People usually scratch their heads at that one because
SiriusXM doesn’t look like a classic “exciting” Berkshire investment on the surface. But through a Buffett/Berkshire lens, it actually makes a lot of sense.
Here’s why Berkshire would still stay deeply involved in SXM 👇
1. Super predictable cash flows (Buffett catnip)
SiriusXM is basically a
subscription toll booth:
- ~30+ million subscribers
- Monthly recurring revenue
- Very low churn
- Customers are “sticky” once the service is built into the car
That kind of
steady, boring, reliable cash generation is exactly what Berkshire loves—even if growth is slow.
2. Capital-light, high free cash flow business
Once the satellites and infrastructure are in place:
- Ongoing costs are relatively fixed
- Marginal cost of new subscribers is tiny
- Free cash flow stays strong even in weak economic cycles
That free cash flow can be used for
buybacks, debt reduction, or dividends, all of which Berkshire values.
3. Built-in moat (even if it’s not flashy)
SXM’s moat isn’t sexy, but it’s real:
- Nationwide satellite network
- Exclusive long-term content deals
- Deep integration with auto manufacturers
- Huge switching friction (most people don’t cancel; they just… keep paying)
It’s not easily disrupted overnight, which matters more to Berkshire than hype.
4. Berkshire loves media businesses they understand
Buffett has repeatedly said he prefers:
- Simple business models
- Media and content economics he can grasp
- Companies with pricing power over time
SXM fits that mold far better than most streaming or tech platforms.
5. Valuation + downside protection
SiriusXM has often traded at:
- Low earnings multiples
- High free cash flow yield
That gives Berkshire:
- Asymmetric risk (limited downside if cash keeps coming in)
- Optional upside if buybacks shrink the share count or the business stabilizes longer than expected
Buffett is totally fine owning a “melting ice cube”
if it melts slowly and throws off cash the whole time.
6. Berkshire doesn’t need growth—just durability
This part is key:
Berkshire is so large now that it doesn’t
need fast-growing companies. It needs:
- Durable cash producers
- Businesses that won’t implode
- Assets that can quietly compound or fund other investments
SXM fits neatly into that role.
The big picture
Berkshire isn’t betting that SiriusXM will become the next big thing. They’re betting that:
- It keeps printing cash
- Subscribers don’t flee en masse
- The business lasts longer than people expect
That’s a very Berkshire-style bet.
If you want, I can also break down
what risks might finally make Berkshire exit or how this compares to their Apple / Coca-Cola mindset 📉📈
