Thursday, March 30, 2006

Satellite Radio Churn

Satellite Radio Churn is a measure of the number of subscribers who leave the service during a specified period of time. Sirius and XM count churn in different ways, and it is important to understand those differences. A direct comparison of the reported churn numbers does not give you an accurate picture of what is happening.

Churn is not governed by GAAP (Generally Accepted Accounting Principals). This means that companies are allowed to report churn in any manner they desire as long as they disclose the methods they choose to utilize.

Sirius Churn is calculated as follows:

Average monthly churn represents the average of the number of deactivated subscribers divided by the average quarterly subscribers.

The Sirius radio method for reporting churn is fully inclusive of ALL deactivations (retail, OEM, and rental)

XM Churn is calculated as follows:

XM does not count all deactivations in their churn. Subscribers in promotional periods who elect to not continue the service are not counted as churn. They are simply dropped from the subscriber roles.

To be clear…..Neither method is right or wrong. Each company can determine the method they use. If you want to compare churn, it is best to measure the company against itself to see if there is improvement. If you feel the need to compare the two companies, pick one method and calculate both companies churn rate using that method.

The link to this write up is http://tinyurl.com/hrc7d

3/30/2006 10:20:00 PM

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