Sirius Xm

In: Business and Management

Submitted By ghaleb2011
Words 10644
Pages 43
Sirius XM
And the viable business model
2010

PART 1
Introduction
Headquarters in New Yorok City, Sirius XM Radio, Inc. is the only provider of satellite radio, broadcasting more than 130 channels of digital audio via satellite to subscribers throughout the United States and Canada. The company's programming includes 65 channels of commercial-free music from every genre and 55 channels of news, sports, comedy, and talk radio. With impressive line ups of celebrity such as Howard Stern, Oprah Winfrey and Martha Steward there is something for everyone. Sirius's broadcasts are beamed from four in orbit satellites to more than 19.5 million subscribers who pay a monthly fee of $12.95 (Sirius). The service is mainly offered through new car sales with companies including Ford, Chrysler, and BMW among others penetrating 55% into the US market which accounts for 40% of their annual sales based on the 2009 annual report. Retailers like Wal-Mart, Best Buy and Radio Shack sell similar Sirius units for home and boat use. “Recently, Sirius has expanded to include music and comedy channels to mobile phone users; and music channels and select non-music channels over the Internet; a suite of data services; services that offer graphic information; and various real-time weather services, as well as operates a television service, which provides content designed primarily for children in the backseat of vehicles” (Sirius). These expansions are critical to the long term success of Sirius Satellite Radio which claims to be the station you can listen to what you want, when you want, wherever you are. As the premier subscription based satellite radio provider in the US Sirius XM must now compete with Internet and terrestrial radios, both are either free or low-cost services. Sirius XM concentrated their efforts and targeted the automobile industry, prior to the economic…...

Similar Documents

Xm Radio

...car radio market and strong home segment demand, XM should target both submarkets. When pricing the radio and subscription fee XM needs to evaluate the potential demand for the product/service based on various revenue and cost assumptions, cost/benefit of advertising vs. not advertising, and the profit implications for various scenarios. Based on expected consumer response and an analysis of the above factors over a five yr. customer lifetime, we determined that XM should start offering a $100 radio with ad-free service of $10/mo. (SIRIUS price) and with-ad service of $5/mo to attract customers ($9.2 bn profit). As XM builds its customer base over time, it can raise the product/service prices to generate higher profits. By doing so XM could reach out to potential consumers who desire satellite radio but are not willing to pay the high $10/mo. ad-free fee. Furthermore, XM could differentiate itself from SIRIUS and retain customers by offering exclusive programming. The benefits of including advertisements are expected to outweigh the costs and can provide funding to other segments in need of additional capital. If the customer lifetime is longer than five years the optimal subscription/radio price can be lower, and vice-versa. By providing both ad-free and with-ad services at different prices, XM will be able to offer consumers more options which could help attract them from SIRIUS’ one-price service. However, SIRIUS is expected to respond by altering its......

Words: 424 - Pages: 2

Business

...Sirius XM is a satellite radio service featuring digital-­quality music, sports, news and entertainment programming when and where you want it. With nine high-­orbit satellites directly over North America we broadcast over 100 channels of satellite radio to Customers from coast-­to-­coast in Canada. Consistently named one of Canada's 50 Best Managed Companies, and surpassing two million subscribers, Sirius XM continues to be Canada's leading audio entertainment company. Sirius XM is unique because they stay true to the artists and their music by broadcasting 100% commercial-­free music. So, unlike traditional radio, all of their original music channels have no commercials - ever! Sirius XM also offers original programming - not recycled radio. Their original music channels play songs from the most popular to the obscure, and everything in between. From crunch-­core metal to spoken word, from bubble-­gum pop to vintage jazz – they have got what you want and more. And if you're looking for a more intimate experience, our national broadcast studio hosts hundreds of exclusive live interviews and performances you won't hear anywhere else. They have also partnered with Canadian and American media teams to provide you with channels from CBC, The Weather Network, CNN, CNBC, ESPN and much more. When in your vehicle, Sirius XM reaches virtually all Canadians. With nine high-orbit satellites, Canadians on every coast and in the far north can enjoy digital-quality music, news...

