Net loss per common share $(0.04) $(1.93) $(0.15) $(2.76)
Less: Preferred stock
beneficial conversion feature - - (0.05) -
--- --- ----- ---
Net loss per common share
excluding preferred stock
beneficial conversion
feature (0.04) (1.93) (0.10) (2.76)
Less: Loss on extinguishment
of debt and credit
facilities, net (0.04) - (0.07) -
----- --- ----- ---
Net loss per common share
excluding loss on
extinguishment of debt
and credit facilities,
net and preferred stock
beneficial conversion
feature (0.00) (1.93) (0.03) (2.76)
Less: Impairment of goodwill - (1.88) - (2.59)
--- ----- --- -----
Net loss per common share,
excluding charges $(0.00) $(0.05) $(0.03) $(0.17)
====== ====== ====== ======
(
Still losing subs , I love it !
Not a big surprise. Looks like they lost a million retail subs, but made some gains with 500k+ in OEM. Guess folks who are disgruntled by the PaidFM format we are now getting are putting their money where their mouth is and ditching the service. Can't say as I blame them. I have deactivated a couple and only have 2 left. Once O&A are gone, I am going to unlaod those two units and switchover to Slacker on my Blackberry instead. Price increases (which we were promised wouldn't happen) plus cuts in services (lost my XM Radio Online) and terrible format changes and hack DJs and Intern Morning Zoos = Unhappy customers who are leaving.
This is fairly good news -- they've stanched the quarter-by-quarter bleeding, at least for the time being, and were able to eek out a gain of a little over 100,000 subscribers. But, these figures reaffirm that real growth is going to require a different approach. We're into the second year of forcing 'the Sirius way' on all satellite radio listeners, and the results have ranged from a hemorrhage of subscribers (earlier this year) to stagnation (now). If they were making money, stagnation in this type of economy would not be all bad, but when you're losing money, if you settle for stagnation, it's suicide on the installment plan.
I continue to believe that a more innovative, listener-centered approach is the only thing that will make satellite radio begin to experience meaningful growth. What they're asking us to pay for is, by and large, the same type of programming that's drained the life and profitability out of terrestrial radio.
In plain and simple language, xcountry is absolutely correct.
You are right - but hell might freeze over before we ever see any inovation or empathy for the listeners. On this front, I get the feeling that Mel Karmazen is clueless; all of us abandoned terrestrial because we wanted something better.... something unique. It has been painful watching satellite radio inexorably continue to mimic AM/FM, as well as other undistinguished competitors.
Sometimes you can kill yourself looking for an answer, or the solution to a problem; often the solution is so obvious that it is human nature to not recognize how overtly evident it is - or should be. As you suggest, the only thing that will propel interest, growth, and genuine passion for the service is for them to come to the realization that they are just spinning their wheels, resolve to modify their philosophy and attitude towards the listeners, and then make a real commitment to differentiate and seperate themselves from all of the competition. If they were to do this, I don't think there would be any competition; people WILL PAY for better content, and a peerless/unparalleled listening experience. In other words - make radio an intimate, personal, organic and completely natural and intrinsic phenomenon that is so compelling that it is irresistible. Where we stand today, that sounds like a pipe dream - but it is certainly attainable if they would vary their approach, use some innovation, and last but not least - exercise some COMMOM SENSE! You and I and a lot of others know that this is the answer, and we know that it is imperitive that they give us world class programming AND world class subscriber ATTENTION.
If Sirius/XM continues to give us payFM, and they continue to ignore the subscribers feelings, then it is only a matter of time before they go out of business. The solution is right in front of them; all they have to do is open their eyes... and their minds!!!
"You are right - but hell might freeze over before we ever see any inovation or empathy for the listeners."
I would say that as is, it is only minimally innovative, but can you consider that a bad thing when you have 18.5 Million paying subscribers? SOMETHING appeals to 18.5M.
That the news is this 'good' given the recession and how bad a beating your average company has taken, is heartening.
BTW, you innovate and try to attract new customers when you are squarely headed out of a recession and people begin to have more $$ to spend. I do hope though that Mel % Co are spending this recession considering possible 'moves' as we come out of it.
Steve, you preaching to the choir here.
