About Sirius XM Radio Inc.
Sirius XM Holdings operates Sirius XM Radio, which transmits music, sports, entertainment, comedy, talk, news, traffic, and weather channels to some 34 million subscribers in the US and 2.6 million subscribers in Canada. The home of Howard Stern offers two proprietary satellite radio systems; a streaming service accessible via desktop, mobile apps, smart speakers, and other consumer electronic devices; and connected vehicle services. The company has equipment alliances with several automakers; it also sells satellite radio equipment through its website and through retail outlets such as Amazon. In 2019, SiriusXM acquired music streaming service Pandora for $3.5 billion. Liberty Media owns a majority of the company.
Some 80% of Sirius XM's revenue comes from subscription fees. The remainder comes from advertising, equipment, music royalty fees, and ancillary revenue.
Subscription revenue includes self-pay and paid promotional subscriptions and other fees for its programming line-up of commercial-free content. Advertising revenue includes the sale of advertising on certain non-music channels. Equipment revenue includes revenue and royalties from the sale of satellite radios, components, and accessories. Music royalty fee and other revenue includes amounts earned from subscribers for the U.S. Music Royalty Fee as well as revenue from connected vehicle services and its Canadian affiliate.
Based in New York, Sirius XM owns or leases about a dozen properties -- including offices and studio/production/engineering facilities as well as a data center, a call center, and a warehouse -- in several states. These include New Jersey, Florida, Minnesota, Tennessee, Georgia, Virginia, California, Texas, and Washington, DC.
The company also has approximately 540 locations for use in connection with the terrestrial repeater networks that support its satellite radio services. In general, these leases and licenses are for space on building rooftops and communications towers.
Sales and Marketing
Sirius XM's sales and marketing activities include advertising, promotional events, and sponsorships along with direct mail, outbound telemarketing, and email communication campaigns.
The company has two primary subscription categories: self pay (from consumers) and paid promotion (bundled with a car purchase/lease). In 2018 Sirius had approximately 28.9 million self-pay subscribers and approximately 5.1 million paid promotional subscribers. When a subscription is included with the purchase or lease of new or used vehicle, the length of the subscriptions is typically three to twelve months. The company works to grow self-pay subscribers through converting trial promotional subscriptions.
During fiscal years 2018, 2017, and 2016, advertising costs totaled approximately $266,000, $262,700, and $227,000, respectively.
SiriusXM has experienced year-over-year revenue growth over the most recent five-year period thanks to the popularity of subscription satellite radio, which has managed to provide listeners with more programming options than traditional ad-supported terrestrial radio. Net income has also mostly grown year-to-year during this time.
The company's fiscal 2018 revenue increased 6% to $5.8 billion, up from $5.4 billion in 2017. Subscriber revenue grew 3% while revenue from advertising, equipment, royalties, and other grew by more than 15% each.
SiriusXM saw its net income grow to $1.2 billion in 2018, up from $647.9 million the prior year when the company reported a loss on the extinguishment of debt and higher income tax expenses.
Cash at the end of 2018 was $54.4 million. Cash provided by operations was $1.9 billion, while investing activities used $379.3 million. Financing activities used $1.5 million.
Sirius XM boasts that its content is its true competitive advantage, and the company works to maintain a stable of programming from top-selling artists. In 2019 it launched a new jam band channel with Phish and special pop-up channels with Madonna, Cher, and the music of Pavarotti. It also announced a collaboration with platinum-selling recording artist Drake.
Perhaps most important to the company is its partnership with Howard Stern. In 2019 Sirius XM unveiled a new Hollywood studio complex, where Stern broadcast several live episodes of his eponymous talk show welcoming big name celebrity guests such as Jennifer Aniston and Robert Downey Jr. The company also celebrated the opening with a rollout of music performances exclusive to Sirius, including a private Billie Eilish concert and an invite-only Dave Matthews acoustic set.
Corporate relationships are also key to Sirius' content strategy. New partners in 2019 include Netflix, SoulCycle, and Marvel. Sirius debuted 'Netflix Is A Joke Radio,' a full-time comedy channel and announced plans for a new music channel in partnership with SoulCycle. And through a collaboration with Marvel, Disney is creating a number of exclusive podcasts for SiriusXM and Pandora.
On the distribution side of the business, SiriusXM inked a deal with Toyota to expand the installation of SiriusXM to all Toyota models and trims sold in the US, starting with 2020 models. Furthermore, Google announced that SiriusXM will be available on Google Assistant on smart devices including Nest Mini and Nest Hub as well as Android and iOS phones.
Mergers and Acquisitions
Sirius XM completed the acquisition of Pandora for $3.5 billion in an all-stock deal in early 2019 to become the world's largest audio media company. Pandora is the largest US streaming music provider with a personalized, free ad-supported service, and the combination caters to more than 100 million listeners in North America. SiriusXM was especially attracted to Pandora's technological competence, which can help the satellite radio service expand beyond vehicles and boost features like personalized recommendations. Meanwhile, SiriusXM's alliance with several automakers should accelerate Pandora's distribution to vehicles and unlock music streaming services for automobiles. The Pandora deal represents Sirius' strategic response to the substantial competition it faces from other providers of radio and audio services, which have multiplied in recent years.
XM and Sirius launched as competitors in 2001 and 2002, respectively. Howard Stern gave Sirius Satellite Radio a big boost when he left terrestrial radio for the company in 2004. The two companies merged in 2008, figuring joining forces would help them better contend in the premium audio space.
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Phone: 1 (212) 584-5100
Employer Type: Privately Owned
Executive Vice President: Patrick Donnelly
Evp And Chief Marketing Officer: Jennifer Witz
Svp And Deputy General Counsel: Ruth Ziegler
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