Satellite Radio Eyes Relevancy in Digital Dash

Karmazin believes mobile advertising is tight squeeze
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Like traditional radio, satellite radio is focused on how to stay relevant in the digital dashboard.

SiriusXM, too, wants to distribute its content on multiple platforms and is keeping an eye on “telematics.” During an earnings call with analysts Tuesday company CEO Mel Karmazin said the satcaster has had many conversations with telcos about delivering its data, say traffic or weather, into the car.

However, the satcaster “really likes its core business,” Karmazin told analysts according to a transcript from SeekingAlpha, and so it recently passed on the opportunity to acquire Hughes Telematics.

As far as Internet in the car in general, Karmazin said “We know that it’s going to take many, many years for these wired cars to roll out with any sort of mass amount …” Getting a good user experience in the vehicle with IP is still chancy, Karmazin believes: “You can obviously bring your smartphone into the car and make phone calls, but the user experience for other content is not there.” IP in the car will grow and SiriusXM will be positioned to provide that content or partner with others to do that, according to the CEO.

Shifting to another trend, Karmazin believes the advertising business is going to be even more challenged than it is now as more companies want to get their content on mobile devices. When he came to Sirius eight years ago, Karmazin believed the satcaster “had an opportunity to take 10% of our revenue in the form of advertising,” but he doesn’t believe that is likely now. While advertising will grow as SiriusXM implements creative content deals, Karmazin told analysts, “I don’t believe that you should think that advertising is going to be a significant driver of this company,” but rather subscriptions are. Some 9% of the Sirius XM revenue comes from subscriber fees.

And what of Karmazin’s role at SiriusXM since his contract is up at year-end? Liberty Media helped the satcaster remain independent when it was facing a financial crunch in 2009 and Liberty has been acquiring SiriusXM stock ever since. It now holds about 46% of the shares and has twice asked the FCC to declare that Liberty has “defacto” control of the satcaster. Karmazin believes that he and the SiriusXM board will handle the question of his future before the third quarter earnings call.

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