XM spent more than wildly in Q4 of last year and came up short on guidance
More wildly than Sirius? You're nuts.
hence all the lawsuits.
The lawsuits are without merit. While XM may pay some small amount to make them go away, it will be nominal. There was no basis for the lawsuits which is evidenced by the fact they had difficulty coming up with plaintiffs.
Now XM manangement is changing their story by saying XM will not spend wildly on sub acquisition and that is the reason for lost market share.
XM hasn't changed its story. They have been brutally honest -- they believed they could give away receivers last year and effectively counter the Stern Effect, and they proved wrong. They still didn't spend anything like what Sirius did, even before you count the billion dollars they have squandered on mediocre content purchases.
They have no choice, SIRIUS is perceived to be a better value and perception is reality.
By who? 900,000 Siriots? Larraine Mancini (hired specifically to pump Sirius)?
Think about it, spend wildly and lose market share or control spending and lose market share. Either way XM loses market share.
XM has never, not in one quarter, outspent Sirius, or even come close. Sirius is, on a quarterly basis, mortgaging the future of the business, and has been for two years or more.
Content is King.
No, hype is king. And Sirius is 1000% better at hype.
In the long haul content may be king (although, it is possible that the true king will be OEM installs on a long-term basis), which is great for XM. Because Sirius has so overspent on NFL, Stern, and NASCAR, they are not in a position to build out their content from here. They have neither the bandwidth nor the money.
XM, already having the superior content, will be in a position over the next few years to add even more music content because of their better engineering and restrained content expenditures.
Both XM and Sirius are going to have to have more money. But XM is close enough that they can use their existing line of credit and get there. Sirius isn't EVEN close and has no such line of credit. |
