Satellite Radio Faces Sirius Problems

May 7th, 2009 | By | Category: iPhone, The New Media Update

Satellite radio network Sirius XM Radio released grim first-quarter results today, with a drop in both subscribers and revenues.

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 “satellite radio is now a cash flow growth story.”

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5 Responses to “Satellite Radio Faces Sirius Problems”

  1. msbpodcast says:

    Anytime an industry has to pay for a high cost platform (and just try to price a satellite, those things cost a LOT) and pay ridiculous amounts of dough for medium-heavy draw personalities (I’m looking at you Mr. Stern,) and then has to expect everybody else to pay for it all is the time to get out of the market.

    Satellite radio is not economically viable against the internet competition.

    I don’t think it ever was but
    * the coming of the internet with:
    ** its quasi-infinite bandwidth,
    ** its asynchronous podcast mechanism,
    ** its use of RSS for show discovery and delivery and
    ** its low cost-show production paradigm
    has put the last nail in its coffin.

  2. Patrick Reilly says:

    Your post is incorrect, by any measure. Revenues increased. SIRIUS XM’s revenue rose in the quarter, to $605.5 million in pro forma revenue, up 5% over first quarter 2008 pro forma revenue of $578.8 million. The company also posted $108.8 million in first quarter pro forma adjusted income from operations, as compared with first quarter 2008 pro forma adjusted loss from operations of ($70.2) million.


  3. Chris says:

    I had it and now it cuts out all the time. Very poor. I know 10 people who dropped it this year. Its all done, It just does not know it yet

  4. i thought us iPhone fans is delighted to have the service from Apple .Ltd.The google satellite provide much conviences.

  5. imincontact says:

    I recently picked up sirius after not having satilite radio for years, before the merger and sirius. I was excited to get it back with my new head unit and the sound quality just sucks, it was a $140. chrge for the atenna installed so I lost it and now I’m trying the XMP#I wich is on the way. If this is the same I will be screaming for a class action law suit against Siriusxm for giving knowinly bad service and demanding that they return everyones subscriptions. I’m $310. into this and only 3 weeks of lousy service so far.

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