Sirius XM Satellite Radio Inc.
Manish, Rajpurohit (0182672)
Monroe king graduate college
In this case study, I will discuss how Sirius XM Satellite Radio got chance to do great in the market after staging of bank carapace. Sirius XM satellite company had spent billions in the market and, even company was unable to pay credit bills. In this case study, we are trying to get for what prospective Liberty media agreed to give billions of money loan to Sirius XM satellite company. In this case, I am trying to get after the get opportunity from Liberty media how the Sirius XM Satellite Radio company did great and increased the revenue. Moreover, Company lineup the refreshing and expending the programs. Sirius executive viewed the program as the foundation the company’s business.
In the year 2008 two major companies XM satellite radio and Sirius satellite together introduce the product in the market called Sirius XM Satellite Radio. These two merge companies start its operation in the year 2001-2002. Both companies spent billions of dollars amount in the market to launch the satellite for broadcasting signals. For the attract subscribes the invest millions of money in for the manufacture of satellite radio receivers and other equipment, install terrestrial signal repeaters and other necessary networking equipment, develop programming, conduct market research. Company marketing strategy was simple quiet. Company’s targeted costumers were more than 230 million registered vehicles and, the over 120 million households all in the North America region.
The company did market prediction and calculate that as many as 49 million people might subscribe to satellite radio service by the year 2012. The company assumes the price based on the car or home model chosen. Company assume a monthly fee of $9.95 and radio receiver prices of $150 to $399. This price was based on monthly fee and radio receiver model. The company figured out that about more than 15 million satellite radio customers would join the end of the year 2006.
What both companies did was to generate revenue they employed a subscription-based business model. The company did offer discount for customers who had more than one XM or Sirius satellite radios (for different vehicles or for home and office use) or if they signed up for prepaid plans of two to three years. The thing happened with the company they did not expect to cover the high startup costs and become profitable until acquiring at least 8 million to 10 million subscribers.
As usually happened in a market both companies faced the rivalry. As we know when two or more firms or companies trying to achieve the same goal in the same market. It means both companies are facing competition. The same thing happened between XM and Sirius..
Following factors were cause of rivalry between both companies.
· Programs which were used that was more attractive than its rival’s programming lineup.
· It was complicated that Convincing automakers to factory-install install its brand of satellite radio (the radios of the two rivals were incompatible XM radios could not receive signals broadcast by Sirius, and vice versa).
· Distribution of various satellite radio models and equipment was challenging for both companies.
· Building brand awareness and stimulating consumer demand for satellite radio service.
· Maintain the brand awareness and stimulating the consumer and latest market demand for radio service was a challenging task for both companies.
In Company focused to create one or more channels for almost every music genre and a big assortment of channels devoted to news and commentary, sports, comedy and entertainment, family and health, religion, politics, traffic, and weather. Company strategy was by the year 2007 XM had a programming lineup of over 170 channels that included 69 commercial-free music channels; 5 commercial music channels; 37 news, talk, and commentary channels; 38 sports channels; and 21 instant traffic and weather channels.
To achieve goals both companies had spent large, sometimes lavish, sums for the market. The company got rights for broadcast the programs on National Public Radio and such cable TV channels. Moreover, the company obtains authority to broadcast the air live play-by-play of various sporting events. The company got an extraordinary opportunity in the year 2004. The company did sing the five years contract with the Howard Stern on regarding of 400 million to $500 million in salaries for Stern and his staff plus stock bonuses for Stern and his agent that was based on exceeding specified subscriber targets.
XM company expenditure for programming got the significant increase in the following year 2005 to 2007.The programming expenditure of company XM were $101 million in 2005, $165.2 million in 2006, and $183.9 million in 2007. On the other hand, merger company Sirius Satellite Radio’s
expenditures for programming were $100.8 million in 2005, $520.4 million in 2006, and $236.1 million in 2007.
In the retail market, both companies were gaining board distribution with the automaker partners. Battle was beginning because at the same time both company XM and Sirius aggressively launched well-funded strategic initiatives to gain broad distribution of their satellite radios.
They had partnerships with automobiles manufacture, and regional consumer electronics retailers, mass merchandisers and selling radios at their websites all were sources of
new subscribers. The competition between both companies was happened because of some reasons. most of the new subscribers for satellite radio service were who purchased new vehicles, this vehicle already equipped with a satellite radio. Moreover, satellite radio which was already factory installed in the new vehicles. However, automobile dealers could install satellite radios in some models. XM and Sirius radios forced the vehicle manufacture companies to choose which
brand to install in factory-assembled vehicles.
