Sirius XM Holdings Radio Distribution

Company Overview:

Sirius XM Holdings Inc. distributes over 900 satellite channels and is the largest and most renowned satellite radio broadcaster and distributor in the world, giving their 29.6 million subscribers access to an extensive catalogue of commercial-free media (Siriusxm.com, 2016). The company’s role in audio-based media may have paved the survival of satellite radio altogether.

Sirius XM, originally conceived as separate licensed satellite broadcasters Sirius and XM Satellite Radio, was established in a $13 billion merger in 2007. With a narrowly approved 3-2 vote by the FCC (Ali, 2008), the new amalgamation escaped filing for bankruptcy by exchanging 40% equity with Liberty Media, giving Sirius XM the ability to remain in business.

The merger intended to facilitate flexible pricing and provide a wider range of choices for its consumers. Among the exclusive content provided, the company also has made deals with nearly every notable automaker for satellite radios to be installed and included in purchasing these vehicles.

Assets:

The three main satellite services, Sirius Satellite Radio, XM Satellite Radio, and Sirius XM Radio, serve to be Sirius XM’s most valuable assets and divisions. Most of the corporation’s strength lies in the sheer amount of varied content they deliver including “commercial-free music; premier sports and live events; news and comedy; exclusive talk and entertainment; and a wide variety of Latin commercial-free music, sports, and talk programming” (siriusxm.com, 2016). Sirius XM also partnered with electronics company Pioneer for installing satellite radios into its partners’ automobiles, solidifying its plans to monetize on mobile radio listening (treifs.com, 2014).

Sirius XM excels in its exclusive content mainly on account of its broad list of celebrity hosts, including noted figures such as Howard Stern, Bam Margera, Tom Petty, and more. All of this radio content is also available online, with a personalization system called MySXM which was released in 2013, allowing consumers to be able to customize their channel at will, as well as skip and replay songs freely (Saltzman, 2013).

NEW YORK, NY – January 31: Howard Stern

With every bit of content online, the prospect of a Sirius XM app was introduced in 2009 and polished over the last few years to maximize its social presence. Along side its American counterparts, Sirius XM Canada acts as its main Canadian subsidiary, offering identical services.

Business Model:

Sirius XM utilizes every possible way it can to spread its brand recognition and to keep its customers coming back. The programming itself acts as a strong concept within the company’s subscription framework and consumer-company relationship, as the various exclusive programs “provide a valuable service they can’t get anywhere else” (Peoples, 2013). Sirius XM also takes advantage of cheaply bundling its content for the sake of detracting consumers from going elsewhere, making its content that much more desirable and easier to access.

Combining its content and distribution into a strong penetration tactic, Sirius XM’s involvement with various automakers has opted a large portion of its success. With three out of every four cars a Sirius XM affiliate, its penetration methods, alongside their usage of a trial period, cause about 45% of users to convert over to a paid subscription (Koslosky, 2015). By maximizing involvement with automobile providers, Sirius XM has been able to spread its outreach almost as far as humanly possible, given about 40-50% of radio listening is done in the car (punchcardblog.com, 2015). With the satellite radio world already being a saturated market, Sirius XM has little worry of upcoming competitors on account of its established name and brand throughout the US.

Revenue Model:

As the main key to its success, Sirius XM has continuously implemented a paid subscription based streaming service for its product, with bundled channel packages ranging from seven to seventeen dollars a month (siriusxm.com, 2016). This system revolves almost entirely around its listener numbers while it focuses on its subscriber acquisition costs and churn (how many customers lost divided by how many there were at the beginning of the month) to be able to measure customer satisfaction, as well as stable company earnings, properly (punchcardblog.com, 2015).

A focus on recurring revenue allows the corporation to remain visible and predictable to its customers and investors, as it pays royalties to music publishers every time a licensed song is played on any of its channels. In that vein, Sirius XM’s scale has developed on account of its consistent client care and simply priced services, while growing alongside its customers. The business has continuously been able to incur interest-free loans from its customers, freeing up other bits of capital for dividends, share buy-backs, and assorted other costly needs (punchcardblog.com, 2015).

Moving Forward:

With satellite radio becoming an increasingly niche but fervent market, Sirius XM Holdings has reported its best subscriber growth since 2007. Plans to cease operations are distant and out of mind, as current CEO Jim Meyer proudly exclaims that “investments, with our long-standing focus on execution, will help us continue our long history of strong, profitable growth” (Szalai, 2016). With a re-upped contract with acclaimed radio host Howard Stern, Sirius XM has plans to delve into the world of video programming with Stern being their person of interest within the deal. Sirius XM may have fallen into the AV trend of our modern age but has not given up hope on its radio-focused interests by any means.