It's amazing that Sirius management reads this board daily and still doesn't "get it" even though we know their subscribers have been complaining about the current state of programming for a long time.
Keep the Gospel going.
As long as you and xcountry continue to keep it real, and not settle for the crap that this company is offering us, I will keep posting my point of view. Improved programming and some attention towards the subscribers would go a long way towards restoring this companies fiscal health - and the unfavorable perception so many people have for satellite radio.
I understand that while this issue has not come yet, but still: I am interested in your forecast for Q4?
I understand that while this issue has not come yet, but still: I am interested in your forecast for Q4?
I totally understand that they have had to withstand unprecedented adversity; the merger debacle, the recession, the collapse of the auto industry, the criminal collusion of the media, wall street and payed for and bought politicians.... and I do agree with you that it is a minor miracle that they are still standing after all of this. Much, if not all of this was out of their control. However, I feel that they could have been doing a better job at managing certain dynamics that are in their control - and that dropping the ball in these areas has tarnished the company. Some of the post merger programming changes absolutely infuriated a portion of the subscribers. I question how much thought, if any, went into the decision of what channels to eliminate. The FMinization of certain channels - initiating potty mouthed interns and "morning zoo" formats - only alienates more subscribers. You can get that crap for free on terrestrial and other places. I certainly am appalled at this development; it's one of the biggest reasons why I, and I'm sure many other people left the travesty of terrestrial radio. Granted, I am older than the demographic that gets off on giggling assholes, celebrity gossip, and lewd/suggestive sexual innuendo... but I do know that the core listenership of satellite radio is a bit more sophisticated and clever enough to realize that trying to appeal to the lowest common denominator is not only an insult, but an affront to the sensibilities of any true satellite radio fan. I also agree with you that their hands have been somewhat tied regarding innovation and attracting new customers - but they weren't bound, gagged and handcuffed and being suspended over the edge of a roof! At the very least they could have developed store displays that draw attention, printed some T-shirts and bumper stickers, activated some of the 40 million dead radios that are virtual mobile billboards going to waste. I say activate every dead radio for a month, and let millions of people get a taste of the service. I was hooked in about 30 seconds after I hooked up my plug and play. You can't catch the fish unless you gangle the lure in front of its face! Perhaps some kiosks in certain prime shopping malls. I'm not talking about a huge ad campaign - just more than doing nothing. It's a freaking miracle that they have 18.5 million subs. Just think how many they might have if the 94% of the population that doesn't have it and knows virtually nothing about it was INTRODUCED to it and was EDUCATED about it. Don't get me wrong - I realize that when you are worried about putting food on the table and paying the bills, satellite radio is hardly most peoples top priority. Hopefully things are getting better; I'm getting a little sick of eating peanut butter and jelly sandwiches all the time, I must tell you. I think the time for Sirius/XM to make a move is now - if they wait any longer the rest of the world will make a move; right past satellite radio to the next cool, groovy thing. People don't have a long attention span these days - you have to strike while the coals are hot. It's time for Sirius/XM to begin fanning the flames, if for no other reason than to see if they can light a fire under their own asses!
Now don't start laughing, all you Morning Zoo comedy geniuses, but what I meant was dangle - not gangle. I know you immature douche bags think thats a knee slapper, but.... oh, what the hell.... go ahead and giggle, like the bunch of drunk little 9th graders that you approximate.
I am so sick of hearing about the "sirius way". I am a subscriber to both services and have been so since the start, everything I liked about both services is gone. How is it that a grown man cant hear that this is a new company? When this merge shit took place, many of us were pushing for mass cancelations to have our voices be heard, instead we sat back and proved mel and companies money saving theories to be correct. This company assumes most people are either listening to a talk show or people need to hear a familiar song when they are in the car, which is fm radio 101. Yet as much as we complain, we are proving them to be right by continually keeping the service. I am personally cancelling all of my radios next friday, three of them are lifetime subs, I have always said that they have a year to show me that they respect me as a subscriber and a listener, they have not, in fact, the service is a complete disaster. Mel is being rewarded and praised for his genius decisions. I will no longer take part in this, financially or mentally. This company cut jobs and many talented people are out of work, the very talent that helped build sirius and xm into what it once was.