Words: 354 - Pages: 2

Stock Market

...The Sirius XM Radio Stock I chose Sirius XM Radio as one of my stocks because as I was reviewing the stocks I was going to pick for this project , I saw that Sirius XM Radio was doing rather well. Sirius XM Radio was founded in 1990 by Martine Rothblatt but officially became a big name in 2007 when it started being used in the production of popular cars such as Ford , Mercury , and Lincoln. Sirius is just a leading brand in satellite radio because it delivers absolutely the best quality service as I have personally experienced. Here is a picture of how dramatic the rise from 2007 to 2012 was in the Sirius XM radio stock. The EBAY Inc. Stock I chose EBAY as one of my stocks because I love ebay. Ebay is a great place to find really nice things for a really good price. Who wouldn’t want that ?!? Not only does it satisfy the public’s needs but it does phenomenal in the stock market. Ebay was founded in 1995 by Pierre Omidyar for the sole purpose of connecting people and trading goods and services. Ebay does so well because of the amount of partnerships it has with big names such as GM or Disney. Ebay is also used by certain stores who only sells things through ebay. Here is a picture of Ebay’s rise in stock prices from 2008 to 2012. The Netflix Inc. Stock I chose Netflix as one of the stocks for my report because I also love Netflix. All you pay is eight dollars a month for unlimited movies!! Its great! But ,......

Words: 587 - Pages: 3

Xm Radio Communication

...1) What is the value proposition of XM to different consumer segments? Who should be the primary target market for XM? * Nationwide coverage with excellent audio service * Greater variety of channels to choose from * Availability: home as well as for people on the go * Commercial-free XM satellite radio’s ability to provide radio service throughout the entire country regardless of a consumer’s location. Furthermore, terrestrial radio offers limited selection and is becoming increasingly cluttered with commercials. Therefore, XM satellite radio provides a greater selection of radio for the various preferences of consumers, commercial free. Furthermore, as an added bonus subscribers will have the opportunity to listen online from their home or office. Based on XM’s research, their target market should be focused on the Tech-Seekers demographic. This demographic appears to present the best opportunity for market penetration. They are more inclined to purchase the XM service and become lifetime customers because of their desire to be on the cutting edge of technology. Moreover, this demographic is very similar to the second largest market interested in satellite radio, Tech-Friendly consumers. Therefore, there is greater opportunity for these Tech-Friendly consumers to purchase the service as well. Between these two groups, XM satellite radio has the ability to gain quick financial stability to capture more of the market share. 2) What aspects need to be......

Words: 869 - Pages: 4

Satellite Radio

...Title of the Case: Satellite Radio (B) Time Context or Period: 2005-2008 Summary of the Case: Late 2005 proved to be the high point of expectations for satellite radio due to the unexpected increase of subscriptions for Sirius and XM Radio that even surpassed forecasts made a year earlier. As 2006 progressed, the growth rate started to decelerate and both companies have continued to lose money. Competition in the market became stiffer because of the rapid growth of technology which led to the birth of new gadgets used in consuming music. Also, a sharp downturn was also experienced by the auto business due to the crisis felt the by the United states. Because of these factors, Sirius and XM Radio have decided to undergo a merger agreement because of the benefits that the merger offers. However, the proposed merger faced regulatory hurdles with the Department of Justice and the FCC, and oppositions from the National Association of Broadcasters (NAB). Later on, in March 2008, the Department of Justice and the FCC gave their “go signals” to the merger provided that the new company, which is named Sirius XM, to offer more content a la carte pricing which gave a huge impact on its revenue. Despite positive cash flows that the forecasts stated, Sirius XM continued to have difficulties, especially in funding current liabilities, because of the crisis felt in the automobile industry, and by late 2008, the stock of the new company was traded under $0.40 a......

