New York — Sirius XM plans to offer an iPhone/iPod Touch application in the second quarter and outlined today a number of other plans to grow its business now that the headwinds of the merger and refinancing are behind it.
The upcoming iPhone application would stream Sirius XM to iPhones and iPod Touch devices and is now in “rigorous testing,” said chief financial officer David Fear during a conference call with analysts. He added, “This will permit an estimated 7 million iPhone users and iPod Touch users to access Sirius XM content if they are paid subscribers.” And if they become a new subscriber, they won’t have to purchase a new radio, he explained.
Sirius XM is also planning measures to boost retail sales through advertising and to direct-market to used car buyers, it said.
Clearly glad to have what he called “the most miserable year of his life” behind him, Sirius XM CEO Mel Karmazin said, ironically, it is the merger that will help Sirius weather the recession until car sales improve.
“We, unlike most companies, have a clear ability to cut costs dramatically in 2009, without harm to the long-term business as a result of our merger,” he said explaining that there are still redundancies in call centers, and in IT expenses that can be exploited and more contracts are coming due that can be renegotiated.
The company admitted to disappointing sales at retail in the fourth quarter that resulted in a loss of 131,000 retail subscribers and a total net gain of only 83,000 subscribers for the quarter from OEM additions.
“There was so much being written about our company going bankrupt and all those doom-and-gloom stories that I believe had a tremendous impact on the consumer,” Karmazin said.
Jim Meyer, president of operations and sales, added that the Circuit City bankruptcy had a big impact. “Circuit City was a very strong supporter of satellite radio and where those shopper went, particularly if they went to mass-market distribution, has been less supportive of satellite radio and that’s something we’re going to address in the second half of this year.”
Yesterday Meyer told TWICE, “I think it’s fair to say we’ve been in a little bit of a cocoon getting through this financing. I think you should absolutely assume that we’re going to ramp up our promotional efforts at retail. As you know, it takes time to get them going. We were certainly disappointed in the holidays. We’re looking at a lot of things to bring things back to the aftermarket business. We’re still absolutely committed to it.”
As for its recent deal with Liberty, Karmazin quipped, “We believe that it’s a very good deal for Liberty and a very, very good deal for our company, considering where some of you had us going.”
He said he has been talking over the last few days directly to Chase Carey, president and CEO of DirecTV, in which Liberty has a controlling interest. “So we think there are opportunities there to work with lots of partners including DirecTV in ways of adding subscribers for both. It wouldn’t be hard to think about that DirecTV might be able to have a special package for subscribers to get Sirius at an attractive price. It behooves us to consider every possible way we can grow our profitable subscriber base and our revenue.”
Sirius XM said it has nearly half a million subscribers now on new package plans with the vast majority of those subscribing to the higher-priced packages like Best of Both programming.
Sirius said three-quarters of those signing up for Best of Both programming are XM subscribers adding Best of Sirius. Karmazin believes more Sirius subscribers will seek to add Best of XM once the company can negotiate a deal with MLB to offer baseball to Sirius subscribers. In addition, he said, a number of automakers are now offering Best of Both programming in their trial packages for new car buyers.
