Sirius' OEM Count
Some Sirius OEM subscriptions (DCX) are counted at the time of manufacture. The reason for this is that DCX pays Sirius up front for a 1 year subscription that Sirius is then passing onto the end user of the automobile. There are people that take exception to this practice, and people that accept it. Here are some things to note:
Sirius pays the subsidy for the radio install up front. This is a Subscriber Acquisition Cost (SAC). This means that Sirius has already invested the dollars into creating a subscriber.
2. Sirius receives the subscription revenue (from DCX) at the time of manufacture.
Units receiving revenue are counted as subscribers. Sirius accounts for the full
impact of the subscriber cost, and books the revenue over the first12 months that
the end user has the vehicle in their possession.
EVERY car that is manufactured with a satellite radio (whether Sirius or XM) becomes a subscriber at some point.
Cars typically sit on a dealer lot for 60 days at the most. Many are sold within 30 days. This means that the un-activated radio is not being counted for a long period of time.
Sirius is only counting three months of DCX vehicles in any given quarter. For example, the q1 2006 DCX cars counted as subscribers will be the DCX cars manufactured in January, February, and March. The bulk of these will be sold during the first quarter anyway. Those that do not sell in Q2 are not counted a second time in the second quarter.
So, while some people like to make a big deal about this practice, on reality, the effect is very minimal. This is especially true when you consider that they will ALL become subscribers any way.
The structure of the practice has been fully disclosed by Sirius, and is well known. Analysts, and other professionals are well aware of the practice, and have not taken exception to it.
The link to this write up is -http://satellitestandard.blogspot.com/2006/03/sirius-oem-count.html
3/30/2006 09:38:00 PM
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