SiriusXM Revenue and Subscribers Up, Despite Down Quarter and $976 Million Pandora Charge

Satellite radio giant SiriusXM saw a 6% revenue gain and added 279,000 subscribers in its satellite radio business, although it faced “headwinds” with its Pandora unit, which lost 63,000 subscribers and recorded a $976 million impairment charge, due primarily to royalty payment costs.

The company had warned investors of the charge last month in its guidance. Pandora has faced challenges as streaming listeners embrace Spotify and Apple Music over more lean-back services.

The charge contributed to the company’s swooning from a $243 million profit in Q4 2019 to a loss of $677 million, despite a 6 percent revenue gain to $2.19 billion.

“We have a taken pragmatic view of royalty costs in our assumptions,” CFO Sean Sullivan said on Tuesday’s earnings call. New CEO Jennifer Witz struck an optimistic tone as she spoke of the company’s efforts to strengthen Pandora, which it acquired less than two years ago for $3.5 billion, mentioning podcasts and greater availability in cars.

“We’re clearly focused on a decline in listenership. It has been harder than we expected. But the monetization has been very strong at Pandora,” she said.

Overall, SiriusXM added 407,000 self-pay subscribers in the final quarter of 2020, up 65,000 year over year, for a total of 34.7 million total users at the end of last year.

Pandora ended the year with just under 6.3 million users, and also marked a 1% drop in advertising revenue, which the company cited as pandemic-related. Overall Q4 ad revenue was up 22% to $425 million.

“SiriusXM turned in strong operating and financial results in 2020: We grew SiriusXM self-pay subscribers, revenue, adjusted earnings before interest, taxes, depreciation and amortization, and free cash flow despite the pandemic,” Witz said.

She also spoke optimistically of Howard Stern’s contract renewal for both new and archived shows, a strong showing for comedian Kevin Hart, and the company’s ongoing push into podcasts, marked by its acquisition of Stitcher.

“SiriusXM, Pandora and Stitcher, together with our investment in SoundCloud, now reach an audience of more than 150 million people.  We are bolstering our position as North America’s leading audio entertainment company with new innovative talk shows and podcasts, streaming music channels targeting younger audiences and extended deals with major media brands, such as NBCUniversal News Group,” she said.

 

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