Words: 1198 - Pages: 5

Xm Satellite

... Executive Summary XM Satellite Radio was founded in 1992 as a subsidiary of American Mobile Satellite Corporation. In 1997, the FCC granted satellite radio licenses to XM Satellite Radio and Sirius. Since now XM has a license they can launch their product but they are facing a lot of questions that are to be answered to have that perfect launch. At top of that, XM Satellite Radio has not proven it value to the market players yet. XM’s biggest rival, Sirius is already far ahead of XM Satellite in term of publicity, timing and fund raising. XM Satellite Radio has a big challenge of getting customers to pay for a service that has been and still is free. Furthermore, people are unaware about Satellite Radio in general and how is it different from AM/FM radio. Moreover, the radio industry is basically in the sales decline stage of the product lifecycle and on the other hand XM Satellite Radio is in the introduction stage of product life cycle. XM is looking for ways to introduce their product to the market but the radio industry is basically trying to stay alive. Now XM needs to decide what should be done so that their launch is perfect from the day one. They have many issues to be resolved like choosing the manufacturers, choosing the target market, setting the price, getting the best retailer, choosing the right promotional tools etc. XM has great opportunities to enter and exploit the market and change the future of radio technology. For this XM need to form......

Words: 4586 - Pages: 19

Satellite Case Study

...XM satellite radio and Sirius satellite radio are the duopoly companies that compete each other in imperfect competition market in order to replace radio wave, FM AM, with satellite radio. There are barriers to entry this market since it needs a high cost. FM and AM are government owned and the network coverage is limited. In order to eliminate this complication, XM and Sirius introduce satellite radio, which have competitive advantages such as nationwide coverage, high quality audio, wide array of entertainment options, easiness to access. However, Sirius strategy is to create a free commercial radio and used subscription based service. In my opinion, in order for XM to win over Sirius is, to have wide variety of subscription fees targeting different segments of markets. For example, to price sensitivity customers, XM could charge them lower subscription fee but with a few advertisement. Nonetheless, higher prices for customers who want commercial-free radio. By that way, XM could generates revenue from advertising service from price sensitivity customer and at the same time not losing the advertising service revenue from not price sensitivity customers since they are charged higher price. The aforementioned strategy leads to higher income to the company in compare to Sirius company that adopt subscription-only model. Thus, the supernormal profit could cover the expected annual operating expenses that are high-priced. The other strategy is ‘keeping that customer’ strategy......

Words: 348 - Pages: 2

Xm Marketing Case

...XM Satellite Radio is one of two that have won the licenses bids to join the duopoly with SIRIUS. SIRIUS currently has a head start in funding, strategy announcement, and product launch. XM needs to define their market segment, product and services offering, and pricing strategy. SIRIUS has revealed their marketing targets and we can use this to our advantage by targeting different segments. Tech-Seekers and Tech-Friendly markets would be ideal for XM. SIRIUS already announced that rural areas and truckers are their target markets. XM offers small, sleek antennas that would appeal to these markets. These markets are willing to replace their current car stereos with aftermarket stereos, which is aligned with our product concepts for the car market, approximately 46M customers. Pursue the home segment, which has approximately 51M customers in the Tech-Seekers and Tech-Friendly market segments. Both SIRIUS and traditional radio are not meeting or pursuing this market. XM will benefit from first mover in the home satellite radio. Advertising as a revenue stream needs to be considered. Limited advertising can be done on select channels, such as talks, where breaks are necessary. Sponsorship of particular channels can be done. The concept products display text. Sponsors name could scroll during limited breaks between sets of music. AM/FM radio has 18 to 20 minutes of commercials for every hour. For XM to differentiate as perceived commercial-free, advertising will......

Words: 348 - Pages: 2

Seciton E

...Section E. The Ethical Code of Sirius XM Radio. As a reputable company, Sirius XM has a Code of Ethics designed to mimic that of any other company of similar size, “This Code of Ethics embodies the Company’s commitment to conduct business in accordance with applicable law and the highest ethical standards. It is intended to provide guidance to help recognize and deal with ethical issues, to provide a mechanism for the reporting of unethical or unlawful conduct, and to help maintain a culture of honesty and accountability.” (Sirius XM) Naturally there is a lengthy list of practices/employees covered under the Code of Ethics so we did a bit of research to find out if the company had any breaches in this Code or if they were solid on their resolve to stay one hundred percent ethical in all their business practices. Right off the bat we are going to look at the Employee portion of the Code of Ethics under the label ‘Fair Dealing,’ where it states that “The Company expects its employees and directors to compete aggressively in furthering the interests of the Company. It also expects them to do so fairly, ethically and in a manner that fully complies with all applicable laws and regulations.” This seems to be uniform with a generic Code from most companies with the small exception that Sirius has a cost cutting practice of placing their interns under an unpaid ‘education’ bracket. “The satellite radio broadcasting company, which posted 2013 revenue exceeding $3.5 billion, does...

