Sirius XM Holdings Inc. (NASDAQ:SIRI) Credit Suisse 24th Annual Communications Conference June 14, 2022 12:45 PM ET
CorporateParticipants
Jennifer Witz – Chief Executive Officer
ConferenceCall Participants
Doug Mitchelson – Credit Suisse
Doug Mitchelson
Good morning. I’m Doug Mitchelson, Credit Suisse’s media and cable satellite and wireless analyst. Pleased to have with us today Jennifer Witz, CEO of SiriusXM for our next keynote presentation will be a fireside chat format. As you’ve heard me say all day, my questions will probably run the entire length of the session. But if you by chance need us for any time, feel free to, you know, any questions, and I’ll try to squeeze them in. Jennifer, thanks so much for sharing some of your time with us today.
Jennifer Witz
Thank you, Doug. Appreciate you having me.
Doug Mitchelson
Of course. So, to start with just wanted to reflect back or something you reflect back on your first 18 months as CEO? What changes have you made, what’s worked well, what’s been challenged?
Jennifer Witz
Sure, my primary objective is to set a new course for our company and to shape the future of audio and therefore, define new opportunities for us for growth. And that starts with building out a strong leadership team. And we’ve added key new hires who will be positive change agents, including our new Head of People and Culture, Faye Tylee and our new Chief Product and Technology Officer, Joe Inzerillo and many other talented individuals at different levels across the organization.
And as we’ve talked about before, we as an organization are really focused on three primary tenants. And that is, maintaining and growing our already strong position in the car. Despite, it’s been a pretty challenging auto sales environment. And really, especially because of the challenges with auto sales, and how that rolls through our funnels, we’re really doubling down on our investments in streaming, both with existing subscribers and new digital standalone subscribers.
And the third piece of this, which I’m also really excited about is that we continue to grow as XM media, our unified ad sales business. We’ve been extending the strength that we have on the Pandora, digital audio ad sales, to scale, our off platform advertising. We’ve signed a number of new agreements with some of the biggest podcasting publishers in the country. And I’m really pleased with the progress we’ve made here. We’re now the number one podcast advertising network based on listener reach in the U.S., and we represent four of the top 15 podcasts.
Doug Mitchelson
You’re sort of mentioning already with the three things you’re focused on. But obviously, companies focused on audio use broadly and not just say, to sell a radio in the car. What are the key points you would call out about the evolution that whole industry and Sirius specifically whether end up with behavior changes or tech platforms, like smart speakers, the growth of connected car, what do you see?
Jennifer Witz
Yes, a lot of the same fundamentals is there that you’ve seen, I think, in video exist in audio, people are listening to more audio than ever before. And certainly in more places. There was a recent Q1 Edison report that, again, highlighted growth in audio, the time spent listening by Americans is up 11% year-over-year in Q1 of 22 versus the Q1 of last year. And you have seen this obviously, and in others as well, the consumer adoption of smart speakers and connected devices continues to accelerate and reinforced this trend in audio. Audio is one of the biggest use cases for smart speakers. You see a lot more opportunities for people to curate and listen to music, voices, podcasts that they love, and that happens really, wherever and whenever they choose.
And look, we’ve benefited from these trends, as audio is one of the top use cases for in-home connected devices. Radio certainly is as well, our subscribers are increasingly using these devices to listen to our service. And one of our top strategic priorities that we’ve been talking about over the last few years has been to increase engagement outside of the car. That is one of the core reasons that we gave our subscribers access to streaming for free included in their subscriptions. It’s also a continued focus now with Joe on board. And we are building out our product roadmap, making sure that we’re available really everywhere that consumers want to listen to us.
And just this past month, we released new Android TV and Roku apps to improve the experience allow for our customers to subscribe to SiriusXM directly on those platforms and we’ll have more launches coming this year and I say you’re even in car going forward our experience will blend streaming and satellite delivery. We’ve talked a lot about 360L, in this significantly enhances the customer experience of the car.
