Satellite and streaming audio company SiriusXM will lay off nearly 500 workers, or about 8 percent of its workforce, its chief executive confirmed in a memo sent to employees on Monday.
The announcement comes about three months after SiriusXM management explored the idea of layoffs in order to address a slowdown in its business brought on by several macroeconomic factors.
The total amount of roles eliminated is 475, SiriusXM CEO Jennifer Witz said, affirming that “nearly ever department will be impacted” by the reduction. SiriusXM will provide severance packages, continued health benefits and other transition support for workers who receive pink slips this week.
The downsizing is part of a revamped business strategy at SiriusXM that is intended to take advantage of synergies across departments. In addition to its flagship satellite radio service, SiriusXM also operates streaming app Pandora, the podcast platform Stitcher and has several on-demand audio and advertisement products under its roof.
“We believe the new operational design will allow us to move faster and more efficiently as we take on new challenges across our business,” Witz said.
In early February, SiriusXM reported it brought in $9.003 billion in revenue for 2022, a slight increase from the $8.696 billion reported during the previous year. Subscription revenue from its SiriusXM satellite and streaming radio service accounted for nearly two-thirds of overall company revenue; SiriusXM said subscriptions earned $6.892 billion for 2022, up slightly from $6.614 billion.
While SiriusXM has branched into other audio sectors in recent years — it owns streaming music app Pandora, podcast platform Stitcher, produces and distributes its own podcast products and has several connected audio advertising brands — the SiriusXM radio service is still closely tied to the automotive market. New and used cars with SiriusXM tuners that are purchased at dealerships come with an extended free trial offer; SiriusXM counts on those listeners converting to paid customers after their trials end.
Data shows only one in five drivers with a SiriusXM tuner in their car actually do become a paid customer. In an interview with a financial publication last year, a company executive said nearly 145 million cars on the road have SiriusXM tuners installed. The company’s own earnings release revealed just 34 million customers subscribe to SiriusXM radio, which starts at $5 a month and goes up to more than $23 a month for an individual subscription.
Over the last few financial quarters, executives have affirmed that economic headwind in the automotive market negatively impacts SiriusXM’s ability to grow and maintain subscriptions. The problem has been exacerbated by a lack of new and used car inventory, partially due to a halt in manufacturing during the global coronavirus health pandemic, which is only now starting to ease.
While inventory has increased, high interest rates on car loans has steered consumers away from dealerships, which is also impacting SiriusXM’s ability to grow its subscription business. While its advertising and platform sectors are growing, neither have been able to overtake the subscription business; advertising in particular has been impacted by a pullback in spending by marketers, an effect that has been felt at other media businesses. In 2022, SiriusXM took in $1.772 billion in advertising across satellite radio, Pandora and podcasts; the previous year, it earned $1.73 billion.
The full memo from SiriusXM CEO Jennifer Witz on the company’s layoffs is below:
I have some difficult news to share. After a review of our business, we have made the decision to reduce the size of our workforce by 475 roles, or 8%. Unfortunately, this will mean saying goodbye to talented colleagues across the organization.
Over the course of the day today, impacted employees will begin receiving invitations to join meetings with their respected leadership, and a member of our People and Culture team.
I want to acknowledge that this is going to be a challenging day, especially for those departing the company, and I’d like to extend my deepest gratitude to everyone for their contributions to SiriusXM. Regardless of the team, level or tenure, you played a role in bringing our company to where it is today, and for that we are grateful. This was not an easy decision to make, nor one we took lightly. However, it is critical for us to take the right steps now to secure the long-term health and profitability of our business.
How Did We Get Here?
We are entering a new phase for our company. The investments we are making in the business this year, coupled with today’s uncertain economic environment, require us to think differently about how our organization is structured. As I shared in November, our planning process for 2023 included an enterprise-wide review of our business to identify opportunities for greater agility and efficiency. As part of this effort, we identified areas in which we could limit discretionary spending to minimize the impact of any additional needs for staff reductions. We streamlined our non-headcount costs by reducing content and marketing spend, decreasing our real estate footprint and, most recently, implementing tighter restriction in our travel and entertainment policy. However, today’s decision to enhance our workforce was required in order for us to maintain a sustainably profitable company. (This text was copy and pasted from TheDesk.net)
Who Is Impacted?
Over the past five years, our business has grown and expanded with the addition of new acquisitions, business lines and revenue streams. Now, we have completed an assessment of our department and functions to determine where we can improve collaboration, consolidate teams to achieve greater efficiencies, and ultimately design an organization structure that is best positioned to achieve our priorities. As a result, nearly every department across SiriusXM will be impacted. We believe the new operational design will allow us to move faster and more effectively as we take on new challenges across our business.
For those leaving us, you will be contacted directly regarding your departure, and you will have the opportunity to speak with a leader from your department as well as a member of our people and culture team. We understand that this transition won’t be easy, but please know that we’re committed to supporting you during this process, and we’re providing exit packages that include severance, transitional health insurance benefits, Employee Advocacy Program consultation and outplacement services.
Today is one of the most-difficult days we’ve had to face as a team, and these changes impact each of us deeply. However, it is my belief that these tough decisions were necessary as we look to capture the opportunity in front of us.
Together, we are committed to delivering the best premium audio experience in North America. We are evolving our service to give the next generation of listeners new ways to discover and engage with our incredible programming and talent. With our vision as clear as ever, and our operating transformation now in play, we will continue to make investments as we gear up for our next major milestone: The launch of a new, best-in-class SiriusXM experience.
Again, to those impacted by these changes, I thank you for al that you’ve done to bring SiriusXM to where it is today, and I wish you all the best in your future endeavors.
We’ll discuss these changes and our path moving forward during our next company-wide all hands meeting. In the meantime, I’ll be in touch later today to share an update, and you’ll also hear more details from your respective executive leaders throughout the remainder of the week.
In closing, thank you for your focus, dedication and resilience. This is not an easy moment for any of us, so it’s more important than ever that we support each other, and that you lean on our leaders, including me, as we work through these next steps.