"EVERYTHING WORTH LISTENING TO IS NOW ON SIRIUSXM"
FUCK SIRIUSXM!!
http://archives.chicagotribune.com/2009/jul/05/business/chi-sun-phil-rosenthal-0705jul05
http://www.orbitcast.com/archives/scott-greenstein-reups-with-sirius-xm.html
I am one of those subcribers Sirius XM recently lost. If you like news, sports and talk, satellite radio is the ultimate thing to have. But if you are a music junkie like me, satellite radio is awful. I didn't even consider cancelling a year ago, that was when the music was excellent and was broadcast in stereo and surround sound. Then they dumbed down the music, started broadcasting in mono and jacked up the price. Now, FM radio is superior with more variety, deeper playlists, better sound quality and it's free. Mel and his boys will need to drasticly improve the music channels to get me back.
The merged company provides a product that is closer to what Sirius provided than what XM did, and evidence of this can be seen both directly and indirectly -- a large number of XM channels (such as X Country) were replaced with materially different Sirius channels, and the programming of these channels was not, in most cases, merged at all. That's why I say 'the Sirius way."
Also, I urge you to reconsider your decision to cancel lifetime subscriptions. Why cut off your nose to spite your face? I am at one subscription, down from four, and I believe that makes a statement to the company. In my view, the product being provided has some value, and I'm willing to pay $15 bucks to keep my foot in the door. That is, after all, only as much money as one TV premium channel, and when I used to have those, I'd sometimes go weeks or months without turning them on even once. Sirius XM, on the other hand, I do listen to several times a week, albeit less frequently than I once did.
I believe profit and subscriber data such as that provided here tell the whole story: This company provides a product that has some appeal, but there is no meaningful growth, and hasn't been since the "channel merger." If company apologists want to say that's because of car sales and the economy rather than the provision of what customers perceive as a lower quality product, so be it, but that approach has been the demise of many companies.
One of the channels I listen to on occassion is Chill; this started a couple of years ago, and I liked the mix of songs and the relaxing nature of the music in general. Over the past year, the quality of the channel has plummeted - a decidedly shorter play list, with much more repitition than in past years. I no longer listen to Chill as often, because it has become too predictable. This is just one example of Sirius/XM's scheme of offering less, while charging more. As many of the non-delusional are aware, this dillution of the programming is pervasive pretty much across the board; in most cases it is done gradually so as not to garner attention. I have been listening to radio a long, long time - I have a keen sense of radio radar bullshit detection.
I really believe that any person, or group of people or company for that matter, if instilled with even the least bit of intelligence, pride, and compassion for their fellow man... has within them a drive and desire to be better today than they were the day before, to not keep repeating the same mistakes, and at least a curiosity in reaching the pinnacle of whatever potential they may have. All that is required is a good heart, some empathy and concern for those other than yourself, and a competitive spirit to power this whole Goodship Lollipop. I guess there really are givers and takers in this world; when someone gives of themself, without ulterior motives and great fanfare, it is nothing short of a beautiful thing. It fosters a feeling of goodwill that is very powerful, usually resulting in the "give-ee" wanting to give back, to reciprocate the kindness. Without this compassion for people, and true concern for others feelings and happiness, I can tell you with a great deal of certainty that no individual, group, or COMPANY will ever be better today than they were yesterday, will continue to stagnate by repeating the same mistakes over and over, and will NEVER come close to reaching their POTENTIAL.
Sirius/XM are takers - pure and simple. What has happened since the merger is unconscionable, especially after promising to LOWER the prices and IMPROVE the programming. I don't give a shit about numbers, charts, analysts, prognosticators, palm readers, car sales, phone sales or any of that; this company WILL NEVER SUCCEED doing what they are doing: treating the subscribers like peasants, nickle and dimeing the ever loving shit out of everybody, treating the music like it's nothing more than a disposable product that can be tossed out to people like rice at a wedding, charging way to much for the hardware, and basically not giving a flying fuck about anybody but themselves! They say it's all about brand recognition. When I think of Sirius/XM, the first thing thet pops into my mind is GREEDY. xcountry is absolutely correct - the approach they are taking has led to the demise of many companies - and it will lead to the demise of Sirius/XM. How's this for a simple formula, all you chart nerds out there: Concern for customers + Everything for 12.95 + lower priced "REAL" A la Cart programming + activate the 40 million dormant radios + return the programming to pre-merger quality = 25 to 30 million subscribers by 2010. All of these things are possible, and should have been happening by now. Some of them were promised, but we all know how good Sirius/XM's word is.
