In this week’s earning call (see RAIN News coverage here), Sirius XM CEO James Meyer and CFO David Frear answered investor questions about connected cars, online streaming, and the recently settled pre-1972 lawsuits.
Sirius activates most of its consumer subscription;n business in autos. In the connected car realm, James Meyer spoke about an alliance with Nissan, and hinted at future announcements.
“Our second quarter launch of Nissan Connect Services powered by SiriusXM has gone off without a hitch and we look forward to working with Nissan and rolling out these services to more and more vehicles. We also continued to work with other significant global automakers on several new enhanced deals an
d we expect to have more to say on this in the coming months, again stay-tuned.”
Meyer takes the long view of connected car competition, while keeping an eye on fast-moving competitors in the online space.
“Our moves to take better advantage of connected vehicles by enhancing our audio service and providing new non-audio services are a long-term play that will take many years to develop. Of course, streaming and smartphone makers move faster with new services. Quite honestly, most of them are copy-cats, launching all the time. But don’t forget just how big terrestrial radio still is and how much listener and revenue share it still attracts. It is quite simply a huge industry that presents plenty of growth opportunities for newer entrants like SiriusXM and streaming players.”
In the Q&A portion of the earnings call, one investor noted the company’s favorable cash position, optimistic outlook, and recent label settlement in lawsuits around pre-1972 music royalties to ask about a potential Sirius XM streaming service to compete with Spotify: “There seems to be an environment of global demand for streaming subscription services with a real bias towards American kind of driven services. That might be an opportunity for you guys and I was just wondering how you think about that?”
James Meyer’s answer:
“I think your observation is correct. Our relationship today with the labels has never been better, and I’ve challenged myself personally as well as the key members of our team to figure out how we take better advantage of that to get our customers a better experience and a better offering. You’ll see us working hard on that in the months to come. In terms of global, we just really — a global license, quite candidly, it’s not on our radar right now. And we’ve got our heads down and concentrating really, really hard on the U.S. market.”
CFO David Frear tackled the streaming market more directly:
“I’d like to point out that we have looked at every music streaming service that has been on the market raising money in the last couple of years. None of them are making money. And as Jim said early on, at the end of the day business models matter, and we are business model people. So, just going global is not worth doing if you can’t make money on it.”