Like many General Motors
The mailing amounts to three bullet points for GM satellite radio customers:
- You'll have new choices.
- You'll get new pricing and packages.
- You'll use the same radios.
The third point is obvious. XM is guaranteeing to GM that the merger won't make any existing receivers obsolete. Of course. Sirius has been selling receiver-specific lifetime subscriptions for years. The next generation of receivers will be interoperable -- able to receive both XM and Sirius broadcasts -- but the combined company can't ignore the established base of nearly 19 million subscribers who are tethered to just one of the two providers.
But the second point should really spark the interest of Sirius XM Radio shareholders:
You'll get new pricing and packages. In fact, there will be exciting new subscription packages that combine the best of what each company has to offer. Packages including the best of both XM and SIRIUS programming will be priced below the cost of subscribing to them separately.
As part of the merger agreement, Sirius XM Radio agreed to introduce scaled-back, lower-priced plans within the year. That will be a great tool to retain subscribers and attract new ones if the economy doesn't improve, but last night's email doesn't touch on such an effort. Instead, GM is priming its millions of XM subscribers with upcoming packages for which they can pay more to get both XM and a select assortment of Sirius programming in the future.
This is great news for Sirius XM Radio. Beyond the cost-saving synergies it will realize over the next few quarters, what if the company can get its average subscribers to pay more? Since automakers like GM on the XM side and Ford
The key, of course, is to be able to offset the subscribers who ultimately downgrade to lower-priced plans with those upgrading to get more content. The upsell process will be easier once the interoperable radios are out, but Sirius XM Radio knows that the real opportunity rests in getting more premium programming to its established base.
There are plenty of important metrics for Sirius XM Radio. Subscriber acquisition costs and churn have been crucial quarterly gauges. Once the new plans come out, the new dipstick may be upsell conversions.
Satellite radio may never be able to achieve the kind of monthly subscription premiums commanded by satellite television heavies DirecTV
More satellite radio news, less static:
Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies 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.