SiriusXM Faces Challenges Amid Tariff Uncertainty
SiriusXM is encountering significant challenges as President Donald Trump continues to threaten tariffs on U.S. automakers. The uncertainty associated with these tariffs is raising concerns for the company, particularly regarding its advertising revenue.
Ad Sales Concerns Voiced by CFO
During a recent presentation at the Deutsche Bank Media, Internet & Telecom Conference, SiriusXM’s Chief Financial Officer, Thomas Barry, expressed caution about the future of ad sales. “Right now, we’re a little concerned and cautious about where the ad sales are going,” he stated in a webcasted session.
The Impact of Tariffs on Advertising Market
The pause on tariffs for the so-called Big Three automakers has not alleviated fears surrounding the ad market. Barry pointed out that the current economic climate, characterized by inflation and trade uncertainties, is adversely affecting advertising. “I think it’s adversely impacting the ad space,” Barry remarked.
CEO Highlights Strong Start to 2025 Before Uncertainty
This sentiment was echoed by SiriusXM CEO Jennifer Witz, who, during a Morgan Stanley event, noted that the first two months of 2025 showed promise for the advertising market. However, this was before a one-month tariff exemption for U.S. automakers was introduced amid ongoing trade tensions.
Rising Vehicle Costs and Advertising Strategy
The ramifications of Trump’s tariffs—whether enforced or suspended—coupled with retaliatory actions from Canada and Mexico are likely to hike the prices of new vehicles. This dynamic poses challenges for SiriusXM as it plans to expand its ad-supported offerings later this year. Barry observed, “In the last couple weeks, or week and a half, we’ve started to see a drop-off” in advertisement effectiveness.
Shifting Focus on Cost Efficiency and Car Subscriptions
In the backdrop of evolving market dynamics, Barry mentioned that SiriusXM has been recalibrating its focus. The company is moving away from heavy spending to attract streaming subscribers and instead prioritizing cost-efficiency and its car subscription model. “Streaming will always be an important part of our ecosystem,” he asserted, but emphasized that the primary focus will revert to in-car subscribers after cutting back on marketing expenditures for streaming.
New Streaming App and In-Car Listening Focus
SiriusXM introduced a new streaming app in December 2023, aimed at competing with platforms like Spotify. However, the company is now shifting its attention back to in-car listening experiences. “When you add up all the priorities, really it’s focused, it’s pulling back a little and it’s looking at where is the profitability, where the high margins are in this business, which is in the vehicle,” Barry explained insightfully.