Sirius platform could shut down by mid-decade, CEO hints — IPTV Live Streaming

SiriusXM Pandora Chief Executive Officer Jennifer Witz. (Photo: Handout/Graphic: The Desk)

SiriusXM Pandora could shut down one of its two satellite radio platform by the middle of the decade, the company’s chief executive remarked this week.

Speaking at an investor’s conference on Monday, SiriusXM Pandora Chief Executive Officer Jennifer Witz said the company was moving forward with the rollout of its next-generation, Internet-connected satellite radio hardware, while at the same time considering plans to shut off one of its older satellite radio platforms.

Prior to 2008, SiriusXM existed as two separate companies — Sirius Satellite Radio and XM Radio — each competing against the other with a similar line-up of channels that were received by customers through a fleet of independent satellites through streams that were encoded using different methods.

The decision by each company to use its own proprietary method of encoding and transmitting satellite radio service meant that hardware radios that received Sirius signals were not able to decode XM signals and vice-versa. It also meant that the combined SiriusXM was effectively forced to continue operating two independent satellite radio platforms post merger.

Complicating matters was a set of long-term deals that Sirius and XM made with original equipment manufacturers (OEMs) of radios for new cars. Those deals largely required that an automaker deal exclusively with one company for satellite radio service.

Immediately after the merger, SiriusXM began to lessen its reliance on the Sirius platform, choosing to use the XM platform for new plug-and-play radios and so-called “SiriusXM Radio” aftermarket radios. But the company continued to maintain its long-term deals with OEMs for car radios rather than try to start anew, widening any potential bridge between the Sirius and XM radio platforms for at least several more years.

Speaking at a media conference on Monday, Witz said car radio subscriptions “will continue to remain the foundation of our business, and we’re working hard to maintain our dominant position there,” but added that newer technology allowed the in-car experience to evolve into one where “sometime in the coming years…we’ll, only really need one of our two broadcast systems to deliver the current business.”

One of those technological advancements is SiriusXM’s next-generation broadcast platform 360L, which marries its traditional satellite radio delivery through the XM Radio platform with an expanded lineup of channels, Pandora-like stations and on-demand content offered through its streaming service.

Since it debuted SiriusXM 360L in 2018, the company has been rapidly making deals with automakers to incorporate the next-generation platform in newer-model vehicles. Currently, it has deals with Audi, BMW, Ford, General Motors, Volkswagen and four others to offer the SiriusXM 360L platform in new cars.

This year, SiriusXM Pandora says it expects 25 percent of new cars that are capable of receiving satellite radio will have their units powered by SiriusXM 360L. The company projects that number could grow to 80 percent of new cars with satellite-capable radios by 2025.

“It’ll be different for every automaker, but we do expect 360L to be the default SiriusXM platform at all of the OEMs over time,” Witz said.

Once the newer platform reaches critical mass, SiriusXM would be in a better position to sunset one of its two older platforms. Witz didn’t specify which of the platforms SiriusXM was considering for shutdown, but the company continues to rely on the older XM platform and its fleet of satellites for the newer-model 360L radios and all SiriusXM-radio aftermarket radios sold post-merger, strongly suggesting the Sirius platform would eventually be closed.

Shutting down the Sirius platform would have significant advantages for SiriusXM Pandora: The company would be able to concentrate its attention on just one fleet of satellites. It would also free up spectrum used by Sirius, which could allow SiriusXM to increase the bit rate for channels on its traditional radio service (SiriusXM’s music channels stream at a lower bit rate on the satellite service compared to its streaming platform and competing services like Apple Music and Spotify), or expand the number of channels offered on the satellite platform, or a combination of both.

The spectrum could also be reclaimed for other parts of SiriusXM Pandora’s businesses. In addition to the radio service, SiriusXM Pandora offers satellite broadcast weather, navigation and traffic through its aviation and marine businesses.

It was not immediately clear how many of SiriusXM’s 34 million subscribers continue to rely on Sirius-only hardware radios. The company recently settled a class action lawsuit brought by some customers who said the company was not adhering to the terms of a “lifetime subscription” tier that was offered before Sirius and XM merged.

When asked on Monday, Witz declined to comment on SiriusXM Pandora’s specific plans for the spectrum set aside for Sirius once that platforms consolidates into XM, but said any initiatives could be delayed by the ongoing coronavirus pandemic if it spurs satellite radio customers to drop their subscriptions or if consumers continue a trend of buying used cars over new ones.

“That could get pushed out another year or two because of the lower churn that we’ve been seeing and also our success at activating used cars,” Witz said. “So we’re going to have to watch that closely and see what makes the most sense for our business.”

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