With Mel Karmazin now gone, Sirius looks to his replacement Jim Meyer to continue to grow the company. For the first quarter, Sirius saw subscribers, revenue, and income all grow, but perhaps not as high as the stock market would like. Most concerning may be the cost associated with keeping subscribers paying and not leaving or churning from the service. As more and more automakers include Sirius in their audio package, the challenge is getting these customers to take the service past the free period.
As a new car owner, I enjoyed the free period but admit to not purchasing the service when the free trial ended. We tend to drive less and use mass transit more. Most car use for us is short trips around the area with few long distance driving. The result, the radio is not on that long in the car. And local radio stations provide the news, sports, and music that we need. We can also link to our iPod when we desire to personalize the music we want to hear. I would however consider a Sirius subscription if my driving habits required more long distance, out of area trips, where station strength fades and switching stations is a requirement. Sirius provides a valuable assortment of entertainment for those kind of drivers.
Whether Sirius can reduce its churn to increase subscription above expectations remains a challenge. Price point also plays into the consumer decision to retain or leave the service. But given that Sirius has an opportunity to also grow ad revenue can help improve their bottom line. It also helps that better research can be gleaned from listeners to help sell a more targeted ad campaign. The hope I'm sure for Sirius is that an improved economy means more call sales and more customers testing the service.
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