Sirius Satellite Radio (SIRI) pre-announced its Q2 results/subscriber numbers today on the eve of its now-approved, $3.6 billion acquisition of XM Satellite Radio (XMSR). The good news: Costs are flat, revenue is up 25%, and the company expects a 70% smaller loss than in Q2 of last year.
That’s about where the good news ends. In the past, Sirius has been criticised for adding lots of new subscribers unprofitably due to expensive content deals and promotions. Now they’ve stopped and, well, the numbers show it.
Sirius added 279,820 net new subscribers during Q2, which is nearly 50% less than the 561,493 it added in Q2 last year. Interestingly, this is the first quarter that XM beat Sirius in net new subscribers since Sirius broke the bank to hire Howard Stern in 2005.
But here’s the very bad news: the vast majority of new subscribers — 89% — were people who just happened to buy a new car in the quarter with Sirius pre-installed. Those subscribers are way more likely to have had a year’s service thrown in, and are more likely to drop it in the future.
Another way of looking at it: Sirius convinced just 34,000 net new subscribers to sign up and buy satellite radios in retail stores in three months.
Shares in SIRI were down 11% in afternoon trading to $2 a share on the Nasdaq.