More on Sirius/XM bankruptcy
From reader RK:
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The problem with Sirius XM these days has far less to do with the merger or any other perceived shortcomings than it does with pure supply/demand economics: 1. Their business model depends on new subscription growth; 2. Most new subscription growth comes from the sale of new cars equipped with satellite radio; and, 3. Obviously, people aren’t buying new cars these days.
That’s been the problem with both Sirius and XM from the beginning: for them to attain sustained profitability (in the fact of the ridiculous contracts they’ve agreed to), they’ve always needed aggressive subscriber growth.
However, don’t expect Sirius XM to go away. Given the robust cash-flow from existing subscribers (10 million+ at over $10 apiece per month) and the infrastructure in place (both the satellites in outer space and the radios in people’s cars), somebody will take the reins of it (once bankruptcy court has voided or reduced the bloated contracts with Stern, Oprah, the pro sports leagues, etc.), trim costs, and keep it rolling.
The fact the enLighten is such a low-cost offering but yields subscribers who otherwise wouldn’t pay for SatRad means it probably won’t go away.