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SiriusXM expects to grow its self-pay subscriber base in the current second quarter despite headwinds from the novel coronavirus pandemic, CEO Jim Meyer said Thursday during the audio entertainment giant’s virtual annual shareholder meeting.
He said he expects self-pay subscriber additions for the quarter to be “positive,” while analysts have recently estimated self-pay subscriber losses of around 200,000 for the period. B. Riley FBR analyst Zack Silver in a Thursday report, which was published before the meeting, forecast that SiriusXM would lose 148,000 self-pay subscribers in the second quarter and 458,000 paid promotional subscribers.
In the first quarter of the year, with the second half of March hit by the pandemic, SiriusXM added 69,000 self-pay customers, down from 131,000 in the year-ago period, while losing 212,000 promotional subs. That meant it ended March with more than 34.8 million subscribers, including more than 30 million self-pay users.
Meyer in his prepared remarks said the company has “maintained a very strong” level of liquidity, “and I have no concerns here.” He cited SiriusXM’s strong free cash flow and reductions on spending in such areas as hiring, highlighting that the firm plans to continue paying its dividend and restarted stock buybacks after its first-quarter earnings call.
Hit hardest and earliest by the pandemic was digital audio advertising, Meyer said, calling April “difficult,” while May was “certainly better than April” thanks to “some more stability.” While his team was encouraged by how June is looking, he said visibility remains limited and ad cancellations higher than usual. “Every media company has been hit in the ad sales area,” he said. “We were no exception.”
The SiriusXM CEO on Thursday also said car sales trends have been better than management had feared, particularly in retail sales, which are more important for the company as they exclude rental car segment sales. “I see that as a very encouraging sign for car sales going forward,” Meyer said.
Churn, which he said is maybe the best monitor of consumer sentiment for the company, is “also encouraging,” he shared. But Meyer didn’t provide specific figures for key financial and subscriber metrics, mentioning that SiriusXM earlier this year withdrew its guidance due to the coronavirus uncertainty.
SiriusXM CFO David Frear also said in May that it was unclear what path a recovery would take following the pandemic and the recession that is expected in its wake. He said the virus crisis drove down sales of new and used cars, with stay-at-home listening to Pandora and SiriusXM only partially offsetting 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 a conference.
Meyer only got a few shareholder questions Thursday. One was about possible salary and bonus reductions for top executives. “As hard as the pandemic has been on the country … at SiriusXM, we took quick and immediate steps to reduce spending and to temper our hiring profile in a way that I believe will provide the cost relief that we need going forward,” he replied. The biggest portion of executive cash compensation is bonuses, and “if our performance is not up to previous periods’ performance,” he said, he expects bonuses to come in lower.
Asked about competition from live TV and other entertainment options in the car, Meyer said market appetite for live video was “not particularly robust,” but added that this could change over time. Importantly, he said that “listening in the vehicle has continued to be strong,” adding that he expects that to be the case for many years to come.
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