Sirius CEO Mel Karmazin at Citigroup Conference - Our Notes And Thoughts
Notes from the Citigroup Conference Presentation by Sirius CEO Mel Karmazin:
-Mel does not like the lifetime subscriptions, because the people using it are probably Sirius’ biggest fans.
-Price hike is possible, but not happening at this time
-They hope to hit goal of 10% of revenue as advertising this year
-No more major deals to do, minor deals still out there though
-Portable device is not a mass-market future, in his opinion
-Deal with MP3 hardware company: maybe, thinking about the relationship, but then there is another company wanting a profit on the device, possibly driving up costs
-Sirius pays 2-3% royalties now to the RIAA, RIAA wants 10%+, Sirius thinks it is worth less than 1%. Music is a good foundation, but they have to add the other content in order to drive subs. Hope to have an agreement or court decision by the end of 2007.
-Agreement with the OEMs for a certain maximum number of ‘contact times’ when Sirius can contact the sub on a promo plan to become self-paying, done in order to receive the names and addresses of those that got Sirius in their car.
-They want to do movie times, price of gas around you, etc. in the future. It would require adding a GPS receiver to the car.
-Confirms that Sirius not FCF + on an operating basis yet, just on a total basis.
Thoughts:
-Making a deal with Creative or Sandisk right around now would be a great thing. While it might make the device cost a little more, such a radio would have greater marketshare than just going it alone, and would bring in greater penetration into retail.
-Lifetime may not bring Sirius more money in the long run, but it helps keep churn lower, albeit probably not by much. I’d say it is good to get OEM subscribers, and keep them.
-Movie times and such has been hinted before, and Sirius has done surveys asking as much. It would be an interesting feature, and possibly one of the best ideas in terms of bandwidth use per unit of revenue that they could want.
-Subscription hike probably happening, but only a $1 or two. Above $14.99, and it has a psychological effect. Probably larger hike for family plan members, to $9.99, but those are just my thoughts.