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Sirius XM to roll out iPhone application
Thu Mar 12, 2009 4:02pm EDT
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By Yinka Adegoke
NEW YORK (Reuters) - Sirius XM Radio Inc looks to expand the reach of its satellite radio service with the second-quarter launch of an iPhone application as it explores a potential marketing partnership with satellite TV provider DirecTV Group.
The company, which had to sell a 40 percent equity stake to John Malone's Liberty Media to resolve looming debt problems, is looking for new revenue streams as its primary distribution outlet, new car sales, is looking "terrible" this year, management said on Thursday.
Sirius said the iPhone application would be available to its 19 million subscribers and to Apple Inc's 7 million U.S. iPhone users. It can also be used by iPod Touch Wi-Fi users,
"This is a large and interesting opportunity that will maintain our subscription-based economics while providing customers easier access to our content through means other than our traditional satellite-based platform," Sirius Chief Financial Officer David Frear said on a call with analysts.
Sirius also sells satellite radios through traditional retail outlets, but it had a very weak fourth quarter, when electronics chain Circuit City, a major customer, filed for bankruptcy.
"There's a lot of opportunity for (Sirius) with iPhone," said Miller Tabak analyst David Joyce. "Unlike buying a new car, it's not an expensive proposition, but it's a tough time for consumers to be trying new products."
Based on January and February data, car sales for 2009 are projected to fall to between 9 million and 9.5 million, a far cry from historical volumes of 16 million to 17 million a year, according to Sirius management.
But the company said it was benefiting from "truly extraordinary" operating efficiencies following its protracted acquisition of XM Satellite Radio, which closed last year.
Sirius said it would post positive earnings before interest, taxes, depreciation and amortization in 2009, the first year it would do so. It expects 2009 EBITDA to exceed $300 million, compared with the analysts' average estimate of $303.4 million compiled by Reuters Estimates.
However, Sirius said the U.S. recession made it impossible for it to forecast revenue or give a more detailed earnings outlook.
Sirius Chief Executive Mel Karmazin said he had held talks with DirecTV Chief Executive Chase Carey and Liberty Chief Executive Greg Maffei in recent days about possible joint marketing opportunities.
Liberty has a 48 percent controlling stake in DirecTV, the largest U.S. satellite TV provider, and there has been much speculation of an operational partnership with Sirius.
"We think that there are opportunities to work with lots of partners, including DirecTV, on ways of adding subscribers for both companies," said Karmazin.
"It wouldn't be hard to think about the fact that DirecTV might be able to have a special package for many of their subscribers to be able to get Sirius at an attractive price."
DirecTV was not immediately available. Continued...
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