Perhaps the folks at SIRIUS XM Radio may not have wanted this released, but I was able to dig up a video of SIRIUS XM Radio CEO Mel Karmazin speaking about the merger just after it was announced, and what will be happening with the company going forward.

The video, which cuts off just after Mel speaks of the interoperable device, does not get into specifics along the lines that were given in the “Town Hall Meeting”, but does give general outlines of some of the things that will be announced after Labor Day. It would appear that perhaps this video was geared towards employees who could not participate in the live “Town Hall Meeting” meeting.

If nothing else, it is interesting listening for passionate fans of satellite radio.

There is no telling how long this link will be active, so listen while you can.

[KARMAZIN VIDEO CAST]

You love baseball, but your car came with Sirius. You love football, but have always been an XM subscriber. These are problems of the past as Sirius and XM have now merged to form Sirius XM Radio. When people think of merger synergies, they tend to think of cost savings that are derived from items such as the elimination of duplicate functions, savings on advertising, or savings in customer service and billing. Some synergies have potential to add revenue, and for investors, the fact that these types of added revenues seem to be getting overlooked could be a positive on the equity.

We covered one obvious revenue stream in Howard Stern, who as the King of All Media, suddenly finds himself with an expanded audience by the addition of XM subscribers that will soon be able to get Sterns program. The next obvious crossover programming would be sports.

Major League Baseball is right now in the midst of a pennant race, and the National Football League is just now ramping up. The timing of the merger from a sports perspective could not be better. XM has every MLB game, Sirius has every NFL game… SIRIUS XM Radio will be able to offer crossover programming in the form of “Best Of”. Best Of will allow existing subscribers to get some of the best from what used to be the other service. The fee for accessing the crossover programming… only $4.04 per month.

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A lot of noise is being made these days by people regarding certain convertible debt that SIRIUS XM has coming due in 2009.  I have no problem admitting that I for one, am one of those unsophisticated investors we’ve heard about lately. The truth is this whole convertible arbitrage thing hit me like a sucker punch to the side of the head, and I’m still trying to find out what the heck just happened!

Seems like a lot of people are becoming more sophisticated these days as they try to learn all they can about convertible arbitrage. I was reading over Sirius’ 10Q filed today. After hearing Mel on Cramer referring to converts coming due in 2009, I decided to look into it a bit deeper. I have seen message board posters claiming billions had to be repaid in 2009.

I did find 2 converts coming due in 2009. The first one is a total of $300,000.00 due in February 2009. On the grand scale this would seem like minutia. Also listed was $1.7 million in “aggregate principal amount of 8-3/4% Convertible Subordinated Notes due 2009″. These are not due until September. That’s a total of 2 million dollars. Not for nothing, but refinancing those notes should not be a problem. In fact they should just be paid off.

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Within three months of the merger, SIRIUS XM Radio has committed to getting a “BEST OF” option available to consumers. Unlike true A-La-Carte programming, “BEST OF” will work on all existing services with legacy receivers on both the Sirius as well as the XM system. The “BEST OF” programming is simply the broadcasting of content that used to be available on only one network onto the other network using existing technology and systems.

Howard Stern will likely be the biggest “BEST OF” draw. Stern, used to only be available on Sirius, and for those that bought a car that only installed XM, were either forced to buy a Sirius retail device and get a full subscription to Sirius on top of their XM subscription, or to simply do without him.

These consumers now have an inexpensive and viable option that allows them to access Howard’s channels without the cost of new equipment, without cluttering up the dashboard, and without paying a full $12.95 per month for the second service. For an additional $4.04 per month, XM subscribers will not only get Howard Stern, but several other “BEST OF” channels from the Sirius line-up.

The “BEST OF” concept goes both ways. Sirius subscribers will have access to XM’s best for the same $4.04 per month. Many consumers feel that the sports programming will cross over as part of this package. I do not believe this to be the case, at least not on an “every game” basis. Negotiations with the major sports outlets likely still need to be conducted to deal with the new concept of a merger. Look for “BEST OF” to include exclusive content that is controlled by each respective entity.

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Tune in at 1:30p ET Monday, As Cramer goes head to head with Mel, live during market hours.

I don’t want to build too much hype. I just know I don’t want to hear anything about 300 million in positive EBIDA before capex (capital expenditures).

UPDATE:

Like him or not, it is prudent to know what Cramer is saying about an equity if you are invested in it. will Cramer now become a supporter of the SIRIUS XM Radio? Tune in Monday to find out.

[ CNBC ]

With the Q2 2008 conference call of SIRIUS XM radio complete, analysts are beginning to weigh in on the prospects of the merged company. While as expected there are both bearish and bullish outlooks, with a smattering of opinion that goes right down the middle. The merger is new, and analysts are applying differing valuations, and even models as they look at the companies.

JP MORGAN

Barton Crockett of JP Morgan has given a slight upgrade to SIRIUS XM Radio. He moved his outlook from “Neutral” to “Modestly Positive” after seeing the financials for the stand alone quarter, and listening to the Tuesday conference call.

STIFEL

Stifel analyst Kit Spring had previously expressed that the pre-release of numbers by Sirius were mostly in line with their estimates. After the full release, Spring still sees a “Buy” rating on SIRIUS XM Radio with a price target of $3.00. Spring notes, “Our core reason for sticking with buys on SIRI despite the somewhat disastrous refinancing of XMSR’s debt, is that we think the stable self-pay churn (1.6%) in 2Q and OEM conversion (50% combined) statistics point to the consumer still liking the product. Especially in light of a weak consumer, increased penetration of lower-end new cars and cars with iPod/MP3 jacks. We continue to see $4.9B of present value of merger synergies with expected cost cuts on virtually every lien item.”

