Deal Close on ‘Long-Term Renewal’ of Stern’s SiriusXM Contract, Says Meyer

Meyer is “very confident” SiriusXM and Stern will “have an agreement soon to announce shortly,” he said: “Our relationship with Howard is very strong. He is producing fantastic content, and his show has never, ever been better.” Meyer won’t discuss specific terms of Stern’s renewal “until the deal is done,” he said. “Where we are in the discussions today, we have a set of economics that Howard’s team is happy with and I’m happy with.” A “long-term arrangement” with Stern is “what we contemplate,” he said.

Q3's rebound in auto sales and the associated bounce in trial subscriptions puts SiriusXM on pace to finish 2020 “with self-paid net additions close to 90% of what we projected in January," said Jennifer Witz, president-sales, marketing and operations, who takes over as CEO Jan. 1. That would be an “extraordinary” achievement in “this year’s environment,” she said. Q3 churn was the best third-quarter performance in that metric “in more than a decade, and puts us on track to potentially have the fourth consecutive year of declining churn,” she said.

Improving SiriusXM’s streaming offering has been “one of our central goals in recent years,” said Witz. The aim is to “drive out-of-car engagement among existing subscribers and acquire streaming-only subscribers who may not have a need for an in-car subscription,” she said. “I can report steady progress and traction.” By making streaming part of the SiriusXM “base package” for most subscribers last year, “we were able to satisfy a greater need for streaming while much of the country was locked down earlier this year,” she said. “That was the silver lining of the pandemic.” The free stream promotion SiriusXM ran after COVID-19 lockdowns began in the spring “resonated with Gen X and younger generations,” she said.

SiriusXM continues to invest in its streaming offering, said Witz. “I think we have opportunities there. It’s still small. We have not built that out-of-the-car streaming stand-alone business yet to where I think it can grow. You’ll continue to see us make improvements to our apps and add content there.”

“Free radio still continues to be the largest share of the audio market,” said Meyer. “What that means to me is there’s still a whole lot more room for us to be able to take share, and frankly, for Spotify and others as well. The way we’re going to take share from those guys is by offering a better product.” Terrestrial radio is the “riskier equation” than other streaming services that compete in the “audio landscape,” he said.

SiriusXM still continues to "battle" a declining Pandora listener base, said Meyer. "It is still by far the largest listener base in the U.S. market. We're working really hard on that problem." Offsetting the decline has been "increased engagement by the listeners that are within the Pandora funnel, which helps our listening hours," he said. "We're also looking at investments in content and ways to bring certain types of really innovative things we've done in SiriusXM over to the Pandora platform."

Senior management believes "we now understand the streaming business way better" than before buying Pandora, said Meyer. "We understand very, very well how the free business works," plus how the premium business works, he said. "We understand where the consumers are going and how they behave, and we understand what kind of investment and technology it takes to deliver the right products to be competitive there." Expect SiriusXM to "up our game" in streaming, he said. "We’ve been reluctant to up that game until we better understood how those economics work," he said. "We understand that now."