Words: 1460 - Pages: 6

Sirius

...Sirius Case Part 1 1. Sirius Satellite Radio, Incorporated provides satellite radio in the United States. They offer 133 channels-69 channels of 100% commercial-free music and 64 channels of sports, news, talk, entertainment, traffic, weather, and data content to their subscribers. When comparing Sirius Satellite Radio to that of traditional AM/FM broadcast radio stations, they have many competitive advantages. Some of these competitive advantages include broadcast reception paid for by subscription fees rather than commercial advertising, making them commercial free, an extensive range of specialized channels, third-party content such as Howard Stern, NFL, and NASCAR, and the offering of multiple platforms available for subscribers to listen to their channels such as over the Internet, DISH satellite television, multimedia handsets, and car radio, for example. 2. Two key risks that are associated with Sirius Satellite Radio’s business model relative to traditional broadcast radio stations are their inability to supply users with local content such as local news and sports and their ability to sustain subscribers while attracting new ones. The traditional broadcast radio does not face these risks because they are able to provide a much wider range of specialized local content. They also do not encounter issues with continuing subscribers or their ability to generate new ones because their services are free. 3. Sirius’ business is dependent, in part, upon......

Words: 1488 - Pages: 6

Sirius Xm and Its Monopoly

...Sirius XM has established a deep economic mote in its industry. Sirius Satellite Radio and XM Satellite Radio were the two largest satellite radio providers in the U.S., but these competitors were both losing. In 2008, they merged to become Sirius XM and are now the only satellite radio provider in the U.S. Due to high startup costs for a satellite company, Sirius XM does not have any competition. In 2014 Sirius XM had 27 million subscribers or about 13.5 % of the total market with annual sales approaching 4 billion. Sirius XM's signal spreads throughout the entire country and it has brand recognition countrywide. Contrary to free charge, ad driven radio such as Pandora, Spotify, and iHeartRadio, Sirius XM is a subscription-based model, which generates revenue via customer payments at a fixed cost. Sirius XM differentiates themselves by offering a variety of options and an abundance of stations for all listeners. They have select radio stations, artist specific stations, and talk shows that can only be heard on Sirius XM making it different from its low barrier to entry “free music” competitor market. For example, the Howard Stern show is exclusive to Sirius XM. They offer a unique commercial free listening experience that can be heard from your car, computer, tablet, or smartphone. Customers can listen via satellite or via the Internet. The company offers services not only for automobiles, but also for planes, boats, and businesses.  The company has managed to partner...

Words: 650 - Pages: 3

Cromwell

...Analysis of Antitrust Concerns Regarding XM/Sirius Merger This memorandum sets forth an initial analysis of the competitive effects of the proposed XM/Sirius transaction and identifies consequences of the merger that appear likely to substantially lessen competition in violation of antitrust law. This analysis is based on publiclyavailable sources regarding the parties, the transaction, and the industry in general. We will continue to refine our analysis as additional facts become available and arguments are developed. I. Introduction The proposed merger of XM and Sirius will combine the only two providers of satellite digital audio radio service (“satellite DARS”). The parties claim that DOJ should not be concerned about this merger to monopoly, because there are other suppliers in the purported market for audio entertainment. Those claims will be evaluated by DOJ pursuant to the rigorous analytical framework set forth in the agencies’ Merger Guidelines1 and decades of federal court decisions interpreting Section 7 of the Clayton Act. Under that framework, there can be no doubt that the effect of the proposed transaction “may be substantially to lessen competition, or to tend to create a monopoly” in any relevant line of business.2 The parties further suggest that regulators should not be worried about their merger to monopoly because they will submit to price regulation that temporarily locks in the current rates to ensure that satellite DARS......

