Sirius Xm Case Summary

1. Sirius XM has a number of factors to be affected by in the in-vehicle radio entertainment industry. We will look at how the industry structure has shaped up by using the Michael Porter’s Five-Forces model of analysis –

a) Threat of new entrants – The threat of new entrants is relatively less than compared to most entertainment and programming industry. For beginning operations the entrants would have to spend hundreds of millions of dollars to launch satellites, for broadcasting signals, arrange for the manufacture of satellite radio receivers and other equipment, install terrestrial signal repeaters and other necessary networking equipment, develop programming, conduct market research, and attract subscribers. These are all the arrangements

Opportunities:

Sirius XM is having billions in tax loss carry-forwards to offset future liabilities. This is advantageous now that Sirius XM is profitable. It now gives the company unusual leverage if it should seek acquisitions of profitable companies, since pre-tax earnings are that much more valuable when they can largely trickle to the bottom line.

Sirius XM has embraced all of the leading smartphone platforms, since it has rolled out its streaming app through Apple 's (Nasdaq: AAPL) App Store. Digital delivery is now truly competitive, particularly for a premium service going up against freebies, but it provides an incremental platform and may one day open the door for international offerings given its established brand.

Margins have been weak in the past, but future seems to be bright. Unlike cable and satellite television providers, Sirius XM has more freedom in its content offerings. It has greater control in its programming costs, and that includes proprietary channels and self-directed music

It is a real concern that a greater number of smartphones in the marketplace makes it that much easier to have a radio choice beyond terrestrial and satellite. AT&T 's (NYSE: T) move this summer to cap unlimited plans may help Sirius XM, but the choices are growing for more and more consumers.

Sirius XM 's subscriber ranks would be tested if Howard Stern left for a rival platform or reduces his live shows.

6. Sirius XM is working with Broad Differentiation Strategy. Yes. It is working well as it has expanded into safety and navigation area along with utility services and it has ensured to cater many other services. This is a smart strategy on Sirius’ part and has helped it diversity its product offering.

7.

8. Yes. It would seem this trend of net subscribers going to negative is alarming. This is due to change in so much of media landscape and the availability of various options. However, one must understand that this is taken care by quick price adjustments and ensuring that new programming is created. Various reasons for this