SiriusBuzz All Things SiriusXM Satellite Radio Fri, 18 Apr 2014 16:28:16 +0000 en-US hourly 1 SiriusXM Notes Get Upgrade Fri, 11 Apr 2014 14:43:41 +0000 → Read More]]> calculator-pen-chart-researchSiriusXM today announced that the ratings on the 5.25% Senior Notes due 2022 issued by its subsidiary, SiriusXM Radio Inc., have been upgraded to investment grade by both Standard & Poor’s Ratings Services and Moody’s Investors Service.

“The upgrade of the ratings on the Notes to investment grade has the effect of eliminating many of the financial covenants contained in these Notes,” said David Frear, Chief Financial Officer, SiriusXM.  “Most importantly, the limitation on restricted payments contained in the indenture governing the Notes is no longer applicable and these Notes no longer constrain our share buyback activity”

In simple terms, the company granted certain lien rights to the holders of these notes which resulted in them being upgraded to investment grade.  This rating removed certain restrictions that the notes contained.  This gives SiriusXM more flexibility than it previously had.

Sirius XM Radio Inc. and the guarantors of the Notes have granted a first priority lien on substantially all of their assets to the holders of the Notes. The liens securing the Notes are equal and ratable to the liens granted on such assets to secure SiriusXM Radio Inc.’s existing $1.25 billion senior secured revolving credit facility (about $400 million has already been drawn). The liens securing the Notes may be released upon the occurrence of certain events, including but not limited to the repayment in full of the Notes or any direct or indirect parent of SiriusXM Radio Inc. attaining an investment grade rating from two out of three rating agencies, subject to certain conditions.

As a result of the granting of liens to secure the Notes, the ratings of the Notes have been upgraded by S&P from BB to BBB- and by Moody’s from B1 to Baa3. Pursuant to Section 4.15 of the indenture governing the Notes (which has been filed as Exhibit 4.1 to Sirius XM Radio Inc.’s Current Report on Form 8-K filed on August 14, 2012), certain covenants in the Notes are no longer applicable.

The bottom line here is not the news that these notes got upgraded in stature, but rather the removal of covenants.  SiriusXM can now enjoy more freedom surrounding share buyback activity.

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Ugly SiriusXM Technical Event Fri, 11 Apr 2014 13:21:59 +0000 → Read More]]> dice-chartI know that many will not want to see, hear, or speak about this, but it has happened.  SiriusXM’s 100 day Exponential Moving Average (EMA) has crossed below the 200 day EMA.  This is a bearish event, and could not happen at a worse time for this equity.  I follow EMA’s for SiriusBuzz Premium members and discuss the issue in greater detail in premium articles.

The last time that the 100 day crossed below the 200 day was back in 2006.  SiriusXM stock went from near $8 per share down to its all time lows.  The 100 day finally crossed back above the 200 day in 2010 and rose back up.  The 100 day has bounced off of the 200 day a couple of times since.

On one hand you can look at this as finding a potential bottom.  On the other it can be an ominous signal that this equity is not yet out of the woods.  I would lean toward the side of this equity being near a bottom, but would not have a comfortable feeling until the equity gets back above the 100 day EMA at about $3.50.

SiriusXM does have an upcoming conference call, and while the financials will look decent, the subscriber numbers will not likely impress.  There is a lot hinging on how the company frames the quarter and the future outlook.  When an equity is beat up the way SiriusXM has been lately, it makes bear cases easier to look at and more plausible.  It can be a tough sell to become a darling of the street again.  Stay Tuned, and watch the volume around this level closely.

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March Auto Sales Show Upswing On Incentives Fri, 04 Apr 2014 15:39:04 +0000 → Read More]]> car dealerThe auto sector showed a little life in March with the help of incentives.  For the month auto sales were 1,533,520.  This beat March of last year by about 80,000 units and even allowed Q1 of 2014 to better Q1 of the previous year.  Q1 2014 was about 48,000 units better than Q1 of the previous year.  Essentially this would present about the same number of subscribers if the metrics were now counted the same.  However, with the restructuring of how radios in GM vehicles are counted, the sub number in Q1 of 2014 should be less than we saw in 2013.

