Sirius XM Radio (SIRI) closed out the year with 25.56 million subscribers, a slight dip from the 25.82 million accounts it was watching over just three months earlier. This is the satellite radio provider's first sequential dip in subs in more than four years.
There's no reason to panic. In fact, the update is actually good news. Investors were already braced for a decline when Sirius XM's forecast in October called for 1.6 million net subscriber additions for all of 2013 after it had already nabbed 1.68 million net adds through the first nine months of the year. It closed out 2013 with 1.66 million more subscribers than it had when the year began. Sirius XM exceeded its guidance.
More important for the bean counters, the actual number of subscribers may have slipped sequentially, but the quarter was solid in terms of folks actually paying for the service. Sirius XM's count of self-pay accounts increased sequentially to top 21 million members.
Growth will continue. Sirius XM is sticking to its earlier 2014 guidance for revenue to top $4 billion and adjusted EBITDA to clock in at $1.38 billion. It's also initiating its outlook for 1.25 million net subscriber additions, and $1.1 billion in free cash flow.
This all is happening just as Liberty Media (FWONA) went public over the weekend with plans to absorb all of Sirius XM. Investors were no doubt disappointed in the meager premium that Liberty Media was willing to pay to take over the 49% of the company that it doesn't already own, but investors knew the risks of buying into a company where a shrewd media mogul has majority control.
Sirius XM's board, or its CEO, can't publicly bellyache for more than the initial 3% premium. The time for complaining about Liberty Media's meddling was before regulators cleared the path for John Malone's eclectic media empire to take command of the company. However, Sirius XM can do things like it did with yesterday's update -- to remind investors that its prospects continue to improve -- and to strategically negotiate in public.
It may not be enough. Critics will argue that, with subscriber growth decelerating -- Sirius XM sees its subscriber count growing by less than 5% this year -- it's the ideal time to punch out and be part of a larger media giant. However, that also ignores this month's subscription rate plan increase, and the average revenue per user that was already inching higher.
Sirius XM has historically flowed freely with press releases touting its accomplishments. Don't be surprised if we see more of that in the near term. Whether the good news encourages Liberty Media to sweeten its offer or stirs up shareholders to hold out for more, it's ultimately in the best interest of Sirius XM investors.
