New York - Sirius XM CEO Mel Karmazin told analysts today he is cautiously optimistic that the auto industry will improve, as will satellite radio's subscriber acquisitions.
"From my vantage point, this was the bottom in subscriber trends, and we expect to see improvement going forward," said Karmazin, adding, "We need the auto industry to improve, and we are confident it will ... we are now cautiously optimistic about the rest of the year and 2010."
Speaking on a conference call with analysts after reporting its second-quarter financial earnings, the company also reiterated its pursuit of the used-car market and said millions of cars with satellite radios will become available to second- and third-time buyers over the next 3.5 years.
Sirius XM operations and sales president Jim Meyer said, "We're very excited about the growth potential of second and third owners of factory-installed satellite radio," noting the challenge is finding the owners of the vehicles. Sirius XM will work with independent sources to "get contact names and addresses" of used-vehicle owners to offer them promotions. "I think it's a huge emerging channel," he said, qualifying that it will take some time to fully develop.
Sirius XM also expects to announce more promotional deals with car makers on certified pre-owned vehicles, it said.
In response to an analyst's question, Karmazin admitted that churn may increase due to a $1.98 monthly pass-through music royalty fee (which users pay in addition to their current monthly service charges) that Sirius XM implemented in July. Karmazin stated, however, "We know we will be recouping hundreds of millions of dollars of cash" and said that Sirius hadn't raised its prices since 2002, even after adding Howard Stern, the NFL and Nascar to its lineup.
Regarding the recent launch of a Sirius XM iPhone application on Apple's App Store, Karmazin said, "We thought the iPhone was a very smart launch for us ... unlike a lot of apps, we're not offering free service. We're offering a free download and a week's trial, so this was never designed to get a significant number of new subscribers." But, Karmazin said, an increasing number of current subscribers are adding the iPhone service for an additional $2.99/month. He also said Sirius will "continue to do more of these things," presumably referring to apps on other smartphone platforms.
Karmazin said Sirius XM continues to be open to deals with DirecTV but offered no specific plans.