We have a lot of incredible content in our apps, and more so than we have on satellite alone, and leveraging the IP delivery in the car lets us bring even more of this content into the car. And through the personalized recommendations that we’re going to be rolling out, we’ll be able to help listeners more easily find the content they love. And what is already a very easy to use in vehicle user experience for SiriusXM.
Doug Mitchelson
Yes. I mean, you touched on some of the — with the first two questions, but I still wanted to ask if you could kind of walk through your portfolio of growth initiatives. One of the reason is, I find it really interested since you’ve came on, you really kind of start off the call, each of the earnings call, sort of going through the list of all the things that you’re working on and the content and and a lot of it has been focused on growth initiatives, and we’ll get to the core business, and that’s obviously very important, but it feels to me, like, if these growth initiatives really gel, they could have a material influence on the overall growth rate of the company.
And so how would you kind of describe the portfolio growth initiatives that you have in front of you? And where do you see the potential to scale, to the point where it will be material to the overall company?
Jennifer Witz
Yes. Look, we were fortunate to have really large profitable business today. And if the challenge with anything like this is that it’s difficult sometimes to significantly move the needle with growth initiatives. But it really starts with continuing to build out the auto fleet. And there’s still more room for growth here. We’re already approaching 150 million vehicles on the road, but there’s 230 million even 240 million cars on the road. And, of course, as more of them become connected over time, we’ll just have a more fully featured service in the car.
And we can also offer different kinds of things, not just subscriptions, like ad supported tiers, whether they’d be subscription are truly free. We’re growing our digital subs. We need to deliver on some core consumer expectations in the apps like better discovery, search and recommendations, those things will start to roll out this year. But I believe there is definitely room for growth here, whether customers are using our service outside of the car, or in the car without cars that aren’t enabled with satellite radios, because there are still 10s of millions of cars on the road that are not satellite enabled.
And so we’re investing to grow our advertising business by adding scale. In podcasting, with new ad rep deals, like audio check, the hugely popular crime junkie, podcast and more, and that went live this year. And with acquisitions, like 99% visible and now more recently, Team Coco. And, we also just continue to focus on like the singles and doubles, right? So they may be smaller individually. But collectively, they can add up and, you know, that’s like music Solutions for Business. We bought Cloud Cover media earlier this year, like our aviation and marine business, our infotainment TV services, and even our growing business in Canada.
Doug Mitchelson
All makes sense. I think one of the ones that you probably asked about the most, and certainly one of the ones we’re asked about the most is podcasting. So I’d give that a little special attention. What would you start with, what’s the overarching strategy with podcasts? You mentioned that in the past, but I think it’s a good foundation to start with.
Jennifer Witz
Yes. Our strategy is to continue to build a large share of audience that we can monetize through broad distribution. And that’s across all listening platforms, obviously, not just our own. And we want to find ways as we do that to make sure that we’re leveraging our relationships with podcasting talent to help us grow our subscription business too. So for the past year, we’ve been focused on growing the scale. And we’ve certainly done that with major deals like crime junkie and crooked media and extending our relationship with Team Coco through the acquisition, which includes a five-year renewal of the Conan Needs a Friend podcast. So we’ll continue to pursue these opportunities to build scale. But we’re also really focused on monetization of the inventory we have.
We are driving more opportunities to add curated and exclusive content for the SiriusXM side of our business. We’re working on, for instance, developing an original Team Coco channel, and we recently launched the Freakonomics Radio Network channel in our apps. And so there’s a lot of tailwinds, I think to the trends here and I think we’re really, really positioned well to take advantage of those given what talent wants, what the publishers want and what we think listeners ultimately want.
Doug Mitchelson
What content you need to own and where you can partner and obviously the economics are different. So I guess I’m curious how the economics are different and how that all adds up?
Jennifer Witz
Yes. I mean the economics are clearly different. As with anything, I think, we look at acquiring content, where we believe really owning that content will provide incremental benefits, such as subscriber growth or enhanced positioning in the ad market, that we could get, if we didn’t just license the content ownership, it gives us I think enhanced control over that content to be able to drive value back to our core business, we can adapt the content to different formats, whether that be more smaller segments within podcasts, or broadcast over satellite radio, or having video even in our apps.
