SiriusXM is increasing its investment in live sports rights in an effort to lure and retain more premium subscribers, CEO Jennifer Witz told Axios' Sara Fisher.
Why it matters: Sports listeners have a lower churn rate than the average SiriusXM subscriber, and sports advertising now accounts for nearly a quarter of ad sales for SiriusXM, executives noted."Trial subscribers that listen to sports channels convert to a paid tier at a higher rate than those who don't listen to sports," said Scott Greenstein, SiriusXM president and chief content officer.
Live sports rights have also helped the company bolster digital streaming subscriptions, which have become a larger priority in the past few years.
Details: Over the past five years, the company has struck exclusive audio deals with the four major U.S. sports leagues (NFL, NBA, NHL and MLB) to carry live feeds of their games via 24/7 league-branded channels, allowing listeners to tune into games anywhere around the country.Today, the vast majority (79%) of sports listeners on SiriusXM listen to games outside of the area in which they live, which executives believe is one of the biggest draws for subscribers.
Be smart: Unlike the video landscape, where rights for the major league games are scattered, SiriusXM has the exclusive audio rights to every regular season and postseason game for the NFL, NHL, MLB and NBA, with the exception of the local radio rights that are limited solely to local markets. Those rights run on multiyear contract cycles, similar in length to the video deals the leagues strike with major TV networks.
Its newest multiyear agreement with the NFL, which was signed earlier this year, makes SiriusXM the exclusive third-party audio broadcaster of every NFL game across North America.
In 2021, SiriusXM became the exclusive audio broadcaster of the Masters.
Between the lines: While SiriusXM wouldn't disclose what it pays to have those rights, Greenstein noted that the cost is significantly lower than exclusive rights cost for video streaming those games. Asked if SiriusXM would ever consider a standalone subscription just for sports listeners, Greenstein said the company has considered it, but has ultimately decided that a unified subscription returns the best value.
State of play: Today, SiriusXM has roughly 34 million paid subscribers, with around 80% of its revenues coming from subscriptions. Subscriber growth has slowed in recent months due to economic headwinds, including supply chain issues impacting new car sales. Still, its stock has outperformed most media firms, thanks to continued profitability growth.
While it's done more to increase its off-platform ad revenue through acquisitions like Pandora and podcast firm Stitcher, Witz said the company is committed to its business being mostly subscriber-driven.
"I'm not sure that we'll see a radical shift in subscription versus advertising," she said.
By the numbers: Today, the satellite radio service lives in 145 million cars on the road, which means that the company's total addressable market for potential paid subscribers is at least 145 million. But Witz said the company is trying to use its digital subscription offering to go beyond just upselling car subscribers. (Premium satellite subscribers get access to SiriusXM's streaming subscription service for free.)
The big picture: SiriusXM has taken on a number of investments in the past few years, to varying degrees of success. While the company is still pushing to offset free listening declines and slowed subscriber growth at Pandora, Witz said the investment remains fruitful in that it has helped to expand its off-platform ads business and it's helped SiriusXM's relationships with record labels and other third parties.
SiriusXM also has a stake in music streaming platform SoundCloud. Asked if the company would ever consider buying it outright, Witz said that while they always look at different opportunities, "I think we're pretty happy with where we are right now."
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