Words: 4876 - Pages: 20

Sirius Xm Canada Case Study 3-8-15

... Sirius XM Canada MGT6910 – Policy and Strategy - Industry Bambie Hayes Shorter University Sirius XM Canada is a satellite media company and is one of the largest subscription based companies in Canada. Sirius XM Canada has 2.5 million subscribers and a 14 percent market share in the Canadian radio industry. Sirius XM Canada offers 120-130 channels that include sports, children, news, and talk programming (Sirius XM, 2015). Sirius XM Canada’s revenues were CAD 79 million for the first quarter 2015 (Q1 2015 Sirius XM, 2015). The Federal Communications Commission approved Digital Audio Radio Service’s usage for radio frequency for satellite broadcast in 1992. Two companies, Sirius Satellite Radio and XM Radio were awarded licenses to use radio frequencies. Sirius Satellite Radio and XM Radio were originally launched in limited cities, however, by 2002, both companies offered services nationwide. In the United States, satellite radio is regulated by the Federal Communications Commission. In Canada, satellite radio is regulated by the Canadian Radio and Telecommunications Commission. Canadian subsidiaries are required to have Canadian ownership (Hitt, Ireland, & Hoskisson, 2015) Satellite radio uses original equipment manufacturer, chip sets, and receivers to provide service to customers. The receivers are plug and play or factory-installed into vehicles. However, the impairment expense to upgrade outdated equipment is costly. For example, Sirius XM spent U.S. $22.3......

Words: 1319 - Pages: 6

Xm Satellite Radio

...Executive Summary: XM satellite is a newly established company that has the potential and the ability to become leading satellite radio service provider in United States. At the time of the case, the demand for high quality, ad-free and mobile radio had a great potential and XM along with Sirius received a great opportunity to enter into the untapped market. XM’s only significant competition threat was Sirius. Both Companies were trying to capture market share from one another by creating superior customer access channels and build a brand image. These could have been done through retailers and strategic partnerships with radio producers for home and car markets. The home product brands include Sony, Pioneer, Matsushita and Car audio products include Sony, Pioneer Alpine, Delphi and Visteon The major issue for XM was how to market, how to price and what will be the value proposition. Since there were only two companies in the market the pricing of the service could significantly shift the demand and estimated/desired earnings. In order to thoroughly analyze the problem and seek viable alternative solutions I will try to list some of the key marketing issues. Key marketing issues include but are not limited to: * Creating brand awareness: In my opinion it is very important to mention that potential future customers are only the ones who are aware of the brand. The creation of brand awareness would be complicated given the company’s value proposition to keep ads off......

Words: 3953 - Pages: 16

Sirius Xm to Get Pandora-Like Upgrade

...market as a whole. Its availability has been undermined by a monthly fee around 15 dollars, which has done a good job inhibiting ambitions to jump onboard this new advancement. Digital radio is a great invention however it is seen more as a prestigious service than it is as the next major form of radio for all. Two major players throughout its existence, Sirius and XM, have controlled digital radio since the beginning of its popularity. The two companies were the only two licensed for the rights by the FCC to broadcast radio by means of satellite (Hart, Washington Post). This was to ensure that a monopoly would not occur, however in 2007 competition was practically eliminated and Sirius merged with XM to form Sirius XM radio. The commercialization of satellite radio was quick to rise and it found its way into consumers lives fairly hastily. It was quickly integrated into the automobile industry and has become a key music component to a vast amount of car companies. Nearly every car company offers Sirius XM as an addition to their cars, which has helped popularize satellite radio and make it a household name. Sirius and XM established themselves as a company and upcoming technology very well. By infiltrating the automobile industry they allowed the companies to let people test their product through sneaking the cost into the transaction of the vehicle. This maneuver allowed the masses to hear this new form of digital radio and provided ample time for the listeners to......

Words: 1722 - Pages: 7