Team Coco is a great example of this kind of multi-platform deal that allows us to provide SiriusXM subscribers with exclusive content, but also enables us to continue to reach a larger audience by broadly distributing the podcasts off platform. Audio Up, we made an investment in and that has podcast and the music from them to our volume and nation channels on SiriusXM as well. So the audience here just continues to grow and podcasting and there’s just so many choices. And I think one of the biggest challenges for listeners is navigating that and discovering and finding podcasts that they love. That’s one of the things I think we do really well at SiriusXM, in terms of our listening platform is providing a curated experience of content. So it’s easier for customers to kind of navigate that and find more exclusive and curated set of podcasts.
So we’ll continue to look for different partnership back opportunities, whether that be acquisition or licensing. We’re also working with talent, who hasn’t traditionally been in podcasting, to develop podcasts, like for example, Quentin Tarantino, and Roger Avary with the video archives podcast, which is pretty cool concept. And we have deal like I am athlete, where Brandon Marshall and a number of other talented athletes have been producing podcasts for a while and we’re bringing that to radio as well.
So we think we offer something really unique for our subscribers and for podcast publishers and for advertisers as well, in podcasting.
Doug Mitchelson
It’s interesting because we’re all having our time delays, I’m having a hard time figuring out competition for podcasts and Spotify and analysts day last week, and they talked up, but if it’s their platform and using AI and machine learning to start driving more and more contexts for customers, better recommendations, not just a podcaster, but a particular podcast from any of them, or even a particular part of the podcast and we’re trying to take friction out of accessing podcasts by making more and more of them available on the sort of single platform for the user and all that.
When you kind of hear what Spotify is doing. And you see what they’re spending trying to acquire podcasts and how they’re developing their ad tech in their ad network. And then you sort of think about what you are doing. One, how would you describe the competitive environment and two, is there anything that you see that you guys need to sort of catch up on? Or do you feel like your strategy is already fully baked and you’re just running with it?
Jennifer Witz
Look, there’s certainly a lot of competition in podcasting, but it does seem to be settling down to kind of a few players, a few big players, I do think we hold a really strong position. I’d given we’re the largest player in terms of the ad sales side today. And that’s has a lot to do with the capabilities that we’ve built. Really started at Pandora but also at SiriusXM where we can appeal to both the brand side and more of the direct response advertisers.
One of the things that’s unique about us might be a little different than Spotify is approach is the broad distribution. So for the most part, when we do these ad representation deals, we are broadly distributing the podcast across all the same platforms, which includes Spotify, obviously. So this allows the podcasters, the creators to really reach the maximum amount of listeners and it benefits us not only because it just adds inventory to our ad sales platform, but also because these podcasts are distributed everywhere, and we have the opportunity to really drive listening back to SiriusXM, where appropriate to our more exclusive content.
And so, everyone’s strategies a little different. And I think that we’re really well positioned given that we’ve kind of got all of the opportunities we can distribute broadly and maximize kind of the audience for podcasters. Or we can also offer very exclusive opportunities for to enhance the SiriusXM subscriber experience as well.
Doug Mitchelson
That makes sense. It’s interested in some of the overlaps in the business, and I’m not sure if you’re sort of prepared to make any comments on this. But, they also mentioned — Spotify mentioned several verticals last week. I mean, they’re working on audiobooks, right now, they kind of imply education and journalism are coming. Do you see other verticals for SiriusXM?
Jennifer Witz
We have a really compelling subscriber base. And with a really strong ARPU, and there are opportunities for us to offer our subscribers enhanced value, whether that’s as part of the subscription or separately, and we’ve looked at different kinds of bundles of soft bundles, I guess, if you will. Like with discovery or with Apple, and I think in certain cases, we do see opportunities where our subscribers are looking for ways to engage with other services. And there’s a lot of demand at the high end, because we have a very affluent subscriber base.
