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Thread: Sirius Stock December 2010

  1. #11
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    DECEMBER 9, 2010, 10:24 AM ET
    How Much is Howard Stern Worth to Sirius?

    By Shira Ovide

    After pulling his typical end-of-contract threats to jump ship, Howard Stern has agreed to stay with Sirius XM Radio.

    Associated Press
    It’s not yet clear how much Sirius had to fork over to keep Howard happy. But shareholders seem to be cheering.

    Shares of Sirius XM are 6.5% higher so far this morning. That means at the stroke of Stern’s pen on a new contract, he’s helped add $315 million to Sirius’s market value.

    Stern helped vault Sirius to the mainstream when he agreed to leave terrestrial radio for satellite in 2004 as part of a contract worth $500 million in cash and stock. As his original agreement drew to a close, Stern teased listeners for months about the possibility of leaving. “I don’t think I’m going to be re-signing,” he said on the air a year ago.

    Speculation stirred about Stern retiring, about him joining the judging panel on “American Idol,” even signing onto some kind of deal with Apple’s iTunes. Some Sirius XM officials didn’t take his threats seriously, figuring Howard wasn’t likely to make the same level of money anywhere else.

  2. #12
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    DECEMBER 9, 2010, 10:10 AM ET
    Howard Stern Contract Boosts Sirius XM: Is He Worth His Pay?
    Article

    By Matt Phillips

    Prices for Sirius XM Radio are up a healthy 6.5% on news that the satellite radio operated nailed down the shock jock for another five years.

    In a statement this morning the company said Stern’s new contract will run through December 31, 2015. “Under the terms of the new contract, SIRIUS XM will now have the right to transmit Howard’s exclusive programming to mobile devices. Additional terms of the contract will not be disclosed,” the statement said.

    Questions about Stern reupping for another stint at Sirius seems to have been a weight on the shares lately. In a note published Wednesday Miller Tabak analyst David Joyce wrote “we reiterate our Neutral rating due to the potential loss of Howard Stern-reliant subs if he does not renew his contract.”

    Last month analysts at Wunderlich Securities tried their hand at what they called “Sternomics,” in trying to suss out whether the subscribers Stern delivers are worth the compensation the company has to shovel out for the superstar radio personality:

    Variables are Stern’s annual compensation, the number of listeners who would defect to a Stern streaming service or terrestrial radio, and the duration of any new contract. We assume a 70% monthly ($9+) variable cash flow contribution on each Stern fanatic and a low 1.5% churn rate. We run compensation iterations at $75mm, $100mm, and $150mm. We are neutral between a five-year contract at $100 million and losing one million customers.

  3. #13
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    Howard Stern Stays: You Called It
    By Theresa McCabe 12/09/10 - 10:14 AM EST

    NEW YORK (TheStreet.con) -- Shock jock Howard Stern announced he signed a new 5-year contract with Sirius XM(SIRI_) this morning, ending months of speculation regarding his plans. His announcement came less than one month before his original 5-year, $500 million deal was due to expire.

    The news may not come as a surprise, after the majority of TheStreet readers who took our poll said they thought Stern was going to stay on at Sirius. Of the 9,780 voters, 51.8% expected Stern to sign a contract with Sirius for two years or less, while 32.2% said he would sign a contract for 3 years or more. Only 16% of voters believed Stern would take his talent elsewhere.

    >>Sirius XM: Hirings, Firings and Negotiations

    Analyst Barton Crooked of Lazard Capital said Stern's renewing with Sirius was "consistent with expectations."

    In his Dec. 9 research note, Crooked maintained Sirius at a buy rating with a $1.65 price target as the risk of Stern's contract renewal won't exist for another five years.

    While the financial terms of the agreement were not disclosed, Crooked said that flat programming costs indicate that Stern will continue to receive $80 million a year, consistent with his former deal.

    Through the agreement, Sirius gains the right to transmit Stern's programming to mobile devices.

    "I am especially excited that my show will now be heard through Sirius XM on mobile devices," Stern said. "Access to my show on mobile devices will open up additional opportunities for my fans to hear me wherever they are."

