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Old 12-30-2006, 10:27 AM   #1
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Default A Look Ahead At Satellite Radio in 2007

2006 was a busy year for Sirius. From Stern to the Stiletto, Sirius introduced exciting new content, smaller hardware, and added approximately 2.5 million net subscribers by the end of this year (based on the latest guidance). 2007 is already shaping itself up to be a stellar year as well for the company. Here are some things to look out for in the coming weeks and months ahead:

-CES: Sirius released an entirely new line of products this past fall, so they will probably not unveil too much. There will probably be an OEM announcement or two, a couple niche tuners or accessories, more information about video, assuming it is not delayed yet again, and possibly a revamped channel lineup(more on that later), but don’t look for anything earth shattering, at least to the public. They may do what they did last year and setup a hotel room for a private viewing with retailers and others. They are sharing a booth with their main distributor, Directed Electronics.

-XM @ CES: They will likely have a much stronger presence there than Sirius. They released only one new plug & play or portable radio last fall - the SkyFi 3. The other radios will all be about 9 months old at least when CES starts. With the Sirius Stiletto having twice the storage capacity of the Pioneer Inno or Samsung Helix, it is time to release either an updated Inno/Helix with 2-4 GB of memory, or have a new lineup of portables. The Roady XT and Audiovox XPress, the two entry-level radios, have both been out since fall 2005, making their likely demise imminent. They have their own booth, bracketed by Delphi, one of their main distributors, and Honda, one of their main car companies, who also holds a stake in XM.

-Channel lineup: It has been a while since there has been a truly large channel changeup. The last time music channels changed was September 29th, 2005. With Sirius moving The Who Channel to 98, it looks like they are positioning to drop The Globe, and position channel 98 to be an artist showcase. They also have NPR up for renewal in February, so if they lose them, it would be a good time to do a channel shuffle.

-NPR: The exclusive agreement ends in February, so what happens? NPR can opt to go with one, both, or neither satellite radio provider. A big factor could be if one buys Morning Edition and All Things Considered, but word on the street is NPR wanted $5 million per year a while back, so whoever purchases these programs could likely have an exclusive. If neither wants to pay, and I wouldn’t blame them because the programs are carried on about 600 US radio stations, then it will likely go non-exclusive, with both companies carrying it since they need to watch their costs over the next 12-24 months, which brings us to…

-Cash Flow Breakeven: In 2007, investors will look less at how well XM and Sirius do acquiring subscribers, and how well they can stem their losses. With XM poised to hit cash flow breakeven either this quarter or next, all eyes will turn to Sirius to see when they will hit it. If they don’t in 2007, the stock will take a tumbling.

-Subscription Rate Hike: It was predicted to happen in early 2006, and it didn’t. Sirius has stayed at $12.95, and that price will have to go up eventually. Since they figured out the $12.95 price, they have paid large sums for exclusive content, including Howard Stern ($100+ million per year), the NFL games ($30+ million per year), Martha Stewart ($7 million per year) and NASCAR ($20 million per year). If there is a price hike, it will be Sirius before XM, and probably to $14.95 for the primary subscription, and $7.99-$9.99 for multiple ‘family plan’ subscriptions. XM will likely match any ‘family plan’ price increases, but stick with the $12.95 for the primary sub in order to gain more people by going with the ‘lower cost’ route.

-Churn: It will increase, simply because there are more subscribers now that could potentially cancel. Hopefully Sirius has a program in place to help retain existing subscribers, and convert more people on the OEM promotional periods into self-paying subscribers.

-Subscriber estimates for 2007: After both companies reducing their guidance substantially, albeit XM more than Sirius, look for more conservative guidance for 2007. Probably around 8 and 10 million total subs for Sirius and XM, respectively. I was going to give a paragraph or so talking about how retail will become a smaller focus compared to OEM installations by GM, Honda, etc., but Ryan over at Orbitcast beat me to the punch yesterday with an amazing in-depth analysis on the issue.

-Five Year Anniversary: Sirius, along with Sirius Backstage, launched on February 14th, 2002. What will they do for their fifth year anniversary? What will we do for ours? Stay tuned to find out!

Last edited by BenDee; 12-30-2006 at 11:43 AM..
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Old 12-30-2006, 12:51 PM   #2
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NPR:

I understand what you're saying about All Things Considered (NPR's flagship program) being on local FM stations, which makes it less attractive to satellite. But one thing Satellite could do is air the program for a longer period. My local stations air the program between 4PM and 6:30PM (they used to have it until 7PM, but now preempt the last half hour for Marketplace). On satellite, it could air between 4PM and 10PM Eastern. That way people can tune in for an hour whenever they want, and it would be there. The same thing can happen with Morning Edition (6AM to 12PM Eastern). Those two programs, plus maybe Talk of the Nation (or something else) between 12PM and 4PM would be on NPR1, and all other programs on NPR2. That would be a great lineup, and would attract a lot of subs, I think.
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Old 12-30-2006, 12:51 PM   #3
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I don't know much about Sirius when it comes to it's operations, numbers, etc but that entire post just depresses the hell out of me. Seems like in the upcomning year the potentail lineup changes all seem negative (less choices, not more) and a certainty that the price will go down, along with Sirius's subscriber numbers...That's very depressing!
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Old 12-30-2006, 01:29 PM   #4
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Thanks for the update BenDee...
Does SBS have any plans for a nascar forum or will it fold in with the sports forum? I was curious if others have expressed interest? Also I hope sirius finds a way to keep NPR....I would certainly understand if its a money issue however being a listener I would hate to see it leave...
One more thing to all those responsible for the improvments to the Blog and other areas here....GREAT JOB!.....I look forward to your 5yr anniversary
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Old 12-30-2006, 02:10 PM   #5
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Siriusurfer: right now there aren't any plans for one. If there is a lot of discussion about NASCAR here, then it would warrant its own forum, like Stern or the S50/Stiletto

