Stressing that churn remains the company’s No. 1 challenge, SiriusXM CEO Jim Meyer stressed that “our whole intention is to get customers who love our product in the car, at home and on the go.” Speaking at the 2019 Media, Communications & Entertainment Conference Wednesday at the Beverly Wilshire Hotel, he added, “We have to work every hour, every day to keep our customers engaged and see our product as a good value. We have got to very diligent about churn,” which averages in the 1.8% to 2.0% annual range.
Looking at the overall health of the SiriusXM biz, Meyer told the audience of investors, “I don’t think we’re anywhere near the end of our subscriber growth. Our guidance is to gain one million subscribers this year, and we’re very confident in that metric. I think we have many years of growth ahead of us.”
In fact, as more cars on the road are equipped with satellite radios, “our used car business is now growing very rapidly,” Meyer explained. A new factoid we’ve not previously heard: Trials from used cars now equal those in new cars “and will soon be bigger.”
As has been discussed on quarterly earnings calls, the company is now moving to amp out-of-car listening, including its move earlier this year to add streaming free for all Select subscribers. “We’re trying to get subscribers through standalone streaming, through the phone and other devices, so there is still a lot of room for growth,” the CEO stressed. “We’ve worked really hard on our app to make it more intuitive,” while also forging partnerships with the likes of Amazon and Sonos to bring SiriusXM to smart speakers, in an effort to “broadly expand our distribution with in-home partners. Engagement is best way we can improve churn.”
Asked about the high-profile partnership the satellite company—and its sister Pandora—has with Drake, Meyer explained, “Our business is all about content. Customers pay us for engaging content, and they like big names, curated content, brands.” He added, “I don’t think we could have done the deal with Drake if we didn’t own Pandora. He wants to be partners on a gigantic platform.”
And discussing strategies for Pandora, he stressed that he remains confident about the acquisition, but admits it needs work. “The good thing is, to be competitive in this game, you need to have a big platform. So between the two, we have almost 100 million listeners.” The first order of business with the streaming platform was to “stabilize Pandora and stop the bleeding.” Next are efforts to cross content to both platforms “to see what might energize (Pandora’s) free base. We’ve been very aggressive on synergies in the company.” He adds that Pandora’s app needs more features and better ease of use; improved company marketing; and increased presence in the vehicle. “It’s a hard problem, but it is a huge focus for me and our management right now.”
Addressing podcasting, Meyer acknowledged the increasing important of the channel, saying that SiriusXM will definitely get more involved. Hypothetically, “If we were to put Howard (Stern) in a podcast format in a paywall, it certainly would become one of largest podcasts,” he began. “And podcasting is clearly a preferred way with younger consumers… how they want to consume spoken word content.” But the company is also approaching the medium with caution.
“We believe that curation and brands are going to matter in podcasting. We’re going to stay with that at the forefront—but we are not going to overpay for this stuff. It remains unclear how it’s going to be monetized, so we’re not willing to pay to get exclusive content or make a dramatic move, overspending, as we figure it out.” That said, “You’re going to see a lot of focus from us in the space. We absolutely need to be in that business.”
Meyer was asked if he believes that competition is increasing for audio in the vehicle. He more or less scoffed at the notion: “There’s always been very stiff competition in the vehicle. There’s AM and FM radio, which is still a gigantic medium, and absolutely the easiest to use. Radio has lots of good channels that are good competition. And Spotify is a good product. What we intend to do to continue competing is to allow our consumers to seamlessly broadcast or stream for a carried-on or embedded device with a couple pushes of a button.”