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Teens don't like satellite radio, analyst says

Posted Jun 19 2008, 03:25 PM by Kim Peterson
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A Goldman Sachs analyst dropped a bomb on Sirius and XM Satellite Radio today with a pessimistic report that caused both stocks to plunge. At the heart of analyst Mark Wienkes' report is this: Young people have no need for satellite radio. By 1 p.m. PT, Sirius shares had fallen 14% to $2.08 and XM shares were down nearly 18% to $8.55.

Kids today are less interested in satellite radio, Wienkes writes, what with iPods, iPhones and other music players out there competing for attention. On top of that, the cash flows of both companies are in decline. Wienkes expects larger losses from both in the future and now rates XM a "sell" and Sirius a "conviction sell." In other words, call your broker immediately.

I have no doubt that young people aren't buying satellite radios. Cell phones, iPods and Web sites like MySpace serve up a well-rounded musical diet for most teens. Radio over cell phone is headed for the mainstream as well. There's no need for more. But does that justify such extreme dumpage today? Sirius and XM are going after a different market, focusing heavily on new car buyers. But fewer new cars are coming off the assembly line these days, Wienkes wrote, and satellite radio faces continued weak retail sales.

He made a few additional points:

--Streaming audio on Apple's 3G iPhone has the potential for strong demand.

--The average revenue per satellite radio user is declining.

--The amount of user turnover is increasing.

--New "a la carte" satellite radio pricing will not impact demand for the product.

Related reading:

XM and Sirius get big endorsement

Sirius: Merger or Chapter 11

If Sirius has to be sold, who will buy?

XM plus Sirius doesn't equal monopoly?

Comments

 

Howard Stern rules.  and a Baba-booey to ya'all

so whats stopping the merger is there is so much competion from ipod/3g cell

phones, regular radio?  also are kids  are not the target market its adults yah

the kids will eventually get older but its not as if this product is  entirely dependant

on kids

Satelite radio is awefull. You lose your signal, over priced, poor selection. The only good thing is the sports.

rofl.. kids have no money esp teens..its us older adluts footing the bills and subscribing to Sirius .Ive been a subscriber since they came out and have no plans to pay the crazy prices of downloading mp3s only to put them on a player to listen to over and over again where with my sat. radio i have 100's of channels to listen to for whatever mood im in ...as for the merger its all politics and the moronic terrestial radio  that clogging down everything ..so much money has been spent fighting the merger its now wonder their cash is lower then normal...but im diehard ill be with them until the end and if that ever comes ill go back to making my own cds and playing them in my mp3 player in my truck

I love my Satelite radio. I don't have to listen to the rap crap they play on the radio now a days. I can listen to REAL music. And I have the choice. Plus, Satelite radio is for adults mainly. That's the whole point! It was not made for kids. And if you think 12 bucks a month is overpriced you real don't understand the point. Your paying a fee to listen to MANY more chioces of music you want to, not what the media or record companys make you listen to. Freedom is free!

I have had XM from the beginning and I'll have it till its death. Which hopefully will not happen in my lifetime because I really dislike my options without XM.

Howard Ster rules.........nothing.  Unless you count the 12 yr old mindset that loves potty language and the "explanation" of naked women on the radio.  Hope you drop your $12 for something other than Stern.  

This demonstrates what kind of idiots are hired by big brokerage companies as "analysts".

As an "analyst" Mr. Wienkes indicates that kids don't buy XM radio, and that iPod does a better job satisfying the music needs for the majority. First, satellite radio was never for kids.

Second, satellite radio costs $12 a month for 100 channels. For $12 I can download 12 songs from iTune!! so the choice is between listening to 12 songs a whole month, Or for the same price having 100 channels of high quality digital music.

Obviously the genius Mr. Wienke thinks buying 12 songs for 12 dollars is the better deal!!

I love Love Love my sirius. I agree with everyone saying that Teens only like ipods because ipods are marketed to the teens. Teens also don't drive enough to enjoy satellite radio in my opinion. I think us adults can use satellite radio to drown out our teens. LOL  Jk people~  If you don't go spending tons of money on overpriced coffee then you can enjoy affordable music that you can choose and by the way my teens are always changing the channels to what they want to listen to.  

The XM satellite 1940s Big Band channel alone is worth the monthly subscription price, not to mention Fox news, CNBC, baseball and all of the other good stuff.

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