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Mel Karmazin recently described himself as an operator. The man has brought many ventures to profitability and beyond, and he is the CEO of the newly merged SIRIUS XM Radio. One thing about Mel Karmazin is that he is steadfast in obtaining goals once he publicly states what they are. He has proven time and time again that he will accomplish the things he sets out to do. He is a business man that is tough to be across the table from, but a joy when he is on your side.

With the merger between Sirius and XM, a new company has been born. Karmazin takes the helm and has set a course for certain goals. $400 million in synergies, strong cash flow, and ultimately profitability. Given his track record, it is pretty much a foregone conclusion that he will get there. Those that want to know how this will be accomplished may find disappointment in the level of detail given thus far, but a bit of waiting has potential to pay dividends.

As a stand alone, Sirius Q2 was good. Metrics seemed to scale across the board, and perhaps one of the more impressive lines was how well costs were controlled despite a much higher royalty rate. While the merger will still deliver costs in the short term, the potential going forward is substantial. Investors and analysts may not be given the path that gets the company to profits, but Mel has pointed everyone in the right direction.

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Citi analyst Tony Wible issued a report on Sirius’ stand alone financial results yesterday, and remains bullish on the prospects for satellite radio. The analyst noted that, “Operational results were strong as revenue came in ahead of our original expectations while costs were lower…” Wible also noted that SAC, ARPU, revenue, and slight increase in expenses were among the strong points of the quarter.

While there has not been a lot of detail on exactly how SIRIUS XM will obtain their synergies, Wible feels that perhaps the synergy guidance of $400 million is conservative as it likely does not include “top line synergies, which should benefit churn, SAC, and subscriber additions.”

Among the near term happenings, wible notes that the “Best Of” crossover programming could give ARPU a boost. “Best Of” should not be confused with A-La-Carte. The “Best Of” service will enable subscribers with legacy receivers to hear certain programming that is from the other service. This is accomplished by either the Sirius service or the XM service broadcasting content from the other carrier to the legacy receivers for a fee. Consumers do not have a choice of the “Best Of” programming, as it is selected by the company. One popular assumption is that Howard Stern will be made available to XM subscribers for an additional fee above and beyond the existing XM service.

Lastly, Wible does not see a real issue with the liquidity of SIRIUS XM Radio. He notes that the company ended Q2 with a cash position of $442 million, and that by demonstrating improved cash flow, the company should be able to find decent terms without significant issues.

Wible maintains a Buy on SIRIUS XM Radio with a price target of $6.50, and significant synergy potential over the coming year.

Tyler Savery Position - Long SIRI

When the financials of Sirius crossed the wires at 7:00 AM, things were looking pretty good in the world of satellite radio. Sirius had posted a good quarter, beat the street on many metrics, and the scaling of the business model seemed evident. The press even seemed impressed with headlines such as “Sirius Narrows Losses”. The pre market trading was positive, and it seemed everyone was anticipating a call where investors could finally get more detail after 18 months of waiting.

Then the call happened. It was a very average call, and actually did very little to entice the street. Synergies of $400,000,000 were once again spoken of, but no meat and potatoes were given on the plans that would be executed to get there. After a drawn out merger process where guidance was scant and generalized, investors were in hopes of seeing something real and tangible. It unfortunately did not materialize in this call.

To be fair, the merger is new, but still, some point blank discussion was needed, and instead we saw blandness. Yes, there were promises about news forthcoming that will be released over the coming months, but this being an election year, and with a bad economy, people want to touch and feel their information.

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File this under “irony”. FCC Commissioner Jonathan Adelstein will be a featured speaker at the upcoming NAB Radio Show from September 17-19 in Austin Texas. Adelstein is expected to address a number of regulatory issues facing radio broadcasters, including the FCC’s localism proceeding, HD Radio and low-power FM. A couple of these issues had a high profile during the merger process of Sirius and XM.

Adelstein at one point seemed to be negotiating a way to approve the deal, but ultimately withdrew his offer when it was apparent that Tate would be the third and deciding vote in the merger approval process.

With his no vote, Adelstein likely preserved his “status” with the NAB, and one can imagine that Adelstein will be a central figure in the upcoming hearings regarding a combination SDARS and HD requirement. The FCC order left the issue open, and wants to look at this issue from both sides. Adelstein will likely be closer to the HD side in my opinion.

Though as a whole the FCC was unpersuaded that a case has been presented on the record of a merger-specific harm to HD Radio that would not be remedied by Sirius and XM’s voluntary commitments and other conditions, the FCC believes important questions have been raised that warrant further examination in a separate proceeding. To this end, the Commission committed to initiating a notice of inquiry within 30 days from the adoption date of their Order to gather more information on issues including, but not limited to:

• Whether HD Radio chips or any other audio technology should be included in all satellite radio receivers
• Whether satellite radio capability or any other audio technology should be included in all HD Radio receivers
• The cost to auto manufacturers of including HD Radio chips
• The cost to radio manufacturers of including HD Radio chips
• Consumer demand for HD radio
• The amount and type of programming available on HD Radio today, and that projected to be available over the next 3 years
• Whether the FCC has jurisdiction to mandate inclusion of HD Radio, satellite radio, or other audio technology.

While the merger is indeed complete, there are still aspects before the FCC that investors as well as consumers will want to keep tabs on. Stay tunes to SiriusBuzz for more information as it develops.

[NAB Press Release]

Position - Long SIRI