Are New Car Buyers Enough to Keep Satellite Radio Alive?
That’s the questions Reuters asks in this article, quoting, actually, no one, except an “independent research analyst in New York.” Twice in the article, reporter Martha Graybow uses the phrase, “some analysts say,” but a close reading shows only one direct quote from a naysayer. The article, in short, is an opinion piece wrapped around data and an analogy against the recent experience of the dotcom euphoria and subsequent crash. It does, however, raise a couple legitimate questions about market valuation, and how many subscribers XM and Sirius radio can attract. At current stock prices, XM values each subscriber at about $1,973 and Sirius’ is almost double that at $3,686, according to a Banc of America analysis. Compared to a similar industry, cable television, these ratios are assuredly high, but Graybow is quick to point out that cable is mature, while satellite is still building its customer base. As both companies are losing money, the key to survival is new subscribers, and here