And so, we’ve looked at most of those opportunities as ways to enhance the value of things like our Platinum VIP package, which is the highest package we have in our packaging structure at $35 a month. And so, there’s a continued focus on our part to find opportunities to add value. So that might be the best place for some of those, as we say, other services or verticals, to play in the value to our business.
Doug Mitchelson
Okay. Interesting. So, flagship, SiriusXM, obviously clear utility for subscribers pricing, power, low churn. It does seem obviously, and you mentioned earlier, your ability to add customers is stubbornly tied to auto sales for at least a little while longer. And one idiosyncratic supply shock after another semiconductors and wiring and social distancing lockdown. So how do you think about your net guidance for the year given the backdrop and to get their DD digital to carry more water than perhaps you originally planned?
Jennifer Witz
Yes. I mean, there’s certainly been a lot of curveballs on this front. And you’re correct. Not only are, most of the OEMs still experiencing production challenges, but the lack of new car inventory has resulted in fewer trade ins, which means just there’s been a meaningful pullback in used car sales as well. So really, both are new and used car funnels are weaker this year in terms of volumes. Even with the rising us car penetration rate, our used car trial starts were down by about 10%, in the first four months of this year, which is evidence of an even bigger contraction and overall used car volumes. And as consumers really are reacting to these double-digit price increases. And I mean, look, there’s been an expectation of gradual improvements in new car production and sales as the year progresses. It’s sort of been built into the numbers. And but candidly, we haven’t seen much of this yet. We saw sequential declines in SAR each month in Q1. April, at 14 three was up nicely, versus March. But may SAR came in surprisingly low at 12. 7 million, which is actually the weakest month we’ve seen this year.
So at the start of the year, the consensus SAR I think it was about 15.6 million and more recent estimates have fallen to 14.8. And given where may landed and where inventory sit, you have to wonder if that’s even achievable. And look, our trial structures, as you know, are a minimum of three months. So any recovery that we see in the fourth quarter doesn’t really materialize in any subs or conversions until next year. And so we’re certainly working through all these dynamics and the impact to our full year outlook. And we’ll give an update in our second quarter earnings call, of course, which will be at the end of July but without question it has become more difficult to achieve our guidance compared to when you know, we issued it in January, even compared to when we reiterated it in late April.
So at some point, whether it’s later this year or into 2023 as inventories recover. We should see a lot of pent-up demand released, depending on what happens obviously with the overall macro factors in the economy, but with our strong new vehicle penetration rates in the low 80s And you know, growing use car penetration for certainly well positioned to capitalize on the eventual rebound.
And look, were you mentioned digital, working hard right to build this digital funnel outside of new and used cars, because I because of, you know, the, the constraints on the automotive side, and digital nomads are going to be a big part of our self-pay net ads this year. But relative to total gross additions, this channel will still probably be pretty small for us. But it’s certainly an exciting growth opportunity as we go into the next few years. And I just say, subscribers is a priority for us. But I do feel confident about our full year financial performance this year growing our revenue continuing to generate significant levels of EBITDA and free cash flow.
Doug Mitchelson
Yes. There’s anything about auto sales, being depressed by supply chain and the potential for macro weakness, you might not even have any further downside auto sales to kind of a natural, it’s already there but it’s interesting.
I think, firstly, the pandemic, they have the supply chain issues, you still operating a company, so the relationship with the OEMs have to get updated and they evolve. And so I’m just curious with this backdrop, not just your 18 months, but I even sort of going back a little bit before that. And the relationships been involved in with the OEMs is there more focus on 360L and driving that into lower end trims or changing the trial structure, the economics, anything notable?
Jennifer Witz
I mean, like that the relationships that are OEM partners are really strong. And we’re aligned with them and looking for ways to improve the experience for our customers. And yes, like you said, we continue to work with them on creative ways to optimize penetration rates, to increase 360L sales mix, and to bring more features to the SiriusXM experience. We’re continuing to release better recommendations, the audio stations and our extra channels, and we’re working on new features and releases like podcasts in the car, an automatic download of the SiriusXM app through the in-vehicle UI, and the integration of SiriusXM into the OEM apps for both listening and billing as well.
