About Sirius XM Radio Inc.
Sirius XM Holdings operates Sirius XM Radio, which transmits music, sports, entertainment, comedy, talk, news, traffic, and weather channels to some 35 million subscribers in the US and more than 2.5 million subscribers in Canada. The home of Howard Stern offers two proprietary satellite radio systems; a streaming service accessible via desktop, mobile apps, smart speakers, and other consumer electronic devices; and connected vehicle services. The company has equipment alliances with several automakers; it also sells satellite radio equipment through its website and through retail outlets such as Amazon. In 2019, SiriusXM acquired music streaming service Pandora for $3.5 billion. Liberty Media owns a majority of the company.
More than 70% of Sirius XM's revenue comes from subscription fees. The remainder comes from advertising, equipment, and ancillary revenue.
Subscription revenue includes self-pay and paid promotional subscriptions and other fees for its programming line-up of commercial-free content. Advertising revenue includes the sale of advertising on certain non-music channels. Equipment revenue includes revenue and royalties from the sale of satellite radios, components, and accessories.
Based in New York, Sirius XM has more than a of dozen properties -- including offices and studio/production/engineering facilities as well as a data center, a call center, and a warehouse -- in several states. These include New Jersey, Florida, Minnesota, Tennessee, Georgia, Virginia, California, Texas, and Washington, DC.
The company also has approximately 540 locations for use in connection with the terrestrial repeater networks that support its satellite radio services. In general, these leases and licenses are for space on building rooftops and communications towers.
Sales and Marketing
Sirius XM's sales and marketing activities include advertising, promotional events, and sponsorships along with direct mail, outbound telemarketing, email communication campaigns, and digital performance media.
The company has two primary subscription categories: self-pay (from consumers) and paid promotion (bundled with a car purchase/lease). In 2019, Sirius had approximately 30 million self-pay subscribers and approximately 5 million paid promotional subscribers. The company works to grow self-pay subscribers through converting trial promotional subscriptions.
During 2019, 2018 and 2017, the company recorded advertising costs of $392 million, $267million and $263 million, respectively.
SiriusXM has experienced year-over-year revenue growth over the most recent five-year period, with an overall growth of 75% from 2015 to 2019. Meanwhile, its net income has struggled to gain steady growth, but overall increased 79% from 2015 to 2019.
The company's fiscal 2019 revenue increased 35% to $7.8 billion, up from $5.8 billion in 2018. Revenue in all operation segments grew: subscriber by 7%, advertising by 9%, equipment by 12%, and other by less than 1%.
SiriusXM saw its net income fall to $914 million in 2019, down 22% from prior year. The decrease was due to higher operating expenses.
Cash at the end of 2019 was $120 million. Cash provided by operations was $2 billion, while investing activities used $3 million primarily for additions to property and equipment. Financing activities used $2 billion primarily for repurchased of common stock and dividends paid.
In 2020, Sirius XM made an investment and an acquisition to provide a better customer offering, as well as reach a larger audience.
Sirius XM invested $75 million in SoundCloud. The agreement enables advertisers and brands to purchase SoundCloud's US ad inventory directly through Pandora, leveraging the company's direct sales capabilities, targeting data, and audio programmatic platform.
To attract podcasters of any size, the company acquired Simplecast, a leading podcast management platform that enables podcasters to publish, manage, and measure their content, and paired it with AdsWizz to create an end-to-end solution that enables creators to publish and generate revenue from their podcasts, all in one place.
Mergers and Acquisitions
Sirius XM completed the acquisition of Pandora for $3.5 billion in an all-stock deal in early 2019 to become the world's largest audio media company. Pandora is the largest US streaming music provider with a personalized, free ad-supported service, and the combination caters to more than 100 million listeners in North America. These two brands are positioned to lead a new era of audio entertainment by delivering the most compelling subscription-based and ad-supported audio experiences to millions of listeners. The combined companies will drive long-term growth and value for its stockholders.
XM and Sirius launched as competitors in 2001 and 2002, respectively. Howard Stern gave Sirius Satellite Radio a big boost when he left terrestrial radio for the company in 2004. The two companies merged in 2008, figuring joining forces would help them better contend in the premium audio space.
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