In Q1 of 2013 the company added 452,890 net subscribers with the old GM deal.  Now, GM sales are not counted as subscribers.  GM sold about 650,000 cars in Q1.  In the old deal every GM car equipped with satellite radio would have been counted as a subscriber.  In the new deal, they are not.  If we assume 70% installation, the gross additions would have had a benefit of 455,000 additions this quarter.  That does not exist.  Instead, what we will see from GM is the self pay conversions of last quarter.  That number will be about 200,000.  The delta here is about 255,000 units on a gross basis.   Bear this in mind.

For some perspective:

  • Q4 of 2012 saw subscribers additions  at 535,000 on auto sales of 3,588,000 for the quarter
  • Q4 of 2013 saw subscribers go negative at (23,000) on auto sales of 3,800,000 for the quarter

We should not expect subscribers in Q1 to be anywhere near where they were last year.  GM is the largest seller of cars and the largest installer of satellite radios.  You do not see a deal like this change without feeling the impact.  The good news is that this deal helps SiriusXM out on the back end with lower revenue sharing.  The bad news is that it will take time for the street to adjust to this.  Additional details will be covered on SiriusBuzz Premium.

With auto sales we want to monitor incentive spending to see how strong the market will be.  Stay Tuned!


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SiriusXM To Announce Q1 Results Fri, 04 Apr 2014 14:56:12 +0000 → Read More]]> chart-pattern-analysis-penSiriusXM announced today that it plans to announce first quarter 2014 financial and operating results on Thursday, April 24, 2014.  The company will hold a conference call at 8:00 am ET on Thursday, April 24, to discuss these results.  SiriusXM typically announces results prior to the market open.  This quarterly call is happening just a few weeks after the end of the quarter, which is also not unheard of for the satellite radio provider.

Consensus of analysts put EPS expectations at 2 cents per share on revenue of $996 million.  Last year the company earned 2 cents in Q1.  The first quarter has been a tough one for the equity.  This is mostly the result of uncertainty surrounding the intent of Liberty Media in combination with guidance for 2014 that is perhaps a bit flatter than the street really wanted to see.

In my opinion the Q1 numbers can be decent, but there are potential pitfalls.  I am not convinced that the street is ready for what will appear to be a low subscriber number.  The number will be low because of the structure of the new GM deal.  That dynamic started last quarter, but was essentially hidden in the full year sub numbers.  This quarter will be the first real test of lower sub numbers being “front-and-center.

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Avis and Budget to Offer SiriusXM on Most Rentals Tue, 01 Apr 2014 15:06:35 +0000 → Read More]]> avisAvis Budget Group, Inc. has announced that SiriusXM is now available to a majority of Avis Car Rental and Budget Car Rental customers via factory-installed satellite radios. The new offering will give customers easy access to satellite radio… for a price.   Previous to this development, Avis and Budget offered satellite radio via a plug and Play system that had the radio connected to the car through a cigarette lighter.

Avis and Budget have carried cars with in-dash satellite radio systems for quite some time, but typically that was not the method used by the car rental company to offer satellite radio.  Approximately 60% of the rental fleet has dashboard equipped satellite radio systems.  SiriusXM will be available as a rental option for $6.99 for the first rental day, and $3.99 for each additional rental day; $19.99 per week (rentals of five to seven days); and a maximum of $29.95 per rental.
From an investment standpoint there are some things to consider here:

  • Consumers will get a much more dynamic and up-to-date experience with the dashboard system.  This could help to market satellite radio to those that are not familiar.
  • There will be deactivations of subscriptions as the plug and play models come off of the market.  This will not likely be huge issue, but will impact the churn numbers as plug and plays come off line.  In theory, it will be offset by “in dash” radios getting activated.
  • Satellite radio in car rentals has never been a big draw of new subscribers, but it is an endeavor worth doing.  I have rented a car many times in which the satellite radio was already active.
  • This shows that the company is still progressing on improving its business model across platforms.

Do not look at this news to be a driver.  Look for minimal impact on share price.  This type of news is simply a small positive that keeps the proverbial ball rolling in the right direction.  Stay Tuned!

