Sirius XM Never Made Sense to Me

Sirius XM, the digital radio co, is trading at $0.20, off its 52 week high of $3.94.  It's 95% down from that peak and about 99.7% down from its all-time high circa 2000.  Still, it's a company with $1b+ revenues, so it's not insignificant.  It's run by Mel Karmazin, who personifies old media to me.

I am not a bit surprised by the state of the company.  I never got satellite radio.  I presumed it's targeted at cars and delivered a constant, high quality signal so it was an improvement over traditional radio, but the high cost of equipment replacement and the high cost of subscription was always a barrier for me to ever become a customer.

Then I realized that the entire venture was dependent on biz dev relationships, which, for me, is the worst kind of competitive advantage for a business.  And in this case, this dependency was with car manufactureres.  The satellite radio companies were trying to get their equipment as standard accessories in cars, turning around and cutting expensive proprietary content deals, to turn and squeeze value out of customers.

This is so far from value at the edge.  So much of old media still does not get what business they are in.  I see this currently at play in Turkey, where the leading satellite TV provider, Digiturk, is trying to sell me Tivo capabilities for $500 for the box plus an increase in my $70/mo subscription.  Are they nuts?  I got my digital cable plus PVR plus unlimited local and national calls plus broadband in NYC (a very expensive city) in 2005 for less than $100/month.

Old media should look at their strategy, then at Sirius XM, and rethink.  Fast.

One thought on “Sirius XM Never Made Sense to Me

  1. One word: Pandora
    I listen to it everywhere. On my laptop, on my iPhone, at home through my media center.
    The price is right – the service is superb…
    Sirius and XM make sense only for pro truck drivers, etc. on cross country routes…


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