Sirius: Radio is Dead. Long Live Radio.

By A-J Aronstein - February 8, 2012 | Tickers: F, P, SIRI | 0 Comments

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I went long on SiriusXM (NASDAQ: SIRI) when it was still just Sirius Satellite Radio--well before "the merger". Before Howard Stern. Before Mel's arrival. It was the first stock I ever bought with my own money, while I was still in college. I started reading The Motley Fool because of Rick Munarriz's coverage of Sirius. I rode Sirius all the way to sub-ten-cents-per-share, and bought more all the way up. And there are a lot of reasons why I'm confident I'll be holding onto it for a long time after tomorrow's earnings report. Some of this has to do with points that Rick actually brought up in his piece today:

• Consistent growth in paid subscribers: Sirius added 1.7 million subscribers in 2011 and 1.4 million in 2010
• Auto sales have been strong, even domestically, and show no signs of slowing
• So far, there hasn't been wide backlash to the news that Sirius has raised subscription prices. This seems to suggest that subscribers have bought into the value of the product (not to mention the fact that Sirius had never before raised its prices). And so the increases will go straight toward beefing up the bottom line
• Other providers of premium radio content haven't threatened the infrastructure that Sirius has built when it comes to content or partnerships (not only do they not provide news and talk, but they also have fewer contracts with automobile companies)

But there's a significant albeit more abstract reason that Sirius has remained popular with consumers, even during a rough few years of tight household spending (and why I'll be holding SIRI for the long haul). Simply: radio as we know it is dead. And in recognition of this fact, Sirius is no longer just about radio.

The company has adapted to changes in the medium of radio --changes inaugurated by increasing demands for data in our homes and cars. I'm interested in the latter of these in particular. If Sirius can figure out how to continue leveraging its advantage in autos, then it will continue to evade potential challengers. "Radio" is no longer just Howard Stern, baseball games, and music. The term "radio" itself refers to an outmoded model of content delivery.

And Sirius recognizes this.

I'm long Sirius precisely because of the ways it has positioned itself as more than a radio provider. For example, though the Ford (NYSE: F) SYNC system has been maligned by users, Sirius has added Travel Link, a system that provides info about gas prices, traffic, weather, sports scores, and movie listings. It has learned to provide all of the other stuff that cars can feed us. There's no doubt that systems like SYNC will improve as automakers refine their respective interfaces. Regardless, Sirius is already in the door--proving itself capable of tapping into the new requirements of content providers in the age of Yelp, Google Maps, and iPhones.

Getting people to pay for content depends on Sirius' ability to continue innovating in the provision of content outside the scope of what we typically think of as radio. Sure, companies like Pandora (NYSE: P) have positioned themselves similarly within  next generation content-providing platforms in cars. But they are not, themselves, providers of that content. Pandora is an app for listening to music. Sirius is becoming an integrated tool that mirrors the way that we use media more generally--as a way to use and share information.

In other words, the key questions are: what is radio? How do we think of radio companies--and how might Sirius be breaking the rules of an industry it entered almost ten years ago? As long as Sirius can control the answers to these questions, it will continue to adapt in such a way that it can stay ahead. In the same way that we still use the word "record" to talk about even mp3 downloads of albums, we might soon be using the word "radio" to describe the devices we have in our cars to deliver music, stock quotes, talk, sports, directions, social media feeds, and whatever else we want to distract ourselves with.

The Humanist is on Twitter @tastyspoonful.

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