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SiriusXM Royalty Costs Won't Spike, or Its Stock

Earlier in December, Pandora shares flopped after reporting weaker than expected earnings.

While Pandora struggles to generate the subscription and ad revenue to justify its music costs, SiriusXM has benefited from a strong new and used car market in 2012, which has driven 2012 subscriber growth and helps to differentiate the service from competitors.

At the UBS Global Media Conference in early December, SiriusXM chief financial officer David Frear highlighted that the company's improving financial picture hinges on how its non-music offerings are driving subscription growth, primarily in new and used automobiles. Meanwhile, the company's moat around auto subscribers is growing, as car makers continue to post record sales figures.

"You don't have to pay for an 80's channel," said Frear at the UBS conference, of the value proposition SiriusXM offers outside of satellite music streams. The CFO added its non-music content like Howard Stern, nationwide sports play-by-play and specialized content like CNBC and Bloomberg radio that are driving the company's paid subscriptions.

SiriusXM shares traded 2 cents lower in early Monday trading to $2.89. The company's shares have gained nearly 60% in 2012, on an improving financial picture and a deepening relationship with large minority owner Liberty Media (LMCA).

For more on SiriusXM shares, see why the company's stock surge may not end in 2012.

-- Written by Antoine Gara in New York

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