SiriusXM used its appearance at the BofA Securities Media, Communications & Entertainment Conference to trumpet new full-year 2020 subscription guidance and where the satellite broadcaster is placing bets to grow its audio footprint. The company expects to add 700,000 self-pay satellite radio subscribers by the time the ball drops in Times Square on Dec. 31.
“Almost everything is stronger” than when the company last provided guidance of 500,000 additions in late July, CEO Jim Meyer said at the virtual event. “Our trial funnel is now beginning to rebuild itself,” he added, as the company holds onto subscribers and wins back some it lost during the pandemic. Auto sales, a key driver of subscriptions, continue to recover and the company’s penetration rate in both the new and used car businesses is on the rise.
Internal research shows subscribers that stream SiriusXM, in addition to listening on car radios, are less likely to cancel so the company is pushing its streaming app in the home and when subscribers aren’t in their cars.
Meyer told Jessica Reif Ehrlich, Managing Director, BofA Securities, that “just running our core business better” represents the company’s greatest growth opportunity. Beyond that it sees an upside in increasing ad sales which now, thanks to its acquisition of Pandora, account for 12%-15% of total revenue with the potential to hit 20%.
Since acquiring Pandora in February 2019, SiriusXM has focused on reigning in the streamer’s costs, stemming the tide of listeners bailing and boosting ad sales. More people listen to AM/FM radio than anything else, Meyer acknowledged, and Pandora is working to entice them and keep them once they tune in. It has cut exclusive content deals with LeBron James, Drake and other mega-watt stars to attract new listeners and plans to bring more spoken word content to Pandora, including live programming. “We believe that live is important if you want to succeed in the free business,” Meyer said.
Against the backdrop of the IAB’s Podcast Upfronts this week, Meyer asserted that podcasting would be part of both SiriusXM and Pandora’s future offerings, some of which will be free and some behind a paywall. Podcasting “has the opportunity to expand the whole audio pie,” said Meyer. “There is going to be enough content out there for everybody to figure out a way to make podcasting very, very interesting.”
But the biggest opportunity, he predicted, will come from offering a form of audio content that hasn’t been done before, not unlike how the medium exploded with the introduction of “Serial” in 2015. “What we've learned in entertainment, whether in video or audio, is if you can bring a new compelling form of content to listeners in a way that’s easy for them to get and easy for them to use, they will like it,” said Meyer. He pointed to content in the pipeline from Marvel Entertainment and other partners as “new entertainment experiences” that offer the medium the greatest room for growth.
Like countless other businesses that have been forced to shift into a work-from-home mode due to COVID restrictions, Meyer said he’s reevaluating the company’s real estate needs. “It will be a long time before I lease any more office space, for sure,” he said, adding that the company plans to have some employees continue to work from home even after it’s safe for them to return to company offices.
And what about the obligatory Howard Stern question? While the superstar’s contract expires at year’s end, Meyer said he isn’t afraid about not renewing him. During Stern’s 15 years in satellite radio, his contract negotiations have always come right down to the wire. Meyer’s message throughout this round of talks is that he wants Stern to work at SiriusXM as long as Stern wants to work and that the quality of his show and guests has never been higher. “I’m personally deeply engaged in conversations with Howard’s team,” Meyer said. “I’m very optimistic about those conversations as we continue to make progress. So stay tuned.”