Sirius/XM has a choice; either start giving a shit about the subscribers AND the music... or go right down the toilet. At this point, I would be more than happy to assist pulling the flush handle.
Correction: dilution & too. Spelling and grammar do count for something; unless you are a great orator like Oprah, with her butchering of the English language - with the "you alls" and all her other grammatical blunders.
BULLSHIT!! Every channel I listened to on sirius is either gone or is completely different. The playlist, the dj's , everything is different. Compared to xm, sirius did not have as large of a playlist, sirius programming was harder by nature, the whole service had less of a corporate feel than xm. So now I lost the variety of xm and the entertainment of sirius. Now I hear censored music and fm style broadcasters, I fucking hate it. Even though the names of some channels are from sirius, I promise you the programming is completely different. Are the xm named channels the same as they were before? Fuck no! I am gone, I cant take the constant channel switching and frustation of not finding anything worth listening to. As far as my cancelling, fuck them, I have tried longer than I wanted to. I have seen how radio executives act in the past, I knew from the get go we were all fucked, I just got suckered into this forum shit and started to actually believe sirixm would listen to their subscribers like they (sirius and xm) did in the past. We have all been duped into a larger radio scheme than we realized. I am done with this bullshit for good. Unless a new satrad broadcaster comes along, I am done with the cbs/disney/abc satrad we are stuck with now. Fuck them!
This is the dumbest message board I have ever witnessed. You guys hate satrad with a passion. The hating here is much deeper than just hating the product. You guys sound like a bunch of sore losers who where somehow affected by the company either through job loss or stock losses. The service is better than ever and so is the company. Eat a big fat dick and listen to outQ. That is what you all should listen to!
The service is better than ever?! Unless you just subscribed, you must be retarded if you cant hear the sound quality difference, the dj's are yacking more than ever and their narrow playlists are on a constant rotation. I new the merged company would eliminate XM's 70 plus tb memory system, but this is just sick. Its ass warts like you that listen to talk radio all day and dont realize what goes on with the music channels. Seriously, you get your one or two programs so your going to criticize my opinions on channels you dont listen to? Its feltchers like you that are fucking this company up through your lack of taste for music. Go listen to your one or two shows and post yor comments at sfn or whatever it is you listen to.
Steve O..
You are 100% correct. They are number two in the world when it comes to subscription services.
How and Why are they not profitable?
Do Mel/Howard even read this forum?
I am pretty disappointed overall post merger.
Do you think they can pull it off ?
Thanks
Rich r
Yes. Its subscribers like him... and another 18 million more of them
Rich R:
There will be no profits until they get rid of the enormous debt.They are making headway in that department. Obviously, this horrible economic climate has been a huge burden. I think Orbitcast and all the other sat rad sites/forums should be REQUIRED READING by every single Sirius/Xm employee - from Mel Karmazin to the men's room attendants, and and everybody in between. I would like for someone to tell me where there is a better source for suggestions/advice, subscriber concerns/problems, and the general welfare of the subscribers. They can pull it off... IF ... they aggressively market the service, LISTEN and become empathetic to the subscribers desires, and RESTORE the programming to the pre-merger level - with longer playlists and more diversity. We don't want bland, cookie cutter, Clear Channel formula music programming: we want innovative programming with some balls, and the opportunity to hear new music, different types of music, and genres that may even be unfamiliar. What they have done to the programming has driven a good number of people to cancel the service; this company can't afford to be losing customers, and should be making every effort to satisfy them. This is the simple, common sense formula for success. For whatever reason, common sense always seems to be just beyond their grasp. They have every opportunity to drive satellite radio right to the head of the pack; all it takes is common sense, creativity, and the ambition to make it happen. If Sirius/XM would only treat the subscribers like human beings, instead of like stupid, unsophisticated piggy banks that they can empty once a month, the word of mouth and perception about them would significantly improve. That could be a real game changer.
