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Old 01-10-2007, 03:07 PM   #1
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<img align="right" src="http://www.citigroup.com/citigroup/domain/image/h_cg.gif">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.

Update: In response to someone asking on Orbitcast, there was merger talk, but it was the same thing as before: 'we think there are synergies, now investors need to look at it and decide'. No new news on that front.

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Old 01-10-2007, 05:08 PM   #2
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I only see a price hike if XM also does it. I don't disagree that they need to raise more revenue, but it will be challenging to do so.

Does anyone know what they collect for their deal with Dish?
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Old 01-10-2007, 05:40 PM   #3
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What does this line mean?

Confirms that Sirius not FCF + on an operating basis yet, just on a total basis.
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Old 01-10-2007, 10:42 PM   #4
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I think Sirius could safely raise their price this summer to about $14.95 and I think XM would follow shortly.
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Old 01-11-2007, 08:46 AM   #5
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While I think Sirius is worth 14.95, I think churn would go through the roof unless they gave the existing customers a chance to refresh their sub at the old rate before the price went into effect like XM did when they raised their prices. I bet XM wouldn't match right away, hoping to reverse the market share trend, and to win some unhappy with the price increase Sirius subscribers.

For lifetime subs, they could take those away without impacting the subscriber growth and I'm glad I got my lifetime sub. Perhaps they could make the lifetime sub only available on new car purchases.
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Old 01-11-2007, 12:03 PM   #6
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I got the lifetime sub, so my only pain would be if the raised the cost of the 3 family plans I have. If it went to $9.99, I'd have to consider downsizing...
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