- Share this article on Facebook
- Share this article on Twitter
- Share this article on Email
- Show additional share options
- Share this article on Print
- Share this article on Comment
- Share this article on Whatsapp
- Share this article on Linkedin
- Share this article on Reddit
- Share this article on Pinit
- Share this article on Tumblr
Audio entertainment giant SiriusXM, the home of Howard Stern, is confident in its traditional core business and growing new areas, CEO Jennifer Witz said on Monday.
Speaking at the virtual Bank of America Securities 2021 Media, Communications and Entertainment Conference, she said while “the car will remain the foundation of our business” that “increasingly our growth going forward will come outside of the car, with both digital subscriptions and from our ad platform.”
Asked about her biggest concerns for the business, Witz said, “I worry about a recession” or economic pullback, because SiriusXM offers “a premium subscription services – there is always a risk that customers don’t want to pay for what we are offering.”
Addressing the impact of the coronavirus’ delta variant and soft August car sales, the SiriusXM CEO said that could “pressure” subscriber trends in the current fourth quarter and, if these trends persist, in 2022. “We maintain full confidence in our subscriber and financial guidance,” she reiterated though.
Asked about concerns that the likes of Apple or Spotify could eventually enter the car segment aggressively, Witz said “we have been in the business” for 20 years, adding that the firm has faced various forms of competition, but has succeeded thanks to the ability to offer attractive content easily and be a good partner to car companies.
Digital subscribers without a car are a growing part of SiriusXM’s user base and a “big focus” going forward, Witz also said on Monday. “Our marginal economics on the digital side are fantastic and they are really on par with our satellite subscriber economics, which is very different from what you see in the interactive music space,” she highlighted. Witz also noted a current promotional campaign, focused on the theme “no car required,” that highlights the company’s “phenomenal talent.” She added that SiriusXM also wants to increase the time car users consume the firm’s content outside their vehicles.
With John Malone’s Liberty Media owning around 80 percent of SiriusXM, Witz was asked about the firm’s capital allocation strategy, responding she expects continued stock buybacks and dividends over the long-term. “When Liberty goes above 80 percent, they could choose to participate in our buyback, I know they have talked about that,” she added. “We could certainly afford a higher dividend payout or a special dividend, but these are all options and they are evaluated alongside our options” of investing internally or making acquisitions or other deals. Witz concluded the SiriusXM board would make “the best decisions for all shareholders.”
Touting the growth potential in the podcasting space, including from advertising, Witz said SiriusXM is open to offering listeners owned-and-operated and third-party podcasts and also wants to provide “unique opportunities for talent,” such as Tom Brady, Megyn Kelly and Kevin Hart.
Discussing the company’s content strategy in a competitive field, she said exclusivity is “just one piece,” but “what is most important is curation.” Live content is appealing and provides new opportunities, even though “we have always strongly believed in live,” she added.
SiriusXM this summer reported that it added self-paying subscribers in its satellite radio and Pandora units during the second quarter and raised its financial forecast for the full year 2021. The company said back then that it was on track to add 1.1 million self-pay subscribers this year, its highest figure since 2018.
The audio company, controlled by John Malone’s Liberty Media, disclosed in its latest earnings report that total SiriusXM users at the end of June stood at 34.5 million, including a record 31.4 million self-pay customers.
“In our opinion, the market underestimates SiriusXM’s dominant long-term position in the car and the importance of the live nature of a material percentage of their programming,” Pivotal Research Group analyst Jeff Wlodarczak, who has a “buy” rating on the stock, wrote in a recent report. “Investors also underestimate the size of the growing used car conversion opportunity which also sports materially lower subscriber acquisition costs.”
And he argued: “A return to normalcy in the new car market and record low subscriber churn sets up ’22 to be quite solid from a subscriber growth perspective and SiriusXM management has shown an ability to be able to continue to grow average revenue per user.”
Sign up for THR news straight to your inbox every day