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Even if people aren’t commuting in their cars as much while they shelter in their homes during the coronavirus pandemic, satellite radio powerhouse and Pandora owner SiriusXM has yet to take a big hit to its bottom line judging by its recently released first-quarter earnings.
But while listening of Pandora and SiriusXM offerings is up for stay-at-home consumers, David Frear, senior executive vp and CFO of SiriusXM, warned Tuesday that his industry faces an uncertain future. “I haven’t talked to anybody who has a good picture of what the recovery will look like,” he told the J.P. Morgan Global Technology, Media and Communications Conference during a session that was webcast.
Frear said the COVID-19 crisis has driven new- and used-car sales down sharply, relative to year-ago levels, while stay-at-home listening to Pandora and SiriusXM has only partially offset the impact of lower advertising revenue.
“People are not commuting as much, but as they come into the home, they’ve carried over a lot of those (listening) habits into the home,” Frear told the investors conference. As American workers, including at SiriusXM, increasingly work remotely, the satellite radio broadcaster has promoted online streaming and introduced promotions to build out and sustain its online listening businesses.
And sales of new and used cars have begun to come back as the U.S. economy slowly reopens and are not as bad as Frear feared. But the SiriusXM exec cautioned that a question mark remains over how many commuting Americans eventually will leave their homes to return to their workplaces as the U.S. economy reopens, especially if there’s a second wave of the coronavirus in the fall.
Frear also pointed to an economic recession impacting subscriber and advertising trends: “Unemployment is stress. And that’s got to have a knock-on effect for people spending money. And there’s another wave of this that we haven’t seen yet. But we’re encouraged by the downstroke so far not having been as bad as we feared in the beginning.”
Frear predicted the hit to SiriusXM subscriber levels will be felt later this year, amid the absence of strong new-car sales. SiriusXM recently unveiled better-than-expected first-quarter results as Americans listen more to music streaming services overall amid the pandemic than before it hit the U.S. economy in March.
Frear said weekly active users for SiriusXM are up 30 percent in early May, compared with January, as listening in the homes via bluetooth speakers and other consumer electronics technology has helped mitigate the impact of reduced car listening.
The SiriusXM finance chief also ducked a question about company parent Liberty Media possibly increasing its investment in iHeartMedia, which owns internet station iHeartRadio. “At SiriusXM, we got our heads down and focused on Pandora products, SiriusXM products,” he said. “We’re 100 percent focused on that.”
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