It’s rumored that Apple and Microsoft are interested in purchasing Sirius XM, the satellite radio service. Do these rumors hold any water? Here’s what we know so far.
1. These Rumors Have Been Circulating Since Last Year
The Bloomberg video above talks about the future of Sirius radio.
Rumors about Apple taking over Sirius XM have been circulating since at least last May. Last year, Mac Daily News ran an article about why Apple should buy SiriusXM. Citing an argument by StockSaints on SeekingAlpha, Mac Daily News stated:
““Given that Sirius has almost 25 million subscribers, of which 20 million are self-paying, Apple is looking at a potential goldmine. First, Apple will want to differentiate itself from Pandora. Given all of the copyrights-related litigation that Apple has tossed at Samsung, Apple will want to look and feel different… Apple can use Sirius’ strong subscriber numbers to monetize the platform. Apple wants to up-sell. Sirius already has 20 million people that have demonstrated they are willing to pay.”
2. Apple Just Launched CarPlay
Apple Getting Into The Dashboard – Should Sirius XM Worry? http://t.co/Pmk5MZ3iX8 $SIRI $AAPL
— Seeking Alpha (@SeekingAlpha) June 11, 2013
Apple is working on a new product, CarPlay, in concert with several prominent automakers. CarPlay will let drivers control their music using a Siri interface. Apple states that current music apps supported by CarPlay include iHeartRadio, Beats Radio, and Spotify.
Given the fact that Sirius XM already has a presence in the dashboard of some cars, a marriage between the two companies makes a certain amount of sense. Forbes notes that “Sirius XM’s new car penetration rate reached an all time high of 71%” which is due to agreements with Toyota, Honda, and Nissan.
There’s precedent for Apple to buy out the competition. Many people have forgotten that Siri wasn’t originally an Apple product. Apple bought Siri in April of 2010. Adding Sirius XM’s cool content library to Apple’s somewhat lackluster iTunes Radio offerings could make for a powerhouse music experience in cars.
3. Sirius XM’s Last Earnings Call Wasn’t Great
Sirius XM might just be in a position to sell to either Apple or Microsoft. Forbes notes that the company’s fourth quarter earnings were “a mixed bag.” They write:
“While the new car penetration rate increased and the company continued to perform well in terms of getting more self-pay subscribers to its platform, its guidance for 2014 implied a material slowdown in the growth. In addition, the fourth quarter profits shrank due to some one-time charges. “
SiriusXM’s somewhat soft earnings, combined with their deep market penetration, make them an appealing buy for either Apple or Microsoft.
4. Sirius XM & Microsoft Already Have a Relationship
In the Bloomberg video above, the reporters ask the question “Is Howard Stern’s Magic for Sirius XM Eroding?”
Back in 2005, Sirius and Microsoft collaborated on a video service. Given the fact that the two companies have worked together in the past, Microsoft might be more likely to acquire Sirius XM than Apple. The CarPlay-related arguments above also hold true for Microsoft, which has an in-car system of its own in Ford and Lincoln vehicles.
Reuters notes that Sirius XM has a Microsoft exec on their board.
5. The Rumors Are Compelling, But the Facts Just Aren’t There
The battle for you car dashboard – Who will win? Google, Microsoft or Apple? http://t.co/jBVPiiFXYW
— Tim Moore (@TimMoore) March 3, 2014
At this time, there just aren’t enough solid facts to prove that either Apple or Microsoft have a serious interest in purchasing Sirius XM. There haven’t been any reports of secret meetings between execs, or any acquisition news in the financial papers. While Sirius XM would be a smart investment for either company, this rumor doesn’t ring true quite yet.