The significant change happened in the year 2006. the Federal Communications Commission made the rule for satellite radio communications and had regulatory authority for issuing operating licenses for satellite radio enterprises, responded to growing numbers of consumer complaints about being locked into subscribing to the service of one company or the other, depending on the brand of satellite radio they had purchased. In end period of the year, 2006 XM and Sirius signed
an agreement to make the unified standard for satellite radio. The policy of companies was customers buy one radio system and they would able to be receiving either broadcast
Both companies had aggressively marketing strategies and spent lots of money on a variety of sizable sales, marketing, and they did the promotion all over the region. As result, the company was able to attract hundreds of thousands and, then, millions of new customers annually. The company also did advertising via Television, newspaper, Internet etc. After this strategy both companies expenses which they spent on marketing of products dramatically changed. XM company spending expenses were $182.4 million in 2005, $164.4 million in 2006, and $178.7 million in 2007.On the other hand, Sirius had sales and marketing expenses of $197.7 million in 2005,
The competition between both company XM radio and Sirius badly affect their financial status. For achieving same goal in the same market both companies produced gigantic losses every year of their existence, despite having attracted millions of the customers.
After long time (after 17 months) in year July 2018 in a concerned Antitrust Division of the U.S. Department of Justice both companies XM and Sirius agreed to pay the $20 million fine for failure to previously comply with certain FCC regulations. Moreover, both companies did sign the consent decree for cease practices and agree to their operating activity with full FCC government regulations. In addition, both companies agreed to would not raise the retail price of the product, and could not low the numbers of channels in the basic price $ 12.95 per month subscription package.
After accept all FCC rules and regulations on August 2008 both companies soon as soon did preparations for the merge. After both companies became one Sirius satellite had changed the name Sirius satellite to Sirius XM Radio Inc. After two years in April 2010, XM Satellite Radio Holdings Inc. merged with and into XM Satellite Radio Inc, and in January 2011, XM Satellite Radio Inc, a wholly owned subsidiary of Sirius XM Radio, was merged into Sirius XM Radio Inc..
After the merger, Sirius XM Radio had aimed some strategic plans to achieve the goals in the market. The company did recruit new consumers and grow rapidly in the market. Furthermore, the company eliminated the number of duplicative programming and thereby importantly reduced the combined program costs of both former companies.
In the year 2008 company focused on programming strategy. The company focused on three important points. For reducing company’s programming costs, the company did the bargaining for lower programming content. However, Sirius XM executives were aware of the rivalry between both companies XM and Sirius during the year 2002 to 2007 had led to importantly overbidding of content.in addition, Sirius and XM did high of programming cost. The company had introduced four country music channels each of them was with own format.
Cutting the programming cost was successful because before both companies merged programming cost was $450 million. After cutting the cost the programming cost became under $ 300 million.
Moreover, the company had a successful distribution strategy. In the year 2008 Sirius XM continued
to employ the strategy of making new customers by distributing the satellite through the three channels. In addition, the company did significant change in Sales and Marketing Strategy. Sirius XM revenue was depending on the fee which provided by subscribers. The company sales and marketing plan were focused on program and initiatives to gain and retain new customers. In the year 2014, company radios were installed in close to 60 million vehicles in all the USA.
In the United States by new vehicles sale increased from 15 million to 16 million annually, almost 11 million new vehicles per year were being equipped with a satellite radio.
The company also used subsidies plan to gain more new subscribers. Subsidies and incentives used to induce retailers to stock satellite radios and promote Sirius XM’s satellite radio service. Company’s share-based payments was $68.9 million in 2013, $63.8 million in 2012, $53.4
million in 2011, and $63.3 million in 2010.
The company had significant changes in customer service strategy. The company invested the significant amount in on customer care service. Company work on the capability to chat with online customers. With this service customer were able to solve their problem online easily. Moreover, the company has provided customer self-service options which were able to enable customers to perform more transactions. In the year 2014 Sirius had launched 10 orbiting satellites to improve the network coverage. The average costing of satellites was approximately $ 300 million each. The company used to launch and in-orbit insurance to mitigate the potential financial impact of satellite launch and in-orbit failures unless the premium costs were uneconomical relative to the risk of satellite failure.