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This Week on SiriusXM – 50 Cent, Billy Joel, Perri Peltz, and Pele Mon, 31 Mar 2014 22:03:40 +0000 → Read More]]> 50cent-billy-joel-perri-peltz-peleThis week on SiriusXM will kick off tonight at 8pm with a special Town Hall featuring rapper 50 Cent. The show can be heard on Shade 45, where 50 will discuss, promote, and give listeners a sneak peak of his upcoming album, Animal Ambition, which is scheduled for release on June 3, 2014. Rebroadcast tomorrow at Noon and OnDemand.

Billy Joel’s special limited engagement channel will continue to play on channel 4, despite the outrage from 40’s on 4 fans. The channel will feature interviews, obscure cuts, and previously unavailable tracks from his earliest days and will run until June 25th.

Starting tomorrow, April 1st (not a joke) at 11am, veteran journalist Perri Peltz will take to the air with her new show for working women and mothers, focusing on women’s daily victories and challenges. The show will air every Tuesday on SiriusXM Stars (ch. 106).

On Wednesday April 2 at 6pm soccer legend Pele will sit down and answer some questions in a special Town Hall event on SiriusXM FC (ch. 94). The event will be moderated by longtime Pele broadcaster Seamus Martin. As with all Town Hall events, a replay can be found OnDemand.

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SiriusXM Ramps Up Used Car Initiative With AutoManager Thu, 27 Mar 2014 23:02:25 +0000 → Read More]]> automanagerSiriusXM today announced that it is now working with AutoManager, which has 4,600 auto dealers using its dealer management products, to easily enroll independent and franchise dealers to participate in the SiriusXM Pre-Owned Vehicle Program.  Essentially the company is outsourcing this project to a company that, in theory, has the contacts and capability to produce better than the current system deployed by SiriusXM.

Auto dealerships utilizing AutoManager’s DeskManager and WebManager products can enroll in the SiriusXM Pre-Owned Vehicle Program so they can demonstrate SiriusXM during test drives. Customers purchasing any pre-owned vehicle with a factory-installed satellite radio receive a three-month SiriusXM subscription.

The ability to demonstrate satellite radio could help bolster sales and bring the conversion rate up after a free trial.  The key here still rests with the car sales-people to see satellite radio as a selling point.  This has been an ongoing challenge for SiriusXM for years.  AutoManager can likely streamline the sign-up process, but educating the “boots-on-the-ground” salesmen is still what matters most.

The integration of the SiriusXM Pre-Owned Vehicle Program within AutoManager’s dealer management products, including its mobile application, allows participating dealers to easily identify and activate vehicles equipped with SiriusXM.   What it does not do is offer incentive to use satellite radio as a selling point.

In most cases, satellite radio is not among the top requirements of a used car buyer.  If you have satellite radio and love it, you will find this program to be great.  If you need to be “sold” on the concept of satellite radio, then AutoManger may well fall short of your expectations.

Streamlining the demonstration and sign-up process is a great step in the right direction, but from an investment standpoint I do not see this as being a huge catalyst.  File under “good news”, “net positive”, or “moving in the right directions”.  Do not file under “instant subs”, “revenue generator”, or “catalyst”.  Overall, this is likely a decent thing to do, but not something that will move the needle of the equity.   AutoManager is promoting the deal on their website.

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SiriusXM Will Carry Every Game of the 2014 MLB Season Thu, 27 Mar 2014 22:49:02 +0000 → Read More]]> mlb logoFor the first time ever, XM subscribers will have access to every single game of the 2014 season, from opening day until one team is crowned champion, on their radio and mobile devices.

The full season coverage will also be made available to Sirius subscribers with a premium “Premier” or “All Access Package.” The All Access option carries an additional $4 per month fee.

Users will have app and online access to 30 channels of play by play featuring both home and away feeds for every team’s every game. A select number of teams will also offer Spanish broadcasts throughout the year.

Listeners will also continue to get 365 day a year baseball talk and news coverage from MLB Network radio’s (XM ch. 89, Sirius ch. 209)  expert hosts including Jim Bowden, Jim Duquette, Todd Hollandsworth, Cliff Floyd, Brad Lidge, Steve Sax, Mike Stanton, Rico Petrocelli, and more.

Starting on Opening Day, March 31, the channel will also feature a simulcast of Chris “Mad Dog” Russo’s new MLB Network show, High Heat with Christopher Russo, every weekday afternoon.