My assessment of why this company is losing money is that they have grossly overspent for celebrity talent, and continue to do so. Satellite radio is a dumb place for celebrity talent like Howard Stern because their potential audience is too small here to justify their astronomical salaries. Paying these people to play to a small audience is like having some supergroup like the Rolling Stones or U2 play at at some "hole-in-the-wall" bar in a small town -- you can do it, but you get little for your effort.
Judging by the ratings, 95+ percent of listening hours to Sirius and XM goes to content other than Howard Stern, yet the company continues to bring on other high-priced celebrities that few people will listen to. Most listening hours, on the other hand, go to music and outsourced content from places like CNN, the talk networks, sports networks. Many of these channels are cheap, involving feeds from existing networks, and music channels can be very cheap, as they can be automated without DJs much of the day. This is, in fact, what many satellite radio listeners want: a "jukebox" where they can just hear the music without any talk at all.
I'd save this company by dumping the high-cost content, starting with Howard Stern, automate the music channels, and turn satellite radio into a content aggregation service that essentially picks up the best audio content out there and broadcasts it, plus provides its own music channels. Hell, Muzak has better-programmed music channels than Sirius XM. Take a look at their playlists.
No doubt we are all on the same page of the music sheet.
I was opposed to the merger from the start and my reply to those who have posted on numerous sites posts such as: "well", SatRad would have failed two years ago if they had not merged." My reply is: "seeing how this thing has turned out that would have been for the best. Someone would have come along,picked up the pieces,saw what was the reason for the failure and made it better". The original charter was for at least TWO SatRad broadcasting entities and you've got to give credit where credit is due, 'ol Mel gave the Feds one hell of a snow job. All competition was virtually eliminated in one fell swoop.
Don't even give me that bullshit that iPods,etc are in competition with SatRad. Never heard that argument when 8-Tracks,cassettes,CD's,etc came on the scene. I've been around and had a drivers license when every one of those devices were hot market items for listening enjoyment and they were the newest & greatest thing to come down the pike.
Ones like us who were the early subscribers of SatRad (XM in particular) have seen what once was something to be SO PROUD of and see it go down the toilet under Mel's control certainly have a reason to be torqued. I know I paid good money in hardware and subscription fees to get away from the pittiful excuse (for the most part) that commercial radio has evolved into and for 5 years LOVED every minute that I listened to XM. Then came the merger, elimination of superior channels like "The System",dilution of channels like "Hanks/Willies Place" and the total gutting of the comedy channels into shit for brains channels which faintly resemble what they once were not to mention gutting of most music channels is too much for some of us to bare.
XM's leadership had its share of mistakes but nothing like what Mel Karmazin & his minions have shat out.
You are so right - the obscene contracts can only be justified if the "talent" directly leads to significant subscriber increases. Stern brought in millions of subscribers, but at what cost to the company? As for all the other talent, I suspect that most of the deals have been a financial disaster (are you listening, Oprah?). The way they throw money around is insane. It really is a sin; think of how different things would be if the money was invested in the music programming and customer care/service, and cutting edge hardware... instead of being squandered on all of this "talent." I am only guessing, but I have to believe that the 15 million for Mad Dog Russo may be one of the worst deals they have ever made - aside from the Oprah fiasco.
When it comes to radio, no one name is as big as Howard Stern, he easily earns his pay. The problem is the non broadcasters that this company continues to hire. Like many critics of all broadcasters, you forget how difficult it is to fill a 3-4 hour show with fresh content, but a whole channel is another thing, these non radio people havent a clue what to do any of it, they are used to showing up, doing their thing and thats that. Stern has done a great job selling this product and that includes hardware and subscriptions. The real problem is that along with Stern comes ratings, his channels are the highest rated between the two services. The company automatically looks at that and assumes most people are NOT listening to music and there for they make cuts where they see fit. Like most radio execs they look at guys like Stern and they assume anyone can do a radio show. Oprah, mad dog, rosie, ellis, these asswipes sound very rookie when compared to Stern or O&A. With all the music options we as americans have, you cant offer a service that has music and only has rebroadcasts of news shows and comedy routines, most people are not as passionate about music as we are. Stern is not the problem, He generates his income ten fold, the problem is the non radio people this company thinks will attract fans of radio. Bottom line, if you are not a fan of radio, you will not sign up for satrad just because oprah or tony hawk are there. I think if this company wants to succeed they need to spend more effort trying to appeal to fans of radio, with that said, they need to understand that its the yakking between songs that drove us away from fm. We can hear reruns of casey kasem why not dr. demento or some of the other niche performers. Talk, sports, news, and music. What the fuck is so hard about that. I dont understand why this company thinks amateur hour will sell?