So we’re opportunistic, and how we work with the OEMs. And looking to both meet their needs and improve the business and so many, in many cases, they’re looking for ways to bring more value to vehicle purchasers, especially as prices have been really high. And we’re flexible, right, in terms of this, we want to create positive outcomes for both sides and we have had a great history of working with them in the past.
Doug Mitchelson
Fish up on macro from earlier, outside of auto sales? And also wallets, become pressure? Is there? Is there also — do you see a headwind to penetration or selling of SiriusXM, radios in general and in orders, gas prices potentially affect your penetration? If there’s exposure to larger vehicles, or versus small? Is there anything you think about outside auto sales in terms of any potential inflation or macro impacts for the business?
Jennifer Witz
Yes. I mean, there’s so much uncertainty, I think, in the economic environment, and we watch a variety of economic factors, whether it’s inflation or gas prices, increases in, you know, retail prices on vehicles because of supply constraints. There, there’s just a lot of uncertainty. But I, you know, we are fortunate to have a really large loyal base of subscribers, and we’ve seen really just historically low churn over the past two years surprisingly low churn. And I really believe this is because of the value that we’ve added to our packages and continue to add over time. We’ve not only differentiated structure of pricing and packages, so that we can react to, if there’s any kind of disruption in the macro trends. And we see more of a reaction from price sensitive customers, we can be flexible there. But I think, we’ve just seen a lot of really positive impacts from and providing streaming access to our customers adding all the content and including more features in our packages.
Doug Mitchelson
Yes, it makes sense. It actually leads right into I was asked about the pricing strategy and,
retention last fall after the price increase was really good to your point. Should we think about pricing being a bigger influence on revenue than it has in the past.
Jennifer Witz
I mean, I think this year, that certainly could be true, given kind of the funnel is more challenged. But we have to be really careful with pricing. And we do have a long history of reviewing our pricing structure adjusting our offers to drive sales, but also routinely implementing price increases across the subscriber base. And you mentioned, we haven’t seen a lot of material negative customer reaction, want to be really careful going into this economic environment, about doing that.
And again, it kind of comes back to value, right, and continuing to make sure that we’re offering our customers the best set of content. One of the other things that we’ve been doing a lot of, which I think is really relevant to what’s happening right now with the consumer is that we’re adding more opportunities for our subscribers to attend, you know, small stage events, town halls, and other kinds of events. And we host probably over 300 virtual and in person events a year, and it just last night, we had a great Yacht Rock cruise, and then New York Harbor with performances from Christopher Cross and Kenny Loggins for hundreds of subscribers. And I really think consumers are looking for unique experiences, you’re seeing the shift from purchasing goods to spending on more of experiences and services.
So I do think that works really well for us. And but we’re going to be careful, I don’t want to push pricing too hard. I think on the acquisition side, there’s certainly some sensitivity and we want to stimulate broad demand, some continuing kind of to differentiate our pricing structure is going to be really important to balancing the demand and the retention of our subscribers.
Doug Mitchelson
Yes, that makes sense. World’s getting sort of more and more complicated when it comes to pricing and packaging and bundling. You got a lot of options on that front. On the digital side, how scaling success, digital tears gone. And what surprised you so far.
Jennifer Witz
It’s been a solid growth area for us. I mean, it’s a long and steady process. And yes, I think the investment decisions that we made years ago to build a better app experience and are paying off for this year, not only in terms of adding some standalone digital subscribers, but again, the retention of the satellite base, as well. And the business is really still in its infancy, we have a lot to learn, a lot of improvements to make, we are seeing growth in trial generation. We know our content bundle is compelling outside of the car and the growth we’re seeing is on top of all this value that we’re providing to our satellite subscribers. So the investments we’re making kind of payoff on both sides.
And so on all fronts, we’re pleased, we’re going to keep investing, you’ll see us continue to invest in marketing, not only on the performance side, but also on a brand side to make sure that we’re continuing to increase the awareness and knowledge that SiriusXM is not just for the car.