MLB Network Radio will broadcast live from Camden Yards on opening day, where the Baltimore Orioles will host the defending World Series Champion Boston Red Sox.  Jim Duquette and Mike Ferrin will host their daily show live from the ballpark starting at 10:00 ET.

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Q1 Auto Sales Expected to be Flat Year Over Year Wed, 26 Mar 2014 14:40:38 +0000 → Read More]]> autoworkersThis may come as a surprise to some, but auto sales seem to have hit a bit of a rough spot so far in 2014.  It is anticipated that Q1 auto sales will total about 3.677 million in 2014 vs 3.685 million for the same period a year ago.  Worse yet, incentive spending is increasing.  January incentive spending was down year over year by about 3%.  In February incentive spending was up about 1% year over year.  In March it is anticipated that incentive spending will be up 8%.  Essentially, we are seeming the same number of cars sell, but auto companies spending more money to get the same result.

For SiriusXM this presents an interesting dynamic.  If the new  car auto sector is not growing, the only way to show growth is through added penetration (installing more radios), or increased conversion (getting people to keep the service).  Penetration has seen a small uptick, but conversion is seeing a downtick.  Compounding the issue is the new GM deal, which only counts subscribers if they become self-paying.  A silver lining is the used car and pre-owned market.  As each year passes, the number of potential satellite radio equipped cars increases.

In the very near term this could make for some not-so-pretty subscriber numbers in Q1.  Just 6 months ago analysts were looking for 2014 to have auto sales of 16.4 million.  With three months already gone, the pace is equal to last year, which had sales of 15.6 million.  Already some analysts are lowering expectations to 16 million.  Essentially there is some optimism, but there also seem to be a lot of reservations.  As an investor in satellite radio you need to keep your finger on the pulse of the auto sector.  It is, after all, the source of the most subscribers.

In my opinion, the street is starting to get wise to the short term issues that may be happening at SiriusXM, and signals about the largest source of subscribers that are less than enthusiastic compound the issue.This is not to say that SiriusXM’s 2014 will be bad.  It is simply saying that the bed of roses that existed last year is not what it used to be.  The company spent $530 million to acquire Agero, spent $160 million buying back Liberty owned shares, spent money launching a satellite, and will be spending an additional $340 million on more Liberty held shares next month.  In the past 6 months this company has laid out well over $1 billion (including the pending $340 million to Liberty).  This will all show (or has been shown) over the Q4 2013,  Q1 and Q2 2014 conference calls.  Yes, the company brings in a lot of cash, but it is spending a lot as well.

What the street wants to see is that SiriusXM can be the cash machine that it once was.  The street wants to see added value, compounded with share buybacks on the open market.  This dynamic may not really set up again until the second half of the year, making the near term not as pretty as we would all like.  We need to monitor auto sales and incentive spending over the next couple of months closely.  Thankfully the current guidance from SiriusXM is conservative enough that we should not see a need to adjust down.

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SiriusXM’s Two Star App Plagued with More Mysterious OnDemand Downtime Thu, 20 Mar 2014 21:52:32 +0000 → Read More]]> app-crashIt’s not just you — the SiriusXM OnDemand feature has been down for over 12 hours and no one seems to know when it will be fixed.

When notified about the issue all SiriusXM would say was “We’re currently having issues with the app, but all the content should return when it’s fixed. There is no ETA at this time, sorry.” They don’t seem to know what is wrong and they never know when it will be fixed.

I spend anywhere from 4 to 8 hours listening to SiriusXM and its OnDemand features during the course of the day so, it is likely that I run into issues more than the average user but, as of late, the downtime for this paid service, is raising some eyebrows.

We all know when it comes to the internet, streaming anything can be flaky but, this isn’t a one off issue, there is a pattern here… it’s happening constantly. There were at least four times that I contacted support in January (in addition to the OnDemand takedown for Howard Stern’s Birthday Bash), twice in February, and now here we are again, down for over 12 hours in March.

Why isn’t SiriusXM more forthcoming with reporting these outages? Why do they keep happening? Why aren’t they doing anything to compensate their loyal subscribers? What do you think about the lowly two star rated app and how the company has been handling it? Sound off in the comments below.

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