Those who claim radio is on its way out will second-guess themselves after SiriusXM’s latest earnings report. For the third quarter of 2018, the satellite radio company posted revenue of $1.5 billion — a quarterly record for the company — and got nearly 300,000 new subscribers, bringing its total subscriber count to around 33.7 million.
How’s the car-centric subscription radio service doing so well at a time when music is widely available for free listening elsewhere? CEO Jim Meyer attributes the record success to the company’s “relentless focus on creating and curating content our subscribers will love,” pointing to a limited-run Dave Mathews Band Radio project and live performances in New York as examples. The growth in both subscribers and revenue is a testament to the power of personalized, artist-centric experiences, at a time when streaming services have made music easy and cheap to access. Music companies everywhere are learning: When there’s exclusivity, fans are willing to pay.
This is also SiriusXM’s first quarterly report since it announced last month that it would acquire Internet radio company Pandora in an all-stock $3.5 billion deal, which is due to close in early 2019 — a takeover that is set to make SiriusXM into the biggest audio entertainment company in the world (and one of the biggest music companies period). With Pandora and its growth possibilities at its side, SiriusXM will have over $7 billion in pro-forma (i.e. projected) revenue in 2018, according to the company’s Q3 financials. For comparison, concert and ticketing industry juggernaut Live Nation posted record revenue of $10.4 billion in 2017.
Meyer said in a investor report that “we have tremendous respect for Pandora and their team for building a massively popular consumer offering, and we believe there are significant opportunities to create value for both companies’ stockholders by combining our complementary businesses.” He highlighted one example of those “significant opportunities” in a conference call last month following the Pandora announcement: If SiriusXM trial users decide they don’t want to shell out for a monthly $10-$20 subscription, they can be funneled toward Pandora’s cheaper deals or its free, ad-based tier. But the $7 billion figure is still hypothetical at this point, and it hangs off of whether both companies can keep luring in new customers in a tightening streaming market.