With interoperable receivers yet to come, Sirius XM CEO Mel Karmazin today announced plans to let XM subscribers buy some exclusive Sirius channels and visa versa. The offerings include Howard Stern, Oprah & Friends and lots of sports.
Speaking at the 2008 Merrill Lynch Fall Preview Conference in Marina del Rey, CA, Karmazin repeated his assurance that Sirius XM will produce positive cash flow next year and updated the company’s financial guidance for 2008 and 2009.
If you don’t want to shell out for a combined XM/Sirius receiver that’s supposed to become available later this year, the merged company is preparing to offer subscribers the opportunity to buy channels which have been exclusive to the other service. No word yet on pricing. “Sirius on XM” will offer Howard 100, Howard 101, Martha Stewart Living Radio, Sirius NFL Radio, Sirius NASCAR Radio and Playboy radio. “XM on Sirius” will offer NBA, NHL Home Ice, Oprah & Friends, The Virus, Public Radio with Bob Edwards, College Sports and PGA Tour.
While Karmazin is certainly an expert on selling advertising, even he can’t overcome the ad downturn impacting a broad range of media. He noted that national advertisers are leaving radio “in droves” and that apparently includes satellite radio as well. Karmazin said that’s why Sirius XM is still short of his goal of having advertising account for 10% of revenues.
Despite the slowdown in auto sales, which is where the satellite radio company is focusing its receiver sales, Sirius XM is projecting that it will end 2008 with 19.5 million subscribers and 2009 with 21.5 million. That’s much slower subscriber growth than in past years.
Karmazin’s revenue projection is a pro forma $2.4 billion this year and $2.7 billion next. The good news, he told investors, is that more synergies have been found from the merger than expected, so the company now estimates it will save $425 million in overhead in 2009 because of the merger. That is how Karmazin says the company will turn from an EBITDA loss of approximately $350 million in 2008 to positive EBITDA of about $300 million in 2009.
RBR/TVBR observation: Mel claims to have found even more synergies than expected now that he is able to see the inner workings of former rival XM. So, he’s boosted the net savings for next year to $425 million, producing $300 million in positive EBITDA in 2009. We’re still taking the attitude of we’ll believe it when we see it as far as posting positive numbers are concerned. But even if Mel succeeds in that regard, the satellite radio business still faces lots of obstacles – some of them the same obstacles facing AM and FM radio.