By Ed Oswald | Thursday, May 7, 2009 at 11:03 am
Despite the company’s best efforts to sugar coat it, Sirius XM is in trouble. The company shed just over 404,000 subscribers in the first quarter, as far as we can tell the first ever where the company combined or separate has done so.
Losses also widened to $236.6 million, more than double the $104.1 million loss a year earlier. Pro forma revenues clocked in at $587 million. The company did report a $108 million profit from operations, its second quarter of doing so.
The loss came as a surprise to Wall Street, which expected the company to continue adding subscribers on a much smaller loss. Miller Tabak & Co analyst David Joyce told CNBC that he believes subscriber loss will offset any gains from cost-cutting measures, a problem for the company.
We’ll give some credit to the company for reducing its costs, such as the subscriber acquisition costs, down to $61 from $82 a year earlier. However, the signficant loss of subscribers is very troubling.
Sirius XM is quick to blame the automobile industry’s woes for its problems in attracting customers. While yes, the auto industry slowdown is exacerbating the problem, it is not the cause. It’s the company itself.
For all intents and purposes this company is being horribly managed, especially in the programming department. We’ve already covered the hot mess that is the DSquared show, but there’s more. It’s as if the service has hired complete novices to program its channels.
I’ve watched the fan boards for awhile, and over and over again its the same story. Music on a channel that is either completely off format or just plain bad, or DJs who make the stations sound like FM.
That is the central problem for Sirius XM, not the automobile industry. Start running your programming department correctly, and you won’t have such a problem keeping people.