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10-Q Watch: Sirius Could Lose Hundreds Of Thousands Of New Subs From Chrysler Bankruptcy

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imageSirius said last week on its earnings call that the Chrysler bankruptcy is bad news for the satellite radio operator. In an SEC filing this morning, the company added some numbers to that statement, saying Chrysler accounted for about 900,000 subscriber additions in 2008, or 16 percent of the company’s total gross new subscribers.

Bankruptcy proceedings tend not to drag on for a full year, so a temporary closing of Chrysler’s plants would likely mean that the carmaker could still potentially deliver some new subs, but a reduced number over last year. Sirius goes on to say in the filing that its agreement with Chrysler could be rejected as part of the proceedings, in which case the carmaker would cease to be a feeder of new subs for Sirius (NSDQ: SIRI). The company says in the filing it has no reason to believe that such a rejection is likely.

Chrysler declared bankruptcy on April 30, 2009. The announcement came after Sirius was able to successfully manage its debt challenges at the time by taking an investment from Liberty Media (NSDQ: LINTA) and has reported subscriber losses the past two quarters reported subscriber losses in the first quarter 2009 after a steep drop in subscriber additions in the fourth quarter 2008 due to consumers tightening their belts in the tough economy.

12 Responses to “10-Q Watch: Sirius Could Lose Hundreds Of Thousands Of New Subs From Chrysler Bankruptcy”

  1. Again, another company is terminating their operation because of the economic crisis. With this kind of situation, it would be very hard for the companies to survive. Unless, they will have enough connection to support their business operation.

  2. WHOLESALECD

    This is bad. All the Chrysler people ARE DEVOTED TO Chrysler and WILL NOT ever buy from someone else. BAD BAD NEWS ALL AROUND US.

    BETTER SELL NOW!

    JAY BOY BILLY

  3. WHOLESALECD

    That's bad bad news for siri especially since GM will also declare BK. Bad news all around us so Sell Now and buy back in a week or two at .25.

    It's on the downslope now so if you don't sell now you will lose out buying at a lower price. Siri is overvalued at the price it is now.

    JAY BOY BILLY

  4. Rory Maher

    Thanks for your comments. You're right, people won't stop buying cars. While Chrysler's production has stopped they can buy other models. However, Sirius radios are installed as options in about half of all new cars produced so there is a 50 percent chance they will buy a car without a Sirius radio in it. It is that risk, I believe, that led the company's President to say it would take a "noticeable hit" to subscribers in the second quarter.

  5. Randy

    NAB paid, biased content and stupid conclusions all rolled into one waste of time. As another pointed out. If Chrysler goes completely out of business, then the OTHER automakers will pick up the slack. Sirius and XM are combined so no need to worry about who benefit from a automaker fault. It ALL goes to Sirius. I mean, I cannot fathom the stupidity it takes for a writer to not understand the basic common sense idea that people will still buy cars if one company goes bankrupt. They will just buy them from another dealer. Idiot. And this tool actually gets paid to write this which is amazing in of itself.

  6. Auto worker

    The 10Q also reads:
    " but we would be released from our obligations to Chrysler to share revenue, provide equipment subsidizes and make other payments"

    This element would drastically reduce expenses for the Subscriber acquisition Cost.

    The Federal government cited 30-60 days for Bankruptcy resolution. In support of that time frame, all creditors capitulated to the Bankruptcy dealings, which is the most significant delay element in any Bankruptcy process.

    The number of installed Radios in Chrysler Vehicles is up year over year. This increase in the install base will most likely make up for the reduced number of vehicles built this year.

  7. JohnnyirishXM

    first your article contains factual errors.
    1.siriusXM satrad has not lost subs in 2 straight Q's,4Q 08 was positive sub adds of 84K…1Q 09 was first time Siri lost subs ever!!!! result of worse Auto industry decline on record..

    2.The rejnection in BK of Siri's contract relates only to details about shared rev between both,not whether they will discontinue to install SATRAD's in cars..They wil.

  8. bananaz

    Any subs "lost" through Chrysler will be made up through other car companies. In the real world, how many people planning a car purchase would not buy if they couldn't have a chrysler product? Almost none! They are going to pick up more with the addition of Toyota than they would "lose" with the Chrysler BK. You've taken an obscure, CYA passage in the 10K and twisted it to manufacture a story with a provocative headline. It is "The Front Page" mentality of the press we see thousands of times a day. Sad.

  9. surprised

    Wow, what a surpise! A website funded by terrestrial radio with a negative headline barely relateabe to the story within. Fact is, people buy cars, if not from Chrysler, then elsewhere, SIRI is an option on cars with all the big automakers domestic and foreign. Just because someone buys a GM car instead of a Chrysler does not mean that SIRI is going to be hit any harder, as a matter of fact they renegotiated their deal with GM and it is more advantagous to them to have a car buyer purchase from GM than Chrysler.
    Nice try but when the auto sector as a whole rebounds, (with or without Chrysler), SIRI's number will too.

  10. js643dp

    SIRI up nealy 3% in trading today.

    People with a slice or an an ounce of intelligence don't buy into "attention grabbing" headlines anyway…… another poor writing performance by a nobody wannabe something

  11. underway

    What a BS headline……just in an attempt to grab attention. Chrysler is not going to stop feeding Sirius Xm subscribers. It's good for their business to put the sat radios in their cars. What a load of crap. No doubt SIRI could see a decline in the volume of new subs from Chrysler, but that's the case across the auto industry for now.