More on Sirius/XM bankruptcy

From reader RK:

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.

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  1. Another G H wrote:

    I sincerely pray that Enlighten never goes away. They’ve greatly improved in the last 2 years that I’ve listened to them. It’s great to listen to SG anywhere without having to hear the local obituaries, trade and sale program, or a clueless dj that enjoys to hear himself talk for 10 minutes at the time.

  2. Charles Brady wrote:

    I just wonder how many of those 10 million are still in free contracts from auto purchases and how the renewal numbers are holding up. I have heard many folks make the ” I like it but I’m not going to renew it statement.”

    Of course when it comes to subscriber numbers we all know how that goes…. Every time circulation and membership numbers get stated somehow I seem to hear a roster crowing off in the distance…

  3. Ron F wrote:

    I hope it goes away. Radio should be free to the listener.

  4. Glenpaynerules wrote:

    If they pull the plug on Opie and Anthony then I’m gone too.

  5. WA wrote:

    I like XM because I can listen to news and sports as I drive - which is around 50K miles a year. Also, when I want to listen to music, including Enlighten, it’s all there, and I never drive away from the signal. So, while it makes sense for me, if I had to pay for it and only drove a bit around town, that $12/month would probably not be something I’d pay for.

    As has been mentioned, they sold their services as trial subscriptions in new cars. And, with new car sales so down these days, that doesn’t bode well for either Sirius or XM.

    Enlighten really has improved over the last year or two, no doubt about it. I still have to change the channel when Marlin comes on, though. I just can’t take his voice!

  6. tjeerd wrote:

    I also like Enlighten 34. I like Marlin, and wish he talked more! They have improved with Britt, Heil, Gaither, and I love the Live Concerts on Saturday nite.
    I also love to listen to “Sunday Social” with Bill Mack. on open Road 171. His show is moving to Willy’s Place 13. Bill Mack did not seem pleased.
    I also listen to WRN 155, They carry Radio Netherlands at midnight, it keeps me up to date with the news in Holland, albeit from a leftist perspective, much like the CBC in Canada-very leftist.

    I listen to O,Rielly and Hannity on Fox News, Mel Kiper Jr. on ESPN Weekends, as I love SEC Football and need updates.
    I like BBC if I need a good take on a International Issue (just heard a report on the Venezuela referendum this Sunday), America Right for G. Gorden Liddy, Bill Bennet, the great one Mark Levin and if I want to Hannitize my kids in the car Sean is a must when I pick up the kids after school.
    Willies Place 13, is old classic country, I love it when I am driving my pick-up truck. My daughter likes the CCM chanel
    32, it gets airplay when she is in the car, one has to keep the peace.

    I hope XM stays in business.

  7. tjeerd wrote:

    @ Ron F.
    I listen to local Toronto Radio such as AM640 with Charles Adler, and John Oakley.
    WGR 550 Buffalo during NFL Season (Bills talk) Local Radio should be free, but I need the XM for diversity.

    @Glen Payne: I do not care for Opie and Anthony

  8. CVH wrote:

    The pending bankruptcy filing was hastened by a struggle for control of the company so it’s not a liquidation. It has stock issues, its relationship with Echostar and a slumping auto sales environment. Even if those issues were worked out however, it would not mean a rosy path into the future. The challenges of other technologies are growing daily and while satellite radio offers a lot of unique and unduplicated offerings, its long-term success is by no means secure.

    Yes, they’ve attracted 20 million listeners. But many of the early adapters were people who already were dissatisfied with terrestrial radio. What has terrestrial radio done in response? Very little. In fact, in many ways, it helped pave the way for satellite radio to gain a foothold by consolidating and homogenizing its content and discounting the value of local programming. (Not surprising then that the FCC is currently focused heavily on the importance of localism in terrestrial broadcasting.) And satellite radio has changed the expectations of listeners - commercial-free music, a multitude of program options, etc.

    Still, XM-Sirius will have a tough road ahead. Terrestrial radio will continue to struggle but will never go away. It’s the other “infinite dial” options on the horizon like internet via satellite or Clearwire technology that will most likely be the future of radio and the biggest threats to both satellite and terrestrial broadcasting.

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