Sirius XM's Brilliant Move

The only thing worse than a dormant satellite radio receiver for Sirius XM Radio (Nasdaq: SIRI  ) is one that is being underutilized.

In a slick move to get its regular Sirius subscribers hooked on the premium content that it only makes available to listeners of its pricier Sirius Plus plan, the media giant is rolling out a free preview that will cover several weeks.

From now through May 6, Sirius customers will be treated to several channels that aren't covered in their $14.49 a month plan.

Oprah Radio is one of the unlocked channels that listeners will have access to until early next month, but the real allure here comes from the sporting end of the programming. The IZOD IndyCar Series channel as well as play-by-play coverage of pro hockey and basketball games are timely inclusions in the plan.

Real timely:

  • The NHL playoffs begin today.
  • There are just two more weeks of NBA action, and then the playoffs kick in.
  • In IndyCar racing news, the Toyota Grand Prix of Long Beach will take place on Sunday. The Sao Paulo Indy 300 follows two weeks later.

In other words, Sirius XM is giving millions of subscribers on its Sirius side a taste for something just as the content is about to get interesting. The NBA playoffs stretch into late June this year, so don't be surprised if folks get hooked -- even those who may not realize that they stumbled across preview content -- and decide to pay as little as $2.09 a month more on an annual basis for the Sirius All Access plan that also includes Web-based smartphone and online streaming.

Sirius XM can use the boost. Average revenue per user has shrunk from $11.80 a month to $11.61. That is largely the result of a reduction in the music royalty fee that many of its listeners are paying, but it's still a metric that the company can get moving in the right direction with plan upgrades.

Average revenue per user should climb this year given its recent rate hike, but there's no shame in going after incremental business.

Users taking advantage of the preview plan to upgrade next month will also help increase Sirius XM's streaming traffic. Even if Sirius XM can never compete with the mostly free Pandora (NYSE: P  ) -- the fast-growing music discovery speedster that saw its revenue soar 71% in its latest quarter -- beefing up its streaming presence can only help in this booming smartphone market.

So let the puck drop, the jump ball soar, and drivers, start your engines.

The game's afoot, in more ways than the obvious.

Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.

XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next rule-breaking multibagger, a free report reveals all.

The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.


Read/Post Comments (9) | Recommend This Article (6)

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  • Report this Comment On April 11, 2012, at 10:53 AM, Sk3ptic1 wrote:

    Rick,

    Nice way to captivate the reader with Sirius XM talk and then throw in Pandora. Pandora will never be able to compete with Sirius XM the company or content offering, the cost of royalties alone will ensure Pandora fails. First to any daily music listener Pandora is not free. Second per Pandora's quarterly call their ad revenue and growth has slowed and company profitability may never happen. You must factor in Sirius XM is an entertainment company not a music company. Can you listen to Oprah on Pandora? Just saying..I am Long Sirius and Short Pandora.

  • Report this Comment On April 11, 2012, at 11:06 AM, Sk3ptic1 wrote:

    Rick,

    Well written article, other than the Pandora reference:]

  • Report this Comment On April 11, 2012, at 1:15 PM, doubting wrote:

    Rick,

    You are one of the few assessing siri's both tactical and strategic moves the way they really are.

    Unlike paranoiac authors on SA lead by Messrs. Pendola and Kaine recommending to sell siri when, you are sticking to your guns and have the courage and scruples to tell your readers what you really think about siri's present and future.

    I keep wondering who in a sober mind may recommend selling the stock when the company is just getting seriously profitable, increased the price, keeps expanding its presence in the used car market and just introduced sat technology 2.0. We are seeing a tip of the iceberg called siri monopoly in the dashboard. The way things are going with siri one does not need to be a rocket scientist to be able to see its phenomenal profitability at 40% margins within the next couple years.

    I am looking forward to Q1 results to disprove these shameless adventurers who do so much harm to their investment community.

  • Report this Comment On April 11, 2012, at 3:51 PM, doubting wrote:

    As a follow up of my previous post appreciating Fool's fair and balanced approach to siri and exposing Seeking Alpha's dirty tactics of bashing the company, SA published two pieces within one hour written by its notorious authors Messrs. Pendola and Kaine.

    Both authors continue their far-fetched baseless scare tactics and fear mongering against sirius xm. It appears that the agenda of SA is to scare the hell out of "innocent" siri investment community and turn them into a herd lead by SA shepherds into a swamp.

    At the same time, it is obvious to anyone who can add two and two that siri, after years of struggle, huge capex, brink of bankruptcy and fierce competition of the two separate companies before the merger, is turning into a golden opportunity for a regular investor. The company is squeezing competition, expanding its penetration and continues innovating. the net result is robust subscriber growth and huge profit margins. As early as this year, we are going to see 20% profit margin and free cash flow over $700M that constitutes over 20% of the company revenue. Sirius XM has turned into a radio giant. Those who do not see that are either fool or manipulators with agenda to bamboozle main street folks.

    Incidentally, SA got to such a low point of indecency that they either do not publish my 100% ethical posts or delay them for days to prevent readers from seeing truthful facts and fair criticism. I would encourage readers to pay much more attention to "fool" pieces and dismiss the garbage published on SA.

  • Report this Comment On April 11, 2012, at 4:04 PM, mattysmitty wrote:

    What is SA

  • Report this Comment On April 11, 2012, at 4:21 PM, doubting wrote:

    Seeking Alpha

  • Report this Comment On April 11, 2012, at 4:22 PM, doubting wrote:

    SA is Seeking Alpha.

  • Report this Comment On April 12, 2012, at 4:50 PM, TMFBreakerRick wrote:

    I have nothing good or bad to say about Seeking Alpha, but -- yes -- just making sure that doubting clears up that he's talking about Seeking Alpha and not our own Stock Advisor newsletter that many around here also abbreviate as SA.

    Thanks for all of the great feed back to this article.

    Rick

  • Report this Comment On April 14, 2012, at 9:52 PM, NealBarkett wrote:

    I think Sirius should have a few free channels such as hits 1 and a couple others w/ advertisements that way all idle radios are utilized.. Then for 1 week @ 4 times a year turn on all the channels on all the radios. If you believe in your content you let everyone "wet their beak". Don't forget that some of the advertisements are to sell subscriptions of Sirius Xm. "It would be a deal you can't refuse"!

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