So where does Sirius XM stand in the new age of Internet radio, Ford Sync radios with Pandora and Stitcher and the iPad.
Don’t discount satellite radio just yet: it should continue to grow modestly through 2015 at least…and by the way Howard Stern is staying. So says a report issued last week by Wunderlich Securities.
Sirius XM will grow from its current 18.5 million subscriber base to 22.5 million in 2015. Sure it’s not the kind of growth we once expected from satellite radio, but at least it shows some staying power in the face of competition with Internet radio.
Analyst Matthew Harrigan believes used cars will be a large potential source of new subscribers; by 2015 the number of pre-owned cars with Sirius or XM-ready radios will reach 70 million. Also, auto sales seem to be improving and each one million hike in the number of automobiles sold per year should mean lots more subscribers and another $.50 boost in Sirius XM’s stock price.
Here’s what else Harrigan says:
• He’s skeptical that Sirius will lose Stern to Clear Channel given Stern’s issues with the FCC. It’s more likely that Stern might complement his Sirius stint with a presence on Internet radio (although he could reduce his level of involvement with Sirius).
• Sirius XM’s new $1.98 fee to users doesn’t seem to be causing it to lose many subscribers.
• About 25 million Sirius or XM radios come with used cars presently, while there are 10 million OEM subscribers so there’s room to win more used car subscribers. It bears repeating that in five years, the number of Sirius XM radios in used cars will jump to 70 million.
• In the long term, Internet radio services such as Pandora could be a challenge but right now, they are just a “nuisance.” Pandora claims 40 million users, with 17 million listening in on mobile devices and 55 percent of users, listening to the Pandora in the car.
• Retail aftermarket sales don’t appear to be rebounding. Harrigan says they lost momentum due to the transmitter recalls of 2006 (but it was also due to the Sirius XM merger and consumers waiting 18 months for an outcome, CEoutlook would argue).
• The iPhone app is not enough to revive retail sales but it helps Sirius XM to benefit from Apple’s marketing halo. A Blackberry app may not be far off.
Source: Wunderlich Securities
