SIRIUS Update
Coming off the most eventful quarter in its history, SIRIUS is in a very strong position for the all-important holiday sales period and remains on track to reach one million subscribers by year-end.
October 27, 2004: SIRIUS has further consolidated its position as the premium satellite radio provider following a “spectacular” three-month period that included the rollout of new-generation receiver products, new momentum in subscriber signups, additional growth in the retail sales network, an expansion of its relationships with vehicle manufacturers and new programming initiatives, highlighted by the agreement with radio personality Howard Stern.
Speaking to financial analysts, investors and the media during his quarterly conference call today, CEO Joe Clayton said SIRIUS is in an excellent position, operationally and commercially, as it enters the important year-end holiday sales period – and the company remains on target to reach the one million subscriber mark by year-end.
SIRIUS added more than 182,000 net subscribers in the third quarter, taking the total subscriber base to over 662,000. In September alone, more than 69,000 net customers came to SIRIUS, Clayton said. This set the stage for SIRIUS to surpass the 700,000-activiation level on October 18.
"This is excellent progress, and it is indicative of the great momentum that we are experiencing as a company and as a growth industry," said Clayton. "There can no longer be any doubt that satellite radio is poised for spectacular growth."
The palm-sized XACT Communication XTR1 Stream Jockey receiver is the smallest SIRIUS Plug & Play system available, and retains features that include a six-line screen display, 18 channel presents and the SIRIUS S-Seek memory function for songs and artists.
The third quarter of 2004 also marked the introduction of "generation 2.5" receiver products that are smaller in size, lighter in weight and lower in cost. These new units – which include the Sportster Plug & Play unit (which is tied to SIRIUS’ relationship with the NFL), and the palm-sized XACT XTR1 "Stream Jockey" Plug & Play radio – bring the SIRIUS product line to more than 20 different receivers, from lightweight hand-held units to boomboxes.
"When you look at some of the major brands that we currently have on the market – including Alpine, Audiovox, Blaupunkt, Jensen, JVC, Kenwood, Sanyo, SIRIUS and U.S. Electronics – it is easy to see why SIRIUS is the brand leader in satellite radio," Clayton said.
He also highlighted this week’s announcement of the SIRIUS interior glass-mounted antenna for automobiles and other vehicles (designated SIGMA), which represents the next step in the evolution of satellite radio antennas. Designed by SIRIUS and RecepTec, the antenna is mounted in the shaded sun band of a vehicle’s front windshield, has no exposed wiring and is unobtrusive – providing distinct aesthetic advantages over the exterior-mounted satellite radio antennas currently in use.
"In addition, the SIGMA will allow for reduced costs due to the elimination of antenna pre-wiring and associated factory installation costs, along with faster and more efficient factory and dealer installations and reduced warranty costs because it eliminates problems from harsh environmental conditions or car wash damage," Clayton explained. "We believe the SIGMA antenna will be quickly adopted by many of our car manufacturing partners."
In the retail sales sector, SIRIUS continues to add more distribution locations for its products, and its overall market share continues to grow. According to data from the NPD Group, SIRIUS captured 44 percent of the retail market in August – which validates the company’s multiple brand strategy and highlights its growing momentum at retail. "It also reinforces the fact that we are the premium content provider in satellite radio, and consumers are recognizing this on the retail floors," Clayton added.
During his conference call today, the SIRIUS CEO underscored the importance of having Office Depot join the ranks of its national retailers, becoming the first office supply superstore to offer SIRIUS radios through its 900 stores in the continental United States. He also announced Kmart and Target as the latest additions to its sales network.
RadioShack continues to perform well in terms of sales, awareness and store execution of subscriber sign-ups, with strong sales numbers expected throughout the holiday selling season.
"We also believe that we are getting a lift at retail – and most certainly a lot of press – from the publicity generated by the National Football League and the Howard Stern announcement," Clayton said.
Stern’s five-year agreement to broadcast on SIRIUS beginning in 2006 was one of several key programming developments recently announced, which also included the launch of SIRIUS NFL Radio and SIRIUS College Sports Radio; the agreement with Eminem, Shady Records and Interscope Records to create an exclusive cutting-edge hip-hop music and lifestyle channel (which launches October 28); and the arrangement with Maxim Magazine to launch Maxim Radio this quarter. In addition, SIRIUS has just announced an agreement for six-time Tour de France bicycle race winner Lance Armstrong to join a growing extreme sports team on the popular Faction Channel.
"These are just a few of the programming initiatives launched or announced during the quarter, and I don’t believe that you could find an entertainment company anywhere to match this all-star lineup," Clayton said.
Significant progress also has been made in the SIRIUS relationships with its automobile manufacturers and dealers. It was announced this month that Ford Motor Company will include SIRIUS as a factory-installed option in up to 20 vehicle models over the 2006 and 2007 model year, and is expanding the availability of SIRIUS as a dealer-installed option on four additional 2005 models – bringing the total to 13.
DaimlerChrysler launched its factory programs this Fall on 11 2005 models. The factory option is bundled with a one-year subscription. In addition, Mercedes-Benz has started offering SIRIUS as a factory-installed option on select models, and will broaden factory availability over virtually all 2005 model year vehicles – including the popular SLK. All Mercedes-Benz models available with SIRIUS are bundled with a one-year subscription.
BMW will offer SIRIUS as a factory-installed option on all sedans, including the 2006 BMW 3 Series. SIRIUS currently is available as a factory-installed option –also packaged with a one-year subscription – on the 2005 5 Series, 6 Series and 7 Series models, and is offered as a dealer-installed accessory on current 3, 5, and 7 Series, X3, X5 and Z4 Roadster models.
In addition, Mazda has launched a dealer-installed program for the Mazda Miata, while Volvo is introducing SIRIUS as a dealer-installed option on four new models this quarter: the XC70, S60, S80 and V70.
Rounding out the vehicle availability, SIRIUS is now offered as a factory-installed option on the 2005 Audi A8, TT Coupe and Roadster – which is in addition to dealer-installed options on these vehicles. SIRIUS is also available as a factory and dealer-installed option on the A4, S4 and A6 models.
In the rental car segment, Hertz is making SIRIUS available in their prestige and luxury line of vehicles, including the Lincoln Navigator, LS and Town Car, as well as the Cadillac DeVille and Escalade, which comes bundled with the NeverLost® navigation system.
"When you combine all of the commercial, operational and financial progress made this past quarter, it is easy to see why we are very excited about our prospects for the fourth quarter," Clayton concluded. |