    Management is confident that keeping Stern on will benefit the company in a variety of ways.

    "Our agreement is good news on all fronts -- it is good for Sirius XM subscribers and good for Sirius XM stockholders," said CEO Mel Karmazin. "Howard forever changed radio and was instrumental in putting Sirius on the map when he first launched on satellite radio. He is one of the few one-name entertainers in the country and our 20 million subscribers are lucky to have him."

    -- Written by Theresa McCabe in Boston.

  4. #14
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    By Liana Baker
    NEW YORK | Thu Dec 9, 2010 10:21am EST

    (Reuters) - Howard Stern will be shocking Sirius XM Radio Inc listeners for at least five more years, news that pushed the satellite radio company's shares up more than 6 percent.

    Under a new contract announced on Thursday, Stern will be broadcasting until December 31, 2015, and the shock jock's content will be available for the first time on mobile devices, Sirius XM said in a statement.

    Stern's previous five-year, $500 million contract with Sirius XM Radio expires this month, and investors had been concerned that subscribers would abandon the service if he were to move on.

    One estimate says Stern brought 1.2 million subscribers aboard when he joined the service, which now reaches 20 million.

    No other terms of the new contract were disclosed.

    Stern, who often swears on air and features adult content on his show, is famous for shocking audiences. He was fined several times when he was on terrestrial radio.

    Analysts said investors can now breathe easier that Stern's future has been settled.

    "It's been a cloud over Sirius XM this year," said Lazard Capital Markets analyst Barton Crockett.

    The full impact on Sirius XM will not be clear until more details of the new contract come to light, analysts said.

    "The question is what kind of package was put together?" said Maxim Group analyst John Tinker.

    Sirius XM has stated that its programing costs would continue to fall year-over-year, and Wall Street is hoping Stern will receive less under the new deal.

    Crockett estimates that Stern will get $80 million a year in cash, the same amount he makes now, but not the $100 million in stock over five years that he had previously received.

    Stern first announced that he had reached an agreement with Sirius XM on his morning show and on his website.

    Sirius XM said last week it had struck a new contract with the National Football League to broadcast games until 2016 and stream the play-by-play online.

    Much of the subscriber growth comes from buyers of new cars that have the radios installed. Customers then sign up for the service when the promotions end.

  5. #15
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    Sirius XM Jumps After Radio Host Howard Stern Says He's Staying
    By Brett Pulley and Sarah Rabil - Dec 9, 2010 10:38 AM ET

    Sirius XM Radio Inc., the U.S. satellite-radio broadcaster, rose in Nasdaq trading after confirming it had secured a contract to keep talk-show host Howard Stern for five more years.

    Sirius XM gained 9 cents, or 6.5 percent, to $1.40 at 10:30 a.m. New York time in Nasdaq Stock Market trading, after climbing 9.5 percent for the biggest intraday increase in six months. The shares had more than doubled this year before today.

    Stern, 56, first revealed the news on his early morning show, known for its uncensored content.

    “It all worked out, very, very well,” Stern told listeners. “I got five f---ing more years of this.”

    Stern’s new deal, which will run through December 2015, allows for Sirius to transmit Stern’s programming on mobile devices, the company said in a statement. Neither Sirius nor Stern disclosed financial terms of his new contract. Don Buchwald, Stern’s agent, didn’t immediately return telephone and e-mail messages.

    Mel Karmazin, the company’s chief executive officer, said in the statement that Stern’s contract was “good for Sirius XM subscribers and good for Sirius XM stockholders.”

    Stern is responsible for adding about 2 million subscribers to Sirius XM since he moved to satellite radio from terrestrial in January 2006, according to Tuna Amobi, an analyst at Standard & Poor’s in New York. Last week, Sirius XM said it reaches more than 20 million subscribers.

    Stern Negotiations

    Stern’s show airs live weekday mornings, and takes place at the New York City headquarters of Sirius, inside a large 36th floor studio the company built especially for Stern. Stern’s programming is replayed throughout the day.

