Shouldn't SiriusXM's investors or the SEC be calling BS on the inflated subscription claims? I remember that it was common knowledge when the two companies were separate that Sirius' sub numbers weren't as close to XM's as Sirius claimed because Sirius was including radios in unsold cars in dealer lots as "subscribers" in its SEC filings while XM was only counting activated radios that were actually being listened to by flesh-and-blood humans. Once Sirius succeeded in hoodwinking the feds into accepting its takeover of XM as a "merger of equals," the phoney-baloney subscriber counting expanded to the XM side.
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The threats to terrestrial radio keep on coming...
- Thread starter davideduardo
- Start date
Shouldn't SiriusXM's investors or the SEC be calling BS on the inflated subscription claims? I remember that it was common knowledge when the two companies were separate that Sirius' sub numbers weren't as close to XM's as Sirius claimed because Sirius was including radios in unsold cars in dealer lots as "subscribers" in its SEC filings while XM was only counting activated radios that were actually being listened to by flesh-and-blood humans. Once Sirius succeeded in hoodwinking the feds into accepting its takeover of XM as a "merger of equals," the phoney-baloney subscriber counting expanded to the XM side.
I think we have an example where a certain president plays games with property values depending on who he's talking to. The investors or the SEC don't care how many subscribers they claim as long as revenues and profits look good. The inflated sub numbers are all part of the marketing narrative. Investors aren't going to blow that up.
Investors, and the SEC, look at accuracy of financials. They know that marketing related issues can be influenced by puffery.
In any case, as long as they report the count predictably without changing the standards each year or quarter, by using any standard allows the investment companies that follow the shares of the parent company know how to interpret the data.
Since both companies were losing huge amounts of money prior to the merger, the SEC saw either the disappearance of both or the survival of one. At that time, online streaming was growing rapidly and the SEC saw that the non-broadcast exclusivity of satellite was no longer such a narrow niche.
Just as a point of reference, property has three legal valued: purchase price (on which taxes are based in many states), resale value (asking or estimated price today) and tax value (often the same as the purchase price.
As long as a value is addressed in the appropriate context, using any of those metrics is appropriate.
This just points out how few reporters, outside of those doing business reporting, understand markets, economics and even the difference between "revenue" and "net income" by companies.
In a news seminar I once asked a series of questions. One was "You buy a bag of groceries for $100. How much of that was profit for the grocery store?"
The average response was around 40%, with nearly all between 25% and 50% profit estimates. At the time, the net profit for the 5 largest US grocery chains was actually 1.5%... about a buck and a half.
I followed up with a question of, "do you believe what I just said". 90% said "no". The idea that the average business is little different than a stagecoach robber in Gunsmoke is prevalent in society. Most of this comes from journalists who never get a basic course in economics or business.
Their reporting came from the testimony of the president's former attorney, who should understand the difference.
https://www.cnbc.com/2020/08/24/ny-...mp-improperly-inflated-real-estate-value.html
Reporters always have a source. If they don't, then they're not reporters.
My comment was not limited to current reporting... it goes back several decades. As I said, most reporters do not know the difference between income and profit for a business. In fact, most do not even know that essentially all expenses by a business are "deductible" because they don't understand that business pay income taxes only on profits, not income. Such reporters only know about personal income, where most everyday expenses are not tax-deductible, so they apply that belief to business and are, generally, wrong.
That's why they're reporters and not economists. I know a lot of reporters. They will all tell you they are generalists. They know enough to know what they don't know, and that's when they start asking questions, getting quotes from people who know, and then they write their story. The minute they cross the line and start becoming a source for someone else, then they become someone like Larry Kudlow, who is in a very different income bracket.
G
Groove1670
Guest
That is what I said. Stations don't want the hassle, and advertisers want to buy a network (it cuts out having to reach individual stations). Small market stations have allowed this to happen.
And the way small market radio started that ball rolling was with subscribing to a satellite delivered radio format that bartered some or all the cost through airing national spots. Some stations might control their own programming but subscribe to a national service or two where part of the cost is covered by airing some national spots. I'm not sure it truly matters for many big companies. Generally they don't buy advertising in a singleton market (as in only 1 location in the station's service area).
The rare instances where I got dollars were flukes. One was a franchisee where his ad dollars went to an insert in the Sunday paper in the metro 150 miles away. When he told the home office he was thinking about taking them to court to get back all those ad dollars he had kicked in that were spent a 2.5 hour drive away, the ad agency bought a regular schedule with me and the same Sunday insert in the local daily. In the other instance a top manager of a small chain was moved in to save the store in the town I was working. In our conversation I learned he was going against everybody in his district to win a trip to Hawaii based on sales. He asked what advertising his company did locally, I told him honestly, zero dollars. He responded he was competing with a group of big city stores supported with TV, radio and print. A couple of hours later his supervisor called and a few minutes later the ad agency did. We got a regular schedule from then on. And he won that trip to Hawaii.
The rare instances where I got dollars were flukes. One was a franchisee where his ad dollars went to an insert in the Sunday paper in the metro 150 miles away. When he told the home office he was thinking about taking them to court to get back all those ad dollars he had kicked in that were spent a 2.5 hour drive away, the ad agency bought a regular schedule with me and the same Sunday insert in the local daily. In the other instance a top manager of a small chain was moved in to save the store in the town I was working. In our conversation I learned he was going against everybody in his district to win a trip to Hawaii based on sales. He asked what advertising his company did locally, I told him honestly, zero dollars. He responded he was competing with a group of big city stores supported with TV, radio and print. A couple of hours later his supervisor called and a few minutes later the ad agency did. We got a regular schedule from then on. And he won that trip to Hawaii.
In the late 50's around the dinner table my dad and I were having much this same conversation. I was comparing his steel sales business to that of a grocery store and he gave me about the same lesson. Years later I got to ask my college professor the same question and turned out he supported my father. He also said if you could get rid of certain sections of the grocery you would improve your profits greatly (for instance: produce).
Having been a VP of a significant Supermarket chain that accidentally owned radio stations, I saw that certain departments of a market were never intended to make money... they were just necessary to be a "supermarket". Produce and dairy make little money (with the exception of yogurts, ice cream and fine cheese in dairy) but have to be there.
Other items are often loss leaders as they establish consumer price comparison points on commonly bought items. Toilet paper is a good example... generally sold with no profit.
Yours is a good example. And you got a knowledgeable response; most kids get told by their parents that the store is "ripping them off" because the parents don't understand business and don't know all the expenses involved in running a market, ranging from "shrinkage" to insurance and utilities.
It’s actually a pretty standard practice. One of the big toy companies (I believe Mattel) counts an item as sold as soon as it’s on the truck. So long as they have a way to account for that with returns, it’s perfectly legal. From their standpoint, there’s no incentive to count sales any other way. They can overfill orders starting about a week before Thanksgiving and get retailers to take the extras. If their fiscal year ends on December 31, they don’t have to deal with extra returns until the next year. I believe Krispy Kreme had a similar practice. They had a way to account for any items that weren’t actually bought at the end destination. So, it was legal.
In the case of XM, it switched to counting empty cars on the lot as subscribers in 2005, several years before the merger with Sirius. Again, they had an increase in subscribers, but they had a decrease in revenue per subscriber. If you know how to and take the time to read its statements, the increase in subscribers is matched with a decrease in revenue per subscriber.
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