Sirius XM Holdings Inc (NASDAQ:SIRI) CEO Jim Meyer told CNBC’s Squawk Box yesterday that he really isn’t all that concerned about Pandora Media Inc (NYSE:P) as a threat to Sirius XM, he’s a lot more concerned with free radio. “The competition for me has always been free” radio, he said. “We’re not interested in customers who don’t want to pay.”
Pandora’s advertising-based model not a threat to Sirius XM
Meyer explained that he really doesn’t see Pandora as a long-term threat to Sirius XM. He argues that the business model of Internet streaming music service Pandora Media Inc (NYSE:P) requires advertising. “That plays to our strength,” he added, “because our music stations will remain commercial free forever.”
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Sirius XM Holdings Inc (NASDAQ:SIRI) currently has around 25.1 million subscribers, compared to 6 million Spotify customers and slightly more than 2.5 million paying subscribers for new-kid-on-the-block Pandora.
Terrestrial radio the “gorilla in the room”
Meyer emphasized that terrestrial radio is still clearly “the biggest gorilla in the room,” bringing in around $15 billion a year in revenue, compared with Sirius XM Holdings Inc (NASDAQ:SIRI)’s anticipated $4 billion in sales in 2014.
He also emphasized the growing revenue stream related to their successful relationship with the auto industry. “We’re in 70 percent of all new cars built,” Meyer said. “At the end of the third quarter, we have 57 million [vehicles] out there that have our technology incorporated. And about mid-30s of that are not active.” Meyer also pointed out that used car sales are beginning to add up to Sirius XM converts. He commented that as subscribers start to sell their cars, “We’re now getting two bites at the apple.”
The value of Howard Stern
Not surprisingly, the subject of Howard Stern came up in Tuesday’s Squawk Box interview. Meyer had nothing but praise for the always controversial Stern. “Howard is more relevant than ever,” Meyer said, and then mentioned Stern’s second job judging on America’s Got Talent has helped to broaden his public appeal.