SIRIUS XM SATELLITE RADIO NEWS

Pioneer has thrown their opinion into the ring regarding the proposed merger between Sirius and XM. While not taking an official position on the merger, Pioneer did express concerns over an Ibiquity proposal that would call for inclusion of HD radio chipsets into all SDARS receivers.

Pioneer raised several concerns about the limits that an idea such as Ibiqity’s would have, and further stated that it should be a free marketplace that determines the success or failure of HD radio, and not government regulation.

Interestingly, Pioneer made no mention of the open access condition proposed by some consumer groups as well as U.S. Electronics.

Pioneer Filing

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Position - Long Sirius, XM.

Sirius Buzz Radio will be airing live tonight at 10:00 PM Eastern. Callers are encouraged to participate by calling 347-945-7995. Tonight we will cover the latest news in satellite radio. From the merger to the latest activities at the FCC, and of course, we will talk a bit about C3SR.

Join us tonight on Sirius Buzz Radio at 10:00 PM Eastern

Position - Long Sirius, XM.

What last evening was simply an opinion of this writer has now turned into living proof that C3SR lacks candor. And it was all the doing of C3SR themselves!! Last evening we published an article titled C3SR Demands Hearing With FCC. In that article we challenged the candor and in fact the mission statement of C3SR. We encouraged readers to post their comments on any of the seven posts that the organization has published in the last 16 months. Several readers during the course of the merger had expressed to me that C3SR would censor any comment that was pro-merger.

Well, by mid morning today C3SR has removed any link to their blog from their website. The removal of the link to the blog could have been simple coincidence, but as it turns out, it was a direct attempt to silence those that would express their merger opinions.

With the link to their blog removed, I published a second article titled C3SR Removes Blog Link From Landing Page. In that article I pointed to a link that would still enable readers to get to the C3SR Blog, so that they could submit their merger comments. Within an hour C3SR shut down their blog altogether!!!

Now, here is the position this alleged subscriber advocate group has put themselves in:

1. They have by their actions directly indicated that they do not want to receive opinions from satellite radio subscribers.

2. They have removed their blog from access by any subscriber who may or may not share their anti-merger position.

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Well, that was fast. While it may be a simple coincidence, C3SR has now removed the link to their blog from their landing page. In fact, there is now no way to arrive at the C3SR blog section of the site at all. Of course, you can still get to the blogs by using the link that Sirius Buzz provided.

In response to what appeared to be censorship of pro-merger comments on the C3SR blog, we encouraged readers to attempt to submit their comments concerning the merger and then post their comments here on Sirius Buzz as well.

Several have tried to post comments to C3SR and as yet nothing none have been published by C3SR. That task is now more difficult because C3SR is now hiding the existence of the blog.

No worries though, as you can still arrive at the C3SR blog trough THIS LINK ….at least for now.

If C3SR had candor as an organization that claims to advocate on behalf of subscribers, one would certainly think that they would not hide information or censor the comments.

Pulling the links to their own blog is yet another example of the agenda that C3SR has.

So, it appears that the test of C3SR’s candor is already bearing fruit. Should the blog section be removed entirely, readers can still voice the opinion to C3SR here on Sirius Buzz our article C3SR Demands Hearing With FCC . C3SR will likely see the comments, because given their actions today, it would appear that they read Sirius Buzz.

Position - Long Sirius, XM.

C3SR has demanded a hearing with the FCC regarding the proposed merger of Sirius and XM. In their filing they charge Sirius and XM with a “lack of candor” with regard to an interoperable radio device.

Candor?

Exactly how much candor has C3SR had?

From what information is available, C3SR funded by the National Association of Broadcasters, and the founders have ties to the NAB.

Here is what C3SR Claims:

“Through the participation and support of subscribers and volunteers, C3SR -the only consumer group in existence today solely dedicated to advocating on behalf of satellite radio subscribers- is committed to opposing the creation of a monopoly in satellite radio, and ensure continued consumer choice and competition.”

1. As a subscriber I have never supported C3SR, and have never had contact with anyone who has. In publishing this site, I come in contact with MANY subscribers. A subscriber that is a C3SR supporter may be harder to find than Bin Laden!!!

2. Support of volunteers? Exactly how many volunteers would that be? Doe the NAB count as a volunteer? It has been well documanted that the NAB finances a great majority of what C3SR does.

3. C3SR is the ONLY consumer group in existence dedicated solely to advocating on behalf of subscribers? Give me a break. I have asked time and time again for C3SR to step up to the plate and show their “membership” I have stated many times that in order to advocate for a group, you must understand that group. Subscribers WANT THE MERGER. If C3SR were advocating on behalf of subscribers, they would not be taking the stance they are. They are not doing anything for the benefit of subscribers. They are doing what appears to be the bidding of the NAB.