I agree - by trying to be all things to all people, they end up being less than stellar to the true, niche, radio diehards that are the foundation of this company. You would think that the last thing they would want to happen is for subscribers to become disenchanted, and to cancell. A huge segment of the population doesn't understand radio, wasn't brought up on radio, and will simply not listen to it. They certainly will not pay for it. Sirius/XM needs to stop trying to appeal to a demographic that not only isn't listening, but doesn't even have the product or the service! They are trying to be hip and cool for, evidently, a young audience. The problem is this; the young people in this country don't listen to satellite radio. They buy phones and i-pods, and computers. There is no convincing them of satellite radios merits. I have tried, and I can tell you it is a waste of time. I am probably the prototype subscriber that is most attracted to satellite. Been listening to radio for decades, loves all types of music, doesn't own an i-pod, has a high quality stereo and still listens to cd's (how 90's is that!), and likes ease of use and as little bullshit as possible when accessing the music. This company scares me, to be quite frank; they don't seem to understand even the most basic trends or to perceive how the culture in this country evolves. They don't seem to have any notion whatsoever regarding peoples lifestyles, peoples opinions and desires, and the fact that an entire generation rejects their technology, product and service. Whatever Apple is doing, one thing is for sure; Sirius/XM is doing the exact opposite. Maybe since they think that Apple is partnering with them, it might be a good idea for them to use some of the same business strategies - if it isn't too late, that is.
Right, Stern is one of the biggest names in radio, at least in a particular branch of radio -- but that's why he does not belong on satellite radio. And, he does not earn his income "tenfold" as you said.
While it's correct that Stern's channel is the highest rated single channel in satellite radio, but that does not mean too much when there are 200+ channels after you add Sirius and XM together, and the total audience of satellite radio is tiny compared to radio as a whole. That makes him a really big fish in a really little pond.
If you spin the numbers toward Stern as favorably as you can, he barely earns for Sirius XM what they pay him, but that does not factor in the other costs of his show (additional personnel, etc.), so he almost has to be a money-loser. But, let's just say they do make a few bucks off of his show. It's still a dead end road for any company that has to pay that kind of money for every listener: Programming can't take up that high a percentage of their budget. Not when there are also all the front office costs, engineering, executives, etc.
Stern was a desperate acquisition for Sirius when they were trying to avoid extinction in their early days, and he probably was instrumental in keeping that from occurring. Now that survival of the whole medium is at stake, not competition between two companies, it's time to send Stern back to terrestrial radio where he belongs, so advertisers can pay his mega-salary, rather than a small number of subscribers, only a small minority of whom even want to hear him.
When sirius hired Stern, they claimed that if 1 million people subscribed than his contract was covered. Not to mention that from the moment he signed, both companies started to see a spike in subscriptions. It started a competition. The contract amount is a payment for the howard stern show as a whole, all production costs and everyones salary. At $13 dollars a month plus equipment its pretty obvious that Stern covered his salary. His fans basically signed on for five years as well. The point I was making is that Stern actually draws attention to this brand as well as bring in subs, many of the other people we talked about earlier do neither. Your point about the big fish is so lame I had to swallow my vomit! Fm radio is all about ad rev, they dont pay royalties and they short change most talent, No one is forcing anyone to sign up for satrad, your precious child cant stumble across a program you disagree with, this proves that people will pay for services they enjoy. Although fm may have a larger audience, it is a subdued group, can you justify Rush Limbaughs salary? Neither can Clear Channel. But sirixm can easily justify Sterns salary, Sirius was nothing before Stern, You have always said that sirius programming was shit, How did they end with so many subscribers? How come more of the well diversified XM subscribers signed up for the best of sirius? You dont like Howard Stern and you dont like to see him succeed. No matter how much YOU try to spin it, Howard Stern has and will always pay for himself. As a subscriber and stock holder, Stern is the least of my concerns, You need to realize that you will not attract radio fans with non radio talent.
