Karmazin Tells Liberty Shareholders SiriusXM is Solid
     

SiriusXM has a solid business model and sees its technology being included in the dash by automakers for years to come.

That’s what SiriusXM CEO Mel Karmazin told Liberty Media shareholders at Liberty’s investor meeting Wednesday.

Liberty now owns some 48% of the satcaster and intends to buy more shares. Liberty has asked the FCC to declare that it controls the company and the commission is taking public comments on that question.

Today, though, Karmazin sought to make investors comfortable with the concept of satellite radio as an investment.

His overall point was that satellite radio continues to gain subscribers and IP audio is growing but has a “challenging” business model. As he has before, Karmazin said terrestrial radio’s future is dimming, pointing to 2012 revenue projections for Clear Channel at $3 billion, SiriusXM at $3.4 billion and Pandora at $429 million.

For IP-based audio in general, Karmazin said it’s hard to find a company in this space that’s making money, calling the digital music ecosystem “complicated and crowded.”

The closest he came to saying anything about a presumed takeover was noting that the SiriusXM content “is as vivid and exciting” as that of Starz, Liberty’s premium pay TV channel group.

Though only around 13% of U.S. households have said they would to pay for radio, “We think we can be bigger,” he said, noting that “with Starz, we saw people pay for TV.” Acknowledging that SiriusXM is not likely to grow to the approximately 90% of U.S. households that pay for television, Karmazin said the satellite radio company’s growth of 446,000 net subscriber additions in the third quarter is the best Q3 growth it’s had since the 2008 merger. It’s raising its total subscriber projections to 1.8 million for 2012, up from 1.6 million.

He’s glad SiriusXM is in control of its satellite delivery system because that lowers its operating costs, noting the launch of its next satellite is set for the first quarter of 2013.

The combination of satellite delivery of audio to the car and the playback and other capabilities that are possible with IP are better than IP capability alone in the vehicle, he believes. He promoted Sirius 2.0 with on-demand features as an option now and personalized radio coming soon. The point of 2.0 “was to talk to auto companies and make sure they’re committed to satellite radio for years to come,” beyond the length of the current contracts, he said.

They are, according to Karmazin, who says the satcaster’s tech is now in 68% of U.S. auto sales, up from 46% in 2008.

And what of the effect on SiriusXM’s churn rate when someone buys a new car that has a large-screen enfotainment system with several audio capabilities in the dash? None so far, he says though the company is watching that.

 


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