Wed. Feb 28th, 2024
SiriusXM Focus on Streaming to Rebuild Subscriber Growth

SiriusXM is undergoing a significant transformation as it enters a “rebuilding phase” to revitalize its subscriber numbers. The media analyst at Wells Fargo Securities, Steven Cahall, highlights that the company is shifting its focus towards digital streaming to adapt to changing consumer behavior. The pandemic has particularly affected self-pay conversion rates, which have declined by a quarter. Cahall suggests that younger car buyers are not converting at the historical rates, indicating a need for SiriusXM to rethink its go-to-market strategy for younger and first-time car buyers.

To address this challenge, SiriusXM has recently launched a new streaming app and a streaming-only product priced at $9.99 per month. The aim is to attract a new generation of listeners by offering a more personalized and user-friendly streaming experience, with a strong emphasis on music discovery. Additional features are expected to be announced in the coming months, further enhancing the app’s appeal.

Although the shift to streaming represents a positive move for SiriusXM, Cahall notes that the company still faces obstacles. However, he predicts that the growth in self-paying subscribers will help counterbalance any potential losses. SiriusXM management is confident that the upcoming period will be conducive to marketing efforts focused on building both streaming-only subscribers and improving app engagement on in-car subscriptions.

Another significant development for SiriusXM is the pending deal with Liberty Media, which owns 80% of the company. The agreement involves combining Liberty Media’s tracking stock group with SiriusXM to create a new public company. This transaction will result in the new SiriusXM operating as an independent entity, with simplified ownership and a board comprising a majority of independent directors. According to Cahall, this deal will bring about “much-improved liquidity” for SiriusXM’s stock, potentially leading to inclusion in a stock index. However, it will also entail inheriting approximately $1.8 billion in net debt from Liberty Media.

As SiriusXM embarks on its rebuilding phase and streamlining efforts, it will prioritize debt reduction while aiming to sustain its dividend. The focus for the future may shift between stock buybacks and debt reduction, depending on market conditions and financial priorities. With these strategic moves, SiriusXM aims to secure a strong footing in the streaming landscape and reinvigorate its subscriber growth.

FAQ

1. What is SiriusXM?
SiriusXM is a media company that offers satellite radio services and has recently shifted its focus towards digital streaming.

2. Why is SiriusXM undergoing a transformation?
SiriusXM is undergoing a transformation to revitalize its subscriber numbers and adapt to changing consumer behavior.

3. How has the pandemic affected SiriusXM’s business?
The pandemic has particularly affected self-pay conversion rates, which have declined by a quarter, especially among younger car buyers.

4. How is SiriusXM addressing this challenge?
SiriusXM has launched a new streaming app and a streaming-only product priced at $9.99 per month to attract a new generation of listeners.

5. What features does the new streaming app offer?
The new streaming app offers a more personalized and user-friendly streaming experience with a strong emphasis on music discovery. Additional features are expected to be announced in the coming months.

6. What obstacles does SiriusXM still face?
Although the shift to streaming is positive, SiriusXM still faces obstacles. However, the growth in self-paying subscribers is expected to help counterbalance any potential losses.

7. What significant development is happening for SiriusXM?
SiriusXM is pending a deal with Liberty Media to create a new public company. This transaction will result in simplified ownership and a board comprising a majority of independent directors.

8. What are the implications of the deal with Liberty Media?
The deal with Liberty Media will bring about “much-improved liquidity” for SiriusXM’s stock and may lead to inclusion in a stock index. However, it will also entail inheriting approximately $1.8 billion in net debt.

9. What are SiriusXM’s priorities during the rebuilding phase?
SiriusXM will prioritize debt reduction while aiming to sustain its dividend. The focus may shift between stock buybacks and debt reduction depending on market conditions and financial priorities.

Definitions:
– Self-pay conversion rates: Refers to the rate at which customers who are using a free trial or promotional subscription decide to become paid subscribers.
– Streaming-only subscribers: Refers to subscribers who only access SiriusXM’s content through the streaming app and do not have an in-car subscription.
– Stock buybacks: A company repurchasing its own shares of stock from the marketplace.

Related Links:
1. SiriusXM – Official website of SiriusXM to explore their services and offerings.