Satellite Radio Faces Sirius ProblemsMay 7th, 2009 | By Elisabeth Lewin | Category: iPhone, The New Media Update
Sirius has recently created a new service that can stream radio content via Apple devices like the iPhone and the iPod Touch, but that innovation may be too little, too late, to staunch the hemorrhage of customers.
In a world where free content proliferates in the form of free Internet radio and free podcasts, is (paid) satellite radio content irrelevant?
The company, which resulted from the merger last of two competing satellite radio providers, had a decline of 404,000 subscribers from the previous reporting quarter. Many new subscribers to the radio service have historically come from new car purchases with built-in satellite receivers. With the slump in automotive sales, the company predicts a “noticeable hit” to subscription rolls over the next quarter as well.
Sirius also reported a loss of $236 million in the first quarter, or 7 cents a share, compared with last year’s first-quarter loss of $104 million. $186 million of the loss was related to stock issued to Liberty Media Group earlier in the year, as part of Liberty’s $530 million loan to Sirius, which in turn helped the satellite company stave off declaring bankruptcy.
Somehow, the company remains optimistic about the long-term outlook for satellite radio. Despite expected continued subscription losses, they have raised their forecast for 2009 adjusted income from $300 to $350 million, as a result of “cost-cutting measures.” Mel Karmazin, CEO of Sirius, also expects to meet a goal of over 20 million subscribers by the end of this year.
In an upbeat statement that flies in the face of the hard numbers and analysts’ assessments, Karmazin says that â€œsatellite radio is now a cash flow growth story.â€