SiriusXM CEO: Car Sales Can Tank And We'll Still Be Fine

This much is clear: The market has little hope for the future of satellite radio operator SiriusXM, whose shares trade at a meager $.50 — though that’s almost 50% higher than their rercent lows! CEO Mel Karmazin has been making the case for a while that the company will turn the corner next year, an argument that would seem to be getting tougher by the day.

The company has a lot riding on automaker pre-installs, so what does it mean that car sales are tanking? Not much. David Kaplan at paidContent reports Karmazin’s presentation at today’s Media & Money conference:

We’re a subscription business. About 96 per cent of our business comes from that. The largest driver is when you go out and buy a new car, every car company has committed to putting it in. Next year, we’ll have 50 per cent penetration. There are about 17 million new cars produced a year. That number will be 13 million next year. If there are only 12 million cars sold, no one has forecast that, but even if the worst happens, 6 million will leave the assembly line with satellite radio. And our surveys show that 50 per cent of the people who are offered satellite with their new car, take it. That will get us to $300 million revenue growth even if Detroit has a very bad year. Even in a market where cars are not doing well, we can still feel successful.

Beyond sales growth, the other big concern n this environment has to be the company’s debt load. Again, Karmazin says not to worry, and that he’s confident the company can refinance $1.1 billion in debt due early next year. Good luck on that.


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