    Sirius XM had been negotiating with Stern for weeks in an effort to reach a resolution before the expiration of his current contract this month, which was worth $500 million over five years.

    The new contract “helps to retain the subscribers who are still using the Sirius radio for Stern access only,” David Joyce, an analyst at Miller Tabak & Co. in New York, said in an interview. “There had started to be some fear in the stock in the past week.”

    Karmazin, in an interview in October, said Sirius XM was exploring programming alternatives in case the satellite broadcaster and Stern weren’t able to agree on a new contract. Without Stern, Sirius XM would “save $100 million a year” and use the money to fill the programming gap with various types of shows, said Karmazin, 67.

    To contact the reporters on this story: Sarah Rabil in New York at srabil@bloomberg.net; Brett Pulley in New York at bpulley@bloomberg.net

    To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net

  6. #16
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    Holly reposts.

    So....no stern pop! Wow. It might have been priced in the move from 1.2 -1.6 and now back to 1.4......amazing....all things go right and no pop. Wtf? I sold a few thousand shares a few days ago for the same price. The final move of 1.32-1.44 was the last move before the stern news....something smells funny. This stock continues to amaze.

    Big Ben
    Taking over the AFC.


    Does this stock trade on fundamentals going forward? kind of funny when you have 12 notes outstanding. LOL.

  7. #17
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    What Howard Stern's $400 million Sirius contract means to the Street
    By J.P. MangalindanDecember 9, 2010: 4:06 PM ET

    FORTUNE -- Howard Stern took more than 35 minutes during his show this morning to make the announcement, but the news that he had renewed with Sirius XM Radio (SIRI) for another five years came as no surprise to analysts who saw the company's shares jump more than 10% afterwards.

    The controversial radio shock jock made headlines five years ago when he signed his first five-year contract worth $500 million -- $80 million in cash each year and $100 million in stock - making him far and away the highest-paid radio personality today.

    This time around, he seems to have the same kind of cash deal, just without the stock, so $400 million for five years, according to The Daily Beast. Some of that money goes to production costs and salaries for Stern's show, and ultimately the figure won't be confirmed until Sirius XM makes necessary regulatory filing with the SEC.

    Fortune reached out to analysts to figure out how much Stern will likely make in the years ahead and how his continued presence benefits Sirius XM.

    Brett Harriss, Gabelli and Company

    I don't think Howard Stern is as important as he was five years ago, especially to Sirius, which has such a broad content lineup. But I do think Sirius wants to make sure nobody else has him, and they'd much rather have demand for Howard just sort of peter out over the next five years than just have a big newsworthy even that just gives people an excuse to cancel.

    The original deal was negotiated like most of their content deals when XM and SIRIUS were at war with programming. Since the merger in 2008, whenever a programming contract has come up for renegotiation, no matter who [the talent is], they've come down significantly -- on the order of 50%.

    When I pull a number out of the air, I'd say he goes from getting $100 million to getting $60 or $70 million, or a 30% of 40% pay cut. I don't think they're going to get the 50% knock down they got with say, Martha Stewart, because he is the 'Oprah of radio.' He's fantastic, but it'll probably be significant. He's going to get a lower total number, but they're not going to disclose it because they don't want to bruise his ego.

    Howard also probably negotiated to work a little less. He often says, 'Oh, I can't believe I'm doing this anymore. I should sit at home and enjoy my money.' So, maybe he goes from four to three days, which will be good for SIRIUS because ultimately, they'll be paying him less. [Peter Lauria of The Daily Beast seemed to confirm that Stern will scale back his workload some.]

    Barton Crockett, Lazard Capital

    I'm assuming he's getting $80 million in cash a year, which is what he was getting before. I'm just assuming he's not getting stock again. I'm also assuming it's the same amount of cash and I'm assuming for now, he loses the stock component. But there's a lot of wiggle room with the margins here. (Editor's note: Ding! On the money.)

