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Sirius: By Any Other Name A Loss
There's a story about Sirius Satellite Radio releasing Q2 earnings linked below. It carries the same tone reported here about XM's Q2 numbers: bleeding but healthy, with a bright future.
According to the financial statement, "SIRIUS reported a net loss of ($177.5) million*, or ($0.13) per share, for the second quarter of 2005 compared with a net loss of ($136.8) million, or ($0.11) per share, for the second quarter of 2004." Sirius also "reported revenue of $52.2 million for the quarter, a 295% increase over the $13.2 million reported for the year-ago quarter."
For the first half of 2005, "SIRIUS reported a net loss of ($371.2) million." That's compared to a net loss of ($280.9) million, or ($0.23) per share, for the six months ending June 30, 2004. But read the article linked below; you'd never guess there might be trouble in River City.
The magic in Sirius' name comes from it having Mel Karmazin, master salesman and cost cutter, who's charismatic enough to get a picture next to the article in Advertising Age. (Name one broadcast radio leader who's enjoyed that luxury over the past five years.)
Mr. Karmazin is optimistic after adding 7-8 people to the sales staff. He also put more people on the streets during his days at Viacom's Infinity. More will follow at Sirius.
Then there are the subscriber counts. While we hear constant chatter about satellite radio being the equivalent of cable TV ("Who would pay for TV?), it's in the subscriber area that these two industries share the most in common. Cable, during its youth, would never let anyone know how many were watching. It would, however, throw around the number of "homes passed," which gave the impression cable TV reached millions long before that was true. Perception.
Receiver count means little to advertisers. How many people are listening is the number they want. But that's never discussed by either satrad company.
So, getting back to that optimistic tone in Sirius' financial statement, it comes from increased subscribers and a lower subscriber acquisition cost (down to $160). This means that for the first year, with no other expenses considered, Sirius now loses only $4.60 for every subscriber it has ($12.95/month x 12 months = $155.40).
With Wi-Max and downloading music to your car in our future, and a broadcast industry that's starting to react to competition, ask yourself if this is a business model you'd want to follow. And why is everyone so optimistic?
*
These Q2 losses were part of the total:
The company's adjusted loss from operations increased
by $11.5 million to ($108.8) million...
Programming and content expenses increased by $5.7 million
to $16.1 million...
Engineering, design and development expenses increased by
$5.9 million to $11.8 million...
Customer service and billing expenses increased by
$3.2 million to $7.7 million...
General and administrative expenses increased by
$9.8 million to $29.0 million...
Six-month losses shown in the report (June 2004 vs June 2005):
The company's adjusted loss from operations increased
by $60.5 million to ($235.8) million...
Programming and content expenses increased by
$21.5 million to $40.6 million... (There's no
mention of Howard Stern or Martha Sterwart,
which will add $525 million to that "programming
and content expenses" loss.)
Customer service and billing expenses increased by
$8.8 million to $17.2 million...
Sales and marketing expenses increased by $8.0 million
to $68.8 million...
General and administrative expenses increased by
$9.8 million to $29.0 million...
Related Article:
Ad Age
Posted:
13:17 8/4/2005
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