-Ben

PS: Why would you post about NASCAR in the sports forum? It isn't a sport!*ducks and runs*

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Old 12-30-2006, 02:18 PM   #6
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I really, really hope NPR doesn't leave. That and Sirius Left are my channels besides H100 and 101.
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Old 12-30-2006, 02:48 PM   #7
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If the subscription rate goes up, would it be advised to get the lifetime subscription? I presume if you have the lifetime already, they won't try and hit you again?
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Old 12-30-2006, 02:51 PM   #8
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Quote:
Originally Posted by sentinel
If the subscription rate goes up, would it be advised to get the lifetime subscription? I presume if you have the lifetime already, they won't try and hit you again?
I just repaid the year sub on two radios so I'm good until 2008. Might be a wise move.
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Old 12-30-2006, 03:19 PM   #9
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If you go for a lifetime, they cannot force you to pay more after the first payment. What they could do though, is increase the $75 fee to transfer your lifetime sub from one radio to another.
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Old 12-30-2006, 03:39 PM   #10
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Quote:
Originally Posted by badmotherfarker
I just repaid the year sub on two radios so I'm good until 2008. Might be a wise move.
I don't know about gettng a lifetime sub or even a year sub because I have such an old model. A year sub might have made sense since I've had it for over a year now but if the prices go up, I guess I'll look into it.
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Old 12-30-2006, 03:39 PM   #11
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That would suck. What does it take to transfer a registration? It can't be that tough.
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Old 12-30-2006, 03:52 PM   #12
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VinnyM27: what model radio do you have?

Sentinel: you call up Sirius and ask them to switch the radio for you. The cost is because they take a loss on the radio when they sell it to you. Most people do a monthly subscription, so that's how they make their money back on it, so the lifers have to pay the $75 in order to get it transferred. If it breaks under warranty though, there is no fee, IIRC.
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Old 12-30-2006, 05:07 PM   #13
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A couple people on here have said that SIRIUS didn't charge them anything to switch radios under the lifetime plan. The CS rep also told us that we get 3 free switches before being charged, regardless of what the fine print says.

Me and my g/f were also able to get 2 lifetime plans under only one account, something that you're not supposed to be able to do either. Glad we got them though.

Also, if you are currently month to month or yearly and want to upgrade to the lifetime plan, SIRIUS will pro-rate you on what you have paid already so you don't lose any cash over being upgraded.

For instance, if you have already signed up for another year's service a month ago and you want to upgrade, they should deduct how much it cost you for that month and credit it towards the cost of your lifetime plan. In our case, it was only a weeks worth of service that we had them pro-rate from the yearly plan, onto the lifetime plan.

Now, will they do this pro-rating for people who have been subbed for over a month or so on the yearly plan? I'm not sure, maybe so.
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Old 12-31-2006, 04:03 AM   #14
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I was wondering about that...I am 1yr into a 2yr sub. If I get the lifetime will they deduct the 2yrs I already paid into the cost of the lifetime sub ?Maybe it depends on who you talk to at CS? Guess ill be making a call to sirius soon..

PS....Ben Dee I don't think nascar is a sport either ...not sure where else it would fit here, maybe a stand alone?
Now that I think on it I would be suprised if there was enough interest to warrant a nascar forum.
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Old 12-31-2006, 09:21 AM   #15
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Quote:
Originally Posted by VinnyM27
I don't know much about Sirius when it comes to it's operations, numbers, etc but that entire post just depresses the hell out of me. Seems like in the upcomning year the potentail lineup changes all seem negative (less choices, not more) and a certainty that the price will go down, along with Sirius's subscriber numbers...That's very depressing!
The outlook expressed in this reality-check article also gets to me. To think that Sirius went out of its way to get Howard and the other "attractions" and find itself "plateaued" after only a year makes one wonder what's left out there to grab. Now the question is: will Sirius be good at supporting its subscription base with quality programming because that's where it stands to loose the most. It looks to me like we're approaching the time where subscription numbers are leveling out, and looks like this period may have approached much sooner than expressed in some business article I read earlier this Fall.

I for one joined Sirius on November 7 of 2005 in anticipation of You-know-what and reniewed my yearly subscription this past month. Now You-know-Who is 53 and realizes his jokes may be going out of style, at least for him, as expressed by the countless moments of silence and annoying "humms" throughout his show. That may not translate well in the coming year for the Howie fans.

Finally, satellite radio is like other technology enterprises: there's a time for growth and a time for sustenance and we're approaching it. I would define sustenance as the ability for a company to stay healthy through revenues generated by a fervent customer base. Now that Sirius put so much at stake in 2005-2006, will it be able to keep us around. That is my concern.
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