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U.S Electronics has outlined a specific open access proposal for the FCC to consider. Some sector followers believe that open access is a concession that could carry some weight with at least some of the FCC commissioners. While the U.S. Electronics proposal would take away the ability of Sirius and XM to make their own hardware, it would also make the “interoperable radio” as well as the “HD chipset inclusion” issues virtually disappear because the merged company would no longer be in the hardware business.

Open access as a concept seems like a pretty workable situation, but there are concerns that still need to be addressed. Thus far, the only distributor/manufacturer seeking an open access condition is U.S. Electronics, a company currently in litigation with Sirius over the hardware that the company made, as well as other issues. With retail sales being weak, it does not seem like manufacturers are knocking on the door in an effort to make hardware for satellite radio. The fact that the list of manufacturers seeking the condition only has one member is a bit of a concern in that unless the marketplace wants to participate, many of the theoretical benefits that open access promises would not come to fruition.

U.S. Electronics lists Sirius Buzz a a supporter of the concept of open access, which to a certain extent is accurate. I feel that the concept can be sound given the right conditions. Whether those conditions can happen is another issue altogether. Read It All After The Jump

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In a note published today, Goldman Sachs analyst Mark Weinke is not as concerned with debt refinancing, but rather possible dilution that he feels may be in need of later this year. In the note, Weinke states, “Our analysis of projected cash flows concludes both XM & Sirius can get through 2008, but maybe not comfortably, given XM’s funding of the $120 million MLB escrow last night, and pending ’09 maturities.”

The analyst feels that there is a tangible chance that the companies will need to raise between $500 million and $1 billion on top of the refinancing of XM’s putable debt.

Clearly the possibility exists that the companies will have to raise additional cash. Integrating the merged company will have its challenges, and even with efficiencies made in management, the savings do not happen right away. Whether more readily available synergies such as sales and marketing savings can help weather the storm is not clear. last year Sirius and XM were able to put together decent second halves, and this may enable them to get through without issuance of new shares.

The issue boils down to where and when people see profits and free cash flow for these companies. If additional shares need to be issued, is this the last time that this type of activity is needed. Any analysis requires some speculation. Goldman, who has been bearish is the only analyst thus far to pose a question of a need for additional shares.

for everyone, a major challenge is trying to build models on these companies without any guidance from them. It leaves a lot to the imagination of the analyst, and that makes projections problematic. Should investors be concerned of the possibility of a share dilution? Sure, but they need to understand the assumptions being made that lead down that path.

UPDATE - XM in their latest 8K regarding their MLB escrow has stated that they will not need additional funds and are fully funded.

“As previously disclosed, provided that we meet the revenue, expense and cash flow projections of our current business plan, we expect to be fully funded and not need additional liquidity to continue operations beyond our existing assets, credit facilities and cash generated by operations; our current business plan is based on estimates regarding expected future costs, expected future revenue and assumes the refinancing or renegotiating of certain of our obligations as they become due, including the maturity of our existing credit facilities and $400 million of convertible notes in 2009 and the MLB escrow arrangement. Our costs may exceed or our revenues may fall short of our estimates, our estimates may change, and future developments may affect our estimates. Any of these factors may increase our need for funds, which would require us to seek additional (including replacement) financing, which financing may not be available on favorable terms or at all, to continue implementing our current business plan. In addition, we may seek additional financing, such as the sale of additional equity and debt securities, to undertake initiatives not contemplated by our current business plan or for other business reasons, or seek to refinance or renegotiate certain of our other obligations.”

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Position - Long Sirius, Long XM

Satellite radio retail sales are an aspect of the sector that has been perceived weak for quite some. In fact, through the first quarter of 2008, the retail channel for satellite radio is negative 49,000 units on a net basis (after churn is considered). NPD, a company that tracks retail sales at participating retailers has been a barometer of sorts for retail activity for quite some time.

According to NPD, the retail channel in SDARS for April of 2008 was a mixed bag. On one hand, Sirius got a positive year over year comparison for the first time since August of 2006. On the other, XM’s sales were still down on a year over year basis. According to NPD, Sirius sales were about 3% better in April of 2008 than they were in April of 2007. Sirius also captured 69% of the satellite radio sales for the month. For XM, the April 2008 performance was down by about 37% when compared to last year. As a whole, the sector sales were down 13%.

The trend, which was improving on an overall satellite radio basis dipped slightly this month. Last month, the dip was 11% and this month the dip was 13%. For Sirius the shift was into positive territory going from a negative 3% last month to a positive 3% this month. For XM it was more dramatic. Last month XM’s NPD sales were off by 22% while this month that figure was 37%.

This new data represents 32 consecutive months that Sirius has garnered a larger NPD share than XM.

Catch Sirius Buzz Radio Live At 10:00 PM Eastern Tonight - Replays Available

position - Long Sirius, Long XM