Two of the hottest media distributor stocks in recent years are joining forces for a comedy radio channel. Sirius XM Holdings (NASDAQ:SIRI) announced on Wednesday that it will be teaming up with Netflix (NASDAQ:NFLX) for an exclusive satellite radio channel that will feature content from the streaming video service's growing catalog of stand-up comedy.
The new channel will also feature comedy talk shows from Netflix as well as additional original programming. There is no launch date for the new channel -- The Wall Street Journal points to January as a tentative rollout -- but Sirius XM's blog entry points out how this is the first time that Netflix is bringing its catalog to an audio service. It's a win-win partnership, as Sirius nabs Netflix's critically acclaimed stand-up content and Netflix gets to test the waters of a premium radio platform.
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Netflix and Sirius XM have been champs of premium subscription services. Sirius XM had 33.1 million members by the end of March. Netflix is now up to 57.4 million streaming accounts domestically, and another 72.8 million subs internationally.
Climbing the wall of worry has paid off for Netflix and Sirius XM -- and for their investors. Sirius XM has been a scintillating 140-bagger since bottoming out in early 2009. Netflix has been the best performer in the S&P 500 over the past five years.
The partnership is a perfect match, and not just because they are two content distributors that have beaten the odds to dominate their markets. There is likely a fair amount of subscriber overlap when it comes to the two services, though Sirius XM guns for driving commuters while Netflix's sweet spot is entertainment-seeking homebodies. When it comes to folks who are already members of both services, it will give them a new way to take in Netflix's popular stand-up comics. Netflix will also gain a new branding outlet. The satellite radio monopoly already has a couple of Sirius and XM channels that feature clips of stand-up routines, but now it will be adding one that validates Netflix as a comedy hub.
There's little downside for either party here. Netflix subscribers won't cancel because audio clips are now broadcasting on Sirius XM. One can argue that this could be a threat to Sirius XM if Netflix should add a radio component to its streaming service, but any potential offering is as unlikely as it is far away from launching. Netflix and Sirius XM pairing up make sense here, and they should both be laughing all the way to the bank when the new channel launches early next year.