Doug Mitchelson
Yes, like, it’s really interesting things is, you’re able to measure the engagement and a lot of the sort of, you’ve talked about adding value to both satellite subscription as well as executing on digital app, and you’re able to measure a lot of these values and start curious, again, not sure you’re prepared to address this today or not, but sort of how much — what percentage of subscribers are using some of these value added services and how impactful it’s been on churn or driving pricing data [indiscernible]?
Jennifer Witz
Yes. I mean, look, there’s a lot of more data, which is extremely helpful to the business since we’ve operated for the vast majority of 20 years without a lot of that engagement data. And the usage data is really important, obviously, to understand engagement and retention. But there’s also just the perceived value and somebody may not go in and listen to some type of content regularly, but the fact that it’s there and the fact that they can go in and experience that is often what drives a lot of value. But definitely, to your point on the digital side, we can see engagement and our standard with our standalone digital subscribers.
And we’re able to watch those metrics really closely to better understand what the retention profile is on these subscribers, which helps us evaluate how much to spend to acquire them in different channels. It’s just a completely different business than what we have on the satellite side. But we’re bringing a lot of that knowledge back to the satellite business because obviously, with 360L, we get a lot more data on usage in the car. And we can customize the marketing communications, or even the overtime the in car experience and to deliver better on customer expectations based on what they’ve listened to right and provide a better recommendation.
So we’re again, we’re really in the early stages of learning a lot and building out better product features to take advantage of all this data.
Doug Mitchelson
So it’s a little too early for me to ask you how lifetime value is trending for your digital subscribers, and whether you have line of sight as to where it might end up someday.
Jennifer Witz
Yes. I mean, look, it’s changing a lot. I mean, it depends on the channel. I think the economics here, and we’ve said this quite a bit, that the margins are strong, right on the streaming side of our business, they look pretty similar to the satellite side. And the dynamics are really different on satellite, we have all this upfront sack per vehicle that we just don’t have on digital. And it’s like, any other streaming service, we can actively use performance media to drive potential users into the funnel, and then their characteristics of usage engagement, and really are a big impact on retention and ultimate LTV. So we’ve just got a lot of information.
And I think we are being really, really opportunistic, about the channels that we invest in testing and making sure that we’re bringing in listeners that are going to say, but we’re going to try channels and test things where we may learn that they don’t have quite the retentive qualities, and then we’ll, we won’t invest as much there. And that that testing cycle is just really fast here. So I don’t think we’re ready to talk about LTV, specifically but over time, I’m sure we’ll be able to share more of that, as we settle into, a longer term business here.
Doug Mitchelson
Some encouraging signs. So advertising, what we see on the demand side recently, and a lot of cross currents in the market. So, even as you step back, think more broadly out articulate the audio advertising opportunity for Siri.
Jennifer Witz
Yes. We are pretty pleased with our Q1 results. I, we reached a Q1 high for Pandora RPM. And we also saw material growth in our podcast revenue, where we have these exclusive global app representation deals. And our off-platform business actually grew really nicely in the first quarter. We are big believers in our strategy here, right with SXM media, which encompasses all of our streaming satellite and podcast, ad sales, and it puts us in a really strong and unique position to help navigate some of these macro trends. And but there’s a lot of choppiness in the market.
Definitely there are challenges out there, we’re seeing some caution on the part of brands and maybe some deferrals even. And we’re watching closely, but we’re exciting, excited, definitely about the demand from advertisers around podcasting. We talked about this a little bit before, we have a great brand business with Pandora with great DTC business with SiriusXM ad sales, and we can bring kind of the elements of these together to best build out the podcast ad sales business too. So it’s the podcasting business is certainly going to be an area for growth, but you know, we have kind of the full set of solutions for advertisers across all of the format’s within Audio.
