SiriusXM to Launch Howard Stern Video Service in Second Quarter

"We are not going into the Netflix business," says CEO Jim Meyer as the satellite radio firm reports subscriber gains and a swing to a loss in the fourth quarter.

Satellite radio giant SiriusXM, home of Howard Stern, on Wednesday reported a swing to a fourth-quarter loss on special charges as it continued to add subscribers.

On its earnings call, management said that a long-planned Stern video service would launch in the second quarter, with the company then set to follow that up later in the year with more video offers.

"Let me be clear: We are wading into the video pool, not diving headfirst," SiriusXM CEO Jim Meyer said. "Our approach to video is just one part of our nonstop effort to add value to the SiriusXM experience." Asked later why the company wasn't diving into video, Meyer said: "It turns out doing video is more complicated than it looks on the surface." And he added: "We are not going into the Netflix business. They can rest easy. We are not coming after them."

Video from The Howard Stern Show, which is heard on SiriusXM live, is expected to dominate the satellite radio firm's first venture into video programming, in addition to special programming and content from Stern's video library.

"Howard customers want one thing: more Howard, and we're going to give them more Howard," Meyer explained. "We are going to focus on getting it promoted right, getting it out there right." He added that adding to the customer experience and value proposition are key, and they will allow the company to roll out more video offers over time.

The Stern video service was previously delayed to 2017 and then this year. Plans for it were first announced in late 2015 when Sirius and Stern signed a new five-year deal.

Meyer said that after the Stern launch, the firm would offer "additional shortform content from around the SiriusXM bundle" later in 2018, with the firm likely to have more to say about these additional plans on the next earnings call.

Asked about the business model behind the video launches, Meyer said: "Our video offering in 2018 will be included as part of the All Access package, and I'm hoping it helps us sell more all-access programming." All Access costs $20.99 per month and $229 a year in a discounted introduction offer.

SiriusXM, controlled by John Malone's Liberty Media, ended 2017 with 32.7 million subscribers after ending 2016 with more than 31.3 million. It added 569,000 subscribers in the fourth quarter and 1.39 million for all of 2017. For 2018, SiriusXM projects self-pay net subscriber additions of approximately 1 million.

It also reported a fourth-quarter loss of $37 million, compared with earnings of $205 million in the year-ago period. The latest quarter included a $185 million charge "associated with the revaluation of the company's deferred tax assets as a result of the Tax Cuts and Jobs Act." The company also recorded a decrease of approximately $72 million in the fair value of its investment in Pandora.

Sirius' quarterly adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $542 million, compared with $475 million.

"The fourth quarter capped a strong year for SiriusXM and was our best quarter for self-pay subscriber growth in five years," Meyer said. "We exceeded all of our 2017 subscriber and financial guidance, even after increasing these targets during the year."

Meyer on Wednesday also said that streaming-only subscriber growth will be a key focus for Sirius going forward. "I'm now confident that we are kind of there" in terms of the company's streaming capabilities, he said, adding this will be another channel for the company to drive.