SiriusXM, long synonymous with satellite radio, has become a bigger player in podcasting and streaming radio. How are things going? Here are six takeaways from SiriusXM’s third-quarter report to investors:
Revenue Drops As Ad Sales Weaken
SiriusXM says its advertising revenue fell 2% to $450 million during the third quarter. “Our advertising revenue was softer than expected, with lower demand due to a flood of new CTV supply entering the market,” CEO Jennifer Witz said. “We expect that shift to also impact fourth-quarter ad revenue.” As a result, SiriusXM lowered its Q4 revenue guidance by $75 million for 2024. Witz said they remain confident in the long-term potential of their advertising business, but current trends have made short-term growth more complicated. A bright spot was a 9% increase in programmatic ad sales during Q3, which, combined with a 6% jump in podcast revenue, points to a potential to grow sales, according to Witz. “The real opportunity is in the intersection of those two,” she said. Witz said programmatic podcast ad sales are “really small” to date but were up 50% in Q3, and she believes their investments in technology and content will help grow that number further.
Overall, SiriusXM’s total revenue during the third quarter declined 4% year-to-year to $2.17 billion, and the company reported a net loss of $2.96 billion. SiriusXM also wrote down the value of the company by $3.36 billion related to its recent financial maneuvering with majority owner Liberty Media.
Podcast Revenue Grows 6% In Q3
SiriusXM says Podcast revenue grew 6% during Q3. CFO Tom Barry said they saw “demand outpacing supply,” and the addition of Alex Cooper’s Unwell network during the fourth quarter will further solidify the trajectory.
President and Chief Content Officer Scott Greenstein said SiriusXM has been focused on bringing some bigger shows into the fold to give the company critical mass as it looks to monetize podcasts and then leverage the talent in new ways on satellite radio. He said some of the content could also go behind a paywall to help grow their subscription business.
SiriusXM Subscribers Total 33 Million
SiriusXM added approximately 14,000 self-pay subscribers in the third quarter, as its total number of subs inched up to 33 million. The satcaster also had 7.3 million users in a trial subscription. “We still expect our full-year subscriber performance to be slightly better than last year’s,” Witz said. She also told analysts there has not been much impact from recent price hikes and an overhaul of its plans to offer various combinations of satellite radio, streaming, and podcasts.
Pandora Loses More Subscribers
The slow and steady shrinkage of Pandora continued in Q3 as the service lost 76,000 subscribers to end the quarter at 5.9 million. Among free users, Pandora ad hours totaled 2.47 billion, a 7% decline year-to-year, while average monthly listening among ad-supported users remains stable at 21 hours. The division remains profitable. Pandora and the other off-satellite radio platform business had $187 million in gross profit during Q3. That was up 4% from a year ago. That came despite a 1% drop in revenue for Pandora, whose billings totaled $544 million. Advertising revenue in the segment reached $409 million, a 2% decline from the prior year period but a 2% increase compared to the second quarter.
Still No Howard Stern Renewal
SiriusXM’s star talent, Howard Stern has yet to decide whether he will sign a contract extension when his current deal expires next year. Greenstein called him a “singular talent” and said Stern would be irreplaceable, comparing him to the late “Tonight Show” host Johnny Carson. “We hope he continues forever — he continues to excel,” Greenstein said.
The Lure Of Alex Cooper
While Stern’s future remains up in the air, some have pointed to Cooper as a potential successor at SiriusXM, which signed a deal worth a reported $125 million that gives the company exclusive sales rights to her Call Her Daddy podcast. Plans for Cooper’s Unwell network to program two channels beginning early next year are already generating buzz.
“We see enormous opportunity here to both bolster our ad offering,” Witz said. “We are already seeing positive momentum in the market, with presenting sponsorships selling out quickly, and driving subscribers to Sirius XM, with exclusive new programming from Alex and the entire Unwell network coming early next year, we’re proud to be home to so many powerful voices like Alex and a platform for important conversations across every topic and fandom.”