Doug Mitchelson
That makes sense. So free cash flow, a lot of free cash flow coming out of Siri. It’s interesting, auto sales, might be hurting the funnel, the free cash flow, keeps chugging along. And so, capital employment, capital allocation always, very, very important to your investors, what sort of the considerations regarding return on capital, you can certainly purchase back stock, we also pay special dividends. So, what determines how you return capital going forward? How you thinking about it in this uncertain environment?
Jennifer Witz
Yes. We’ve used a variety of tools to enhance value for our shareholders. And I think the special dividend was a good option, given our strong balance sheet and the low leverage that we have in and the confidence we have in our continued cash generation and I were just constantly looking for what to do what’s best for all of our shareholders and that’s going to continue to guide us we have plenty of liquidity in our stock and the special committee of the board, I have an agreement with how things would work if Liberty were to go above the 90% threshold. So I think that alleviates some concerns there. And what I’d say is that we’ll continue to be opportunistic, right to create the most value for our shareholders. We have a ton of flexibility on cash returns, stock buybacks, you know, versus regular dividends or, you know, a potential future special dividend, although we don’t have any specific plans there today.
Doug Mitchelson
So the question that you probably can’t or won’t answer, but I’ll ask anyways. So what’s the optimal structure for the company recurrence relationship with Liberty Siri? And what’s the optimal process to achieve that optimal structure? And my answer to that, ultimately, I think, from a Siri shareholder standpoint, it would be better if it was one company rather than two. But, not sure if there’s anything about that?
I well, I do but it does take two to tango, in this case, is there, any thought from your standpoint as to — how to drive what’s optimal for Siri public shareholders forward here?
Jennifer Witz
Yes. I mean, I can’t speak to the optimal structure and how Liberty might look to achieve it. But I do think we might benefit from a cleaner structure over time. We are highly focused on running our business. And we want to make sure that we’re delivering value for all shareholders, liberty, and the public shareholders as well. Liberty certainly will, have its own point of view on how best to structure its ownership with the company.
We work really well with Liberty, and we’re thrilled to have them as shareholders and board members and really thought partners. And we’re just — we continue to look at first, it just had to invest in the business and at the levels, we think are appropriate to continue to maintain and grow the business overall and maximize the opportunities that we think we have in front of us for growth.
And we believe we have the appropriate leverage in place and we have the capacity to continue to return capital to shareholders. So like we’ve managed things, I think, really prudently. And we have a great relationship with Liberty.
Doug Mitchelson
Yes. And frankly, I should have asked you about it in the opportunities before we got to the Liberty question, because I do feel since you’ve come on, you’ve been focusing on a lot of growth initiatives, and you’ve been on it pretty quickly. And so as part of that, I would think, perhaps they’re smaller rather than larger, but the breadth of potential M&A opportunities that could add capabilities to SiriusXM has probably broadened over your tenure, because you’ve also broaden the focus of growth investing. So I don’t know if that’s accurate or not. But you’ve got pretty good cash flow and a pretty good balance sheet, relative to your business model heading into uncertain times. So how do you think about buybacks versus M&A given that backdrop? And are there a lot of M&A opportunities in your mind?
Jennifer Witz
Look, we look at a variety of acquisitions, big and small on a regular basis, some of which are in the advertising space, or the content space and will I think help us continue to drive growth in our subscribers and in advertising? There’s obviously podcast opportunities out there. And we’ve selectively made investments and acquisitions there. And we’ll continue to look at acquisitions, certainly in podcasting and in content. But yes, we’re just on the lookout for unique opportunities. And I think there’s — it’s great to be in a position where even through an uncertain economic environment we have very robust cash flow, we have a supportive majority shareholder. And we can be opportunistic, I think, maybe more so than some other companies to pursue growth.
Doug Mitchelson
So, any closing comments, anything I missed?
Jennifer Witz
I think we covered it. I really appreciate the time, Doug.
Doug Mitchelson
I appreciate the time as well. Thank you so much for coming in and sharing your thoughts and thanks, everyone for listening in very much. Appreciate it.
Jennifer Witz
Great. Thanks.
Question-and-Answer Session
Q – DougMitchelson
Be the first to comment