Columnist Questions Sirius Sub Count Methods
October 7, 2005 at 7:40 AM (PT)
A column by THESTREET.COM's SCOTT MORITZ questions SIRIUS SATELLITE RADIO's subscriber count methodology, saying "not all those new SIRIUS subscribers are actual people."
MORITZ says that SIRIUS, unlike XM, adds every car equipped with a factory-installed satellite receiver as a subscriber whether the car has sold or not. "(A) number of those freshly minted SIRIUS subscribers could actually be CHRYSLER Concordes sitting on a dealer's lot somewhere," MORITZ notes, adding that the difference in methods between XM and SIRIUS is "disconcerting" considering that subscriber counts encourage investors to "tune out the heavy costs and massive losses associated with the business."
SIRIUS says it counts the cars as subscribers because the auto makers have already paid for the subscription costs before they sell the cars, and SIRIUS CFO DAVE FREAR says that the policy, which represents less than 10% of overall subscribers, is "a big yawn" to analysts. But LEGG MASON analyst SEAN BUTSON notes that when a car owner doesn't opt to keep the subscription after the one year free trial, he or she is not immediately dropped from the overall subscriber count, sometimes remaining on the list as long as 17 months.