SiriusXM CEO changes tone on closing down Sirius platform

Mondo, the mascot of Sirius Satellite Radio, appears in an image taken in 2006.
Mondo, the mascot of Sirius Satellite Radio, appears in an image taken in 2006. (Photo by Camille King via Flickr Creative Commons/Graphic by The Desk)

The top executive at SiriusXM Pandora says it is no longer possible to consider shutting down the Sirius side of the platform by the middle of the decade, a move that would free up spectrum for use in other satellite radio and datacasting applications.

At an investor’s conference last week, SiriusXM Pandora Chief Executive Officer Jennifer Witz said the majority of its customers are using the XM side of the platform, but there are stil “several million” who continue to use Sirius hardware radios as part of their subscriptions.

“It really isn’t economically feasible today to free up the low band,” Witz said, referring to the type of spectrum used by the Sirius platform. “I think over time, it’ll start to make more sense to be able to do it.”

Sirius and XM started as independent operations in the early 2000s. The two companies used different and incompatible hardware and signal processing techniques to reach customers across the continental United States with digital radio beamed from the skies.

When Sirius and XM combined in 2009, the company’s short-term plan was to continue supporting both platforms, while its long-term strategy was to use XM’s spectrum and technology for new subscriptions and SiriusXM-branded hardware.

Last year, Witz told investors at a Bank of America conference that the company was considering plans to sunset the Sirius platform by the middle of the decade, a move that would allow the company to reclaim the low-band satellite spectrum for other uses, including datacasting services.

But that appeared contingent on plans to have 80 percent of new customers activating hardware radios that support SiriusXM’s new hybrid satellite-streaming platform, called 360L, by 2025. Last week, Witz told investors the company was expected to miss that target.

SiriusXM is also essentially forced to continue supporting the Sirius side of its platform due to a perk that the pre-merger Sirius offered to some customers early on. Until 2005, customers had the option of paying a one-time, $500 fee for a lifetime subscription that unlocked every satellite and streaming radio channel from the company.

The combined company argued that the perk was for the lifetime of the hardware radio to which it was originally assigned, and not the customer who paid for it. SiriusXM allowed customers to transfer the plan to a new radio a maximum of three times; it charged subscribers a $75 transfer fee each time they made the request.

In 2018, a legacy Sirius customer filed a class-action lawsuit, arguing that the company was not honoring the terms of its lifetime subscriptions. Court records revealed that around 838,000 hardware radio users had an active lifetime subscription, while SiriusXM shut off another 126,000 radios that were originally activated with a lifetime subscription.

Last year, the lawsuit was settled in a way that forced SiriusXM to recognize lifetime subscriptions as applying to the life of the customer. Those with inactive radios were given the opportunity to re-activate them with an actual lifetime subscription or the option to receive $100 cash. The benefits were worth around $422 million to subscribers, according to a report.

The end result of the lawsuit means SiriusXM has to support around one million customers with lifetime Sirius satellite radio subscriptions. Since the Sirius and XM technologies are incompatible, moving customers over to the SiriusXM platform would require replacing radios and tuners, which may be impossible for a handful of customers with Sirius tuners built into their cars.

Eventually, those cars will die and SiriusXM can move those subscriptions over to newer radios that use XM’s technology. When that move happens, most customers will likely have access to the new SiriusXM 360L platform; currently, Witz says there are 6 million vehicles on the road that use the new standard, and that number is expected to increase over time.