There are about as many ways to approach XM Satellite Radio's
That's not too shabby, until you keep reading and realize that XM should probably have a channel that exclusively plays dirges. Since it doesn't, you'll have to make your own somber background music.
All dirges, all the time
And now, the bad news. Subscriber acquisition costs bumped higher, ad sales failed to keep pace with top-line growth, aftermarket sales (revenue from subscribers who purchase a satellite radio through a retail or distributor outlet) continue to slip, and the adjusted operating loss actually widened slightly.
So pick your perspective. Yes, XM and Sirius Satellite Radio
But then, commuters are an easy sell for satellite radio. They're on the road, where radio is the diversion of choice. You don't have the installation fuss or the finicky reception problems that have plagued home-based receivers. Yet XM receivers become a costly dashboard paperweight to the 47% of car buyers who don't activate their paid XM subscriptions after their promotional trials run out. With the first wave of XM subscribers starting to trade in their cars, we'll find out what kind of loyalty the automaker partnerships have nurtured.
Too many choices and nothing's on
I still believe in satellite radio, though slowing growth and an expanding laundry list of cheaper alternatives have me fearing for the industry's fate if XM and Sirius are not allowed to merge later this year.
Yes, I said alternatives. It's not just the input jacks that are becoming standard equipment in most cars and allowing motorists to plug in their Apple
The future would have been tricky even without the challenge of new technologies. Losses keep mounting, and incremental subscriber growth will be tougher, as the heavy-driver hardcore radio buffs are already on board.
And what's the deal with the softening of ad revenue per subscriber? This trend also reared its ugly mug at Sirius in the first quarter. Sure, it shouldn't bother me. Most people still see XM and Sirius as a source of commercial-free music. However, one would expect XM and Sirius to be improving on the money they can make through their non-music commercialized offerings. With lower-priced plans in the works if the merger passes regulatory tests, ad sales should be growing instead of shrinking.
Oh, well. I guess I'll save that expectation for the next time I tune in to the Upside Potential channel. It's a tricky find, but it's there for the streaming.
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XM Satellite Radio is a former Rule Breakers stock pick. Don't worry, the newsletter service spared investors a precipitous drop by recommending last year that subscribers sell the stock. A free 30-day subscription will shed some light on the rise and fall of the stock's potential.
Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius, but he does not own shares in any of the stocks in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.