    For Stern, it's probably important to face the world and say you didn't take a big pay cut, even though god knows he's making enough money to pay the rent. And I think from Sirius' perspective, trend costs overall are trending down and Howard Stern's a very big component. Historically, they've been spending $350 million a year on programming, of which $80 million in cash was Howard. I'd argue it's not a massive change, but if anything, I'd shade a little lower.

    We would guess that maybe 1 to 2 million subscriptions came into Sirius five years ago because of Howard Stern and that would basically be close to awash with what they're paying him. If he left and he lost all of those subscriptions, you'd have to lower subscriptions, but you'd also have to lower revenues and costs, which would also be close to awash in terms of earnings.

    But in reality, you wouldn't lose all those subscriptions. You'd lose a fraction of what he brought in because they've been around five years and they've probably found other things they like on satellite radio.

    David Joyce, Miller Tabak

    We are expecting a reduced rate of $60 million per year for Stern from $80 million a year, although terms have not yet been disclosed. (Editor's note: as of the time of this interview.)

    Had he left, and if there had been a 1 million subscriber loss as a result, we estimate there could have been a modest $12 million operating income before depreciation and amortization (OIBDA) hit and a $64 million free cash flow (FCF) hit versus our prior 2011 estimates, and a moderate stock pullback could have resulted in a positive view of the shares. But if 1.5 million subscribers had left, our model would have pointed to a $48 mm OIBDA hit and a $126 million FCF hit, which start to look more material to the stock outlook.

    Matt Harrigan, Wunderlich Securities

    The variables are Stern's annual compensation, the number of listeners who would defect to a Stern streaming service or terrestrial radio, and the duration of any new contract. We assume a 70% monthly ($9+) variable cash flow contribution on each Stern fanatic and a low 1.5% churn rate. We run compensation iterations at $75 million, $100 million, and $150 million. We are neutral between a five-year contract at $100 million and losing one million customers.

    That last bit of analysis might be the most fascinating: Stern is so expensive, the savings from him leaving would pretty much offset the loss of subscribers. But for someone of Stern's stature, the hit to Sirius XM's prestige over the loss might've been too much for CEO Mel Karmazin to handle.

  8. #18
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    thestreet.con (Jimmy's little hobby site)

    Liberty Media Up on Price Target Hike
    By Theresa McCabe 12/21/10 - 03:39 PM EST

    NEW YORK (TheStreet) -- Liberty Media Capital(LCAPA_) shares are up 2% today after analyst James Ratcliffe of Barclays Capital raised his price target on the stock to $60 from $56 on Monday.

    In a Dec. 20 research note to investors, Ratcliffe maintained his neutral rating on Liberty Media Capital as well as Liberty Media Starz(LSTZA_) as he believes their plans to split from Liberty Media Interactive(LINTA_) will be finalized in 2011.

    "We expect Liberty to receive the declaratory ruling in [the first-quarter of 2011], but an appeal could add several months to the process," Ratcliffe said. "Certainty on this issue is a must-have for the deal, as the risk of a future covenant violation -- and cross-default -- is unacceptable."

    In June, 2010 Liberty president and CEO Greg Maffei announced his plans to separate Liberty Capital and Liberty Starz tracking stock groups from the Liberty Interactive tracking stock group.

    "We are pleased to announce our plan to make Liberty Interactive an asset-backed stock by splitting off Liberty Capital and Liberty Starz," Maffei said. "An asset-backed Liberty Interactive will provide better transparency on Liberty's operating businesses, enable more efficient capital raising, and permit us to better pursue our strategic objectives, including acquisitions using stock."

    Ratcliffe says his 2011 year-end price target for Liberty Starz is $72, on his forecast that Starz will strike an over-the-top deal with Netflix(NFLX_) or another company such as Amazon (AMZN_) or Google(GOOG_). He predicts that over-the-top will be a key revenue source, bringing in $160 million in annualized revenue beginning in the mid-2011.

    "With our forecast for relatively flat subscribership over the next few years, despite increased spending on original programming, we view over-the-top revenue as Starz's primary growth driver in 2011," Ratcliffe said.

    