Sirius XM Hops on the Free Way

Sirius XM hopes a preview of satellite radio on inactive receivers will help drum up subscriptions.

May 29, 2014 at 9:35AM

If you are driving one of the tens of millions of cars out there with inactive satellite radio receivers, Sirius XM Radio (NASDAQ:SIRI) wants to give you a treat. It's turning on those receivers, making 60 channels available for free through June 2.

The preview channels are mostly its popular commercial-free music stations, but there is also a handful of sports, entertainment, and talk content to convey a real taste of what's available on premium radio. 

To be fair, this isn't exactly news. Sirius XM kicked off the preview on May 20. This also isn't the first time that the media giant turns dormant receivers on for two weeks. It ran this promotional stunt four months ago. Shorter previews have been common in previous years.

It's easy to see why Sirius XM is going this route. Just like the chicken joint at the mall food court is handing over samples on toothpicks to woo hungry patrons with a full meal, Sirius XM wants to give you a taste of what's on the menu.

More than half of the cars out there with satellite radio receivers installed are inactive, and that's a ratio that's going to continue to shrink. It's not that Sirius XM is doing anything wrong. It's just simple math. More than 10 million cars will be sold with Sirius or XM receivers in this country this year, but Sirius XM expects to close out the year with 1.25 million more subscribers than it had when 2014 began. 

Where did the other 8.75 million drivers go? Well, it's not as simple as that. For starters, just 42% of buyers of new cars stick around as paying subscribers after their free trials run out. You also have the churn of existing drivers. Every month, we see an average of 1.9% of self-pay subscribers cancel their plans. The 1.25 million figure is net additions. The gross additions sum is naturally substantially higher before it's offset by folks nixing their service. Making matters even more complicated, the 1.25 million in net additions also includes folks buying used cars, where Sirius XM has been ramping up its marketing efforts. 

It works in the end. There have been just three quarters since Sirius and XM completed their merger in 2008 that Sirius XM has posted a sequential dip in subscribers. In short, Sirius XM knows what it's doing. If it's dangling free tunes and talk radio on a toothpick from now through next Monday, it's because it has worked in the past. Rock on, Sirius XM.

Your credit card may soon be completely worthless
The plastic in your wallet is about to go the way of the typewriter, the VCR, and the 8-track tape player. When it does, a handful of investors could stand to get very rich. You can join them -- but you must act now. An eye-opening new presentation reveals the full story on why your credit card is about to be worthless -- and highlights one little-known company sitting at the epicenter of an earth-shaking movement that could hand early investors the kind of profits we haven't seen since the dot-com days. Click here to watch this stunning video.

Rick Munarriz has no position in any stocks mentioned. The Motley Fool owns shares of Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information