When I signed up for XM back in Feb 2002,Stern wasn't even on SatRad & O&A were available for a few bucks/month extra.
Listening to those people and others like them was NEVER my motivation for subscribing to SatRad and STILL isn't for extending my multi-year sub which runs out sometime next year. Karmazin & Co. will have to really convince me to renew. So far, I'm costing him for each year so it is a little revenge. I paid with check so they don't have me on a credit card thus they have to notify me or cut me off.
My motivation was for the music(mainly Classic Rock,Classic Country,Motown,70's and EXCELLENT niche channels like "Bluesville". Then I discovered great channels like XMComedy,"The System","WaterColors","AudioVision" not to mention information/news channels it was icing on the cake.
But man, how things have changed. Eliminations/substitutions & basically gutting what was left. It is my opinion that XM should have never gave O&A one damn cent but paid them only a per cent of the ad revenues or kept them as a pay extra channel. Since I was an XM subscriber,what Sirius did or did not do was no concern of mine.
I haven't listened to O&A more than 15 minutes in 7 years and not one minute to Stern that I can recall.
I'm past slamming them because it is true some people pay to hear them so that is their business but for the life of me, I just don't get their "sthick". Guess I never will. But then again, "different strokes for different folks"
XM subscriber since Feb 2002 & stockholder since Jan 2005(ain't bought any since then either)
I've had some respect for your points in the past, but your post contains so many misrepresentations of what I've said that I'm somewhat at a loss on where to begin. Maybe that vomit you swallowed affected your powers of reasoning.
1. Yes, Howard Stern did start "a competition," -- one that was corrosive to both companies and plunged them into debt. Neither could afford the talent they paid for, and the now-joined company still can't; had the "talent war" not have started, we'd probably still have two good satellite radio companies rather than one that you admit is not that good.
2. I am not here to "justify" or quarrel with anyone's salary -- Howard Stern's, Rush Limbaugh's, or anyone else's. Please don't put words in my mouth. If a million people signed up for him, as you say, 17 million people didn't. It's illogical and dumb to spend a huge proportion of your programming budget for what comparatively few people want.
3. I have never, and do not at this point, consider Sirius's programming "shit." I consider it not a suitable alternative to what XM listeners such as myself signed up to get, as it's not the same. I consider it a foolish decision for a company to summarily remove the programming half of their customers signed up to get.
4. How did Sirius end up with so many subscribers? The same way XM did -- by cutting deals with car companies. You said yourself Stern was worth a million people, and that's probably roughly accurate given the ratings, but then you contradict yourself by suggesting he accounts for everyone Sirius had.
5. You have no knowledge of how I feel about Howard Stern, and I have never maligned him, so your comment about my feelings about him is pointless and out of line. Like Rush Limbaugh, Howard Stern has talent that makes him popular, and he can command a far larger audience than he gets on satellite radio. That is, if anything, more of an endorsement than a criticism.
6. Bringing enough subscriptions on board to "cover" your salary does not amount to making money for the company, and it certainly comes nowhere close to making ten times as much money for the company as he's paid, as you asserted in the earlier post.
7. Whenever you make a statement such as "Howard Stern has and will always pay for himself," you call into question the validity of everything else you say. Where does it say that? In the Bible? Few things in the world "always will" happen, and with the scant evidence you've provided that Howard Stern "pays for himself" (first saying ten times over, and now just barely past the break-even point, apparently), it would seem that you are, in fact, accepting this on faith rather than basing it on evidence.
8. "Radio talent" of the Howard Stern variety is not what most satellite radio listeners choose to listen to, as the ratings clearly show. They listen to music channels, network talk and sports more than they listen to Howard Stern. Just a few of the popular music channels added together exceed Stern's total draw.
9. Stern has done his work for satellite radio -- he's brought in just about everyone he's going to, and they're still not making money. I say, time to think about the quality of the overall product rather than concentrate on a handful of big names that really don't draw that many listeners -- and that's based not on what I think, but on what the ratings say.
Item #9 says it all.
If I'm not mistaken, prior acquisition/merger, XM had more subscribers than Sirius and XM didn't have Stern to bring them in. Sirius was gaining in subs but like everything else Sirius did/does, their methods of headcounting subscriptions was suspicious at best.
That's not to say XM was pure as the driven snow but their customer service,hardware & programming was by far the best of the two. The "suits" at the old XM share the blame of trying to grow too fast and spending money they really didn't have. I disagreed with that strategy and posted so on old sites at the time.
Indeed. And when Mel Karmazin testified to the FCC to argue for the merger, he said repeatedly that XM and Sirius never had really competed with each other. If you bought a certain brand of car, you got the service that came with it, whether XM or Sirius. Few people select a car based on which satellite radio service its maker has allied itself with.
Retail radio sales -- which represented the only area of actual competition between the services, and the only potential place where Stern could have helped out, are and have long been extremely weak.
I've been reading the comments on this article for the past few days, and once again a number of intelligent, thoughtful comments are to be found, which I'm glad for. The O&A thread has again degenerated into a nuthugging/mudslinging contest, which I've no time for.
With regards to Stern: the mantra that "Stern Saved Sirius" is patently untrue. Sirius could have carried on well enough without him, and without the merger. Say what you will about the programming; by and large I agree with Xcountry that it is not good enough, and its replacement of most of the XM channels might have been a cost-effective move, but it was a bad one for the listeners and the firm as a whole.
Stern is not worth the $100 million he was paid--no one is worth that kind of money, no ballplayer, no CEO, and no media personality. Xcountry is right again: Stern has a talent that still draws, even if he is just doing it four days a week.
Another point someone made, which is true: if you're a news/sports/talk junkie, Sirius/XM is great to have. I don't listen to much of it myself apart from the BBC, but it's got its place and its listenership.
Thing is, music remains the driving force for those who want something more than the stuff that is force-fed on terrestrial radio (and now S/XM) by the combination of media companies, consultants and payola (DON'T think that went out when Alan Freed got busted).
An old music industry colleague of mine once told me that both companies made a mistake in not pushing their product in two ways: 1. Many people he knew personally still didn't know what satellite radio was, or how it worked (an experience I still have when I talk to others about it).
2. They didn't push the music channels and their diversity enough. Howard could well have helped there; have him to TV and radio spots...his face and voice, like him or not would have been a wonder and at least attracted some attention.
Right now...I have to wonder how much longer the old guard that runs the show will be around. Mel is not getting any younger, and I gotta think he's looking for a way out of this mess for himself. The others? One must think that some new blood might actually listen to the subscribers and take heed of what's going down.
I have no doubt that S/XM people are reading this and other sites and are aware. Mel and his cronies have no time for commoners, but others do have to listen.
As for the numbers game: seems like they're cutting the debt, but there is a cost involved that goes beyond money lost...the subscriber base, the lost goodwill, etc.
I'd say let's keep our ears open for the doings through the next quarter; that should tell us quite a bit about the direction of things.
Re: Retail radio sales:
And what made up the majority of dedicated,extremely brand loyal SatRad subscribers? The ones who bought the convertable/portable units i.e. stand alone receivers. And the majority of those were who?? The XM subscribers because XM's hardware was so superior to the stuff that Sirius had to offer in those days(better quality at a better price).
And what did Karmazin & his minions do?
Shit on that core group, then proceed to eliminate,substitute, or gut what was left of most of the company produced music channels.
That's what.
Right. I'm a retail customer, never having owned a vehicle with OEM satellite radio. This is why I have said that weakness in the retail segment of their market should be taken as an especially bad sign by the company -- we're the people who wanted this product enough to take the initiative to get it. Many people I know with OEM satellite radio are lukewarm to it, they get it for a while, then get tired of paying for it, so they drop it.
The company is looking to the iPhone and other mobile devices as the next big growth area, but I think the competition there will be fierce, as there are many providers who can deliver content via the internet or a mobile device -- and they do not have the overhead that Sirius XM does, so they can charge less (or nothing).
xcountry, the most sane and rational voice on orbitcast.
your posts are always right on.