David Frear, SEVP and CFO at pay radio operator SiriusXM, speaking at the Credit Suisse Technology, Media & Telecoms conference on November 27th told equity analysts that 2018 was proving to be a better than many expected. However, he also explained that the radio broadcaster’s overall aim was to see penetration of its radio sets into more than 80 per cent of all cars. SiriusXM currently has some 32 million total subscribers, out of a total 130 million cars on the road.
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| David Frear |
“When the used vehicle penetration rates started out in the sort of low- to mid-30s, we were stunned that our original [financial] models assume that maybe we’d get 15 per cent conversion rates. I think the transaction penetration rate right now is about a little under 40 per cent. The used cars, the turnover on any given day are Sirius XM enabled vehicle, vehicles, that 40 per cent is got to go to 80 per cent eventually. I think we’ve got good long-term growth characteristics in the used car business.”
Frear also included the company’s recent acquisition of music streaming service Pandora. “When it comes down to talking about synergies and the impact of the Pandora transaction as we move into providing 2019 guidance we’ll start to talk more about it then. In the last couple of years, we’ve provided guidance at the conference that coincides with the Consumer Electronics Show.”
However, he expanded his thoughts, saying: “Far and away what North American consumers want in audio entertainment is a free service. It just dwarfs everything else, right. So you still have 200 million people listening to AM and FM radio, you’ve got 200 million people streaming. [We] are trying to figure out is that we’re ultimately going to have 200 million cars on the road with a radio in them, and we want to figure out how to drive the maximum amount of free cash flow out of those 200 million vehicles. And you have got to have a free product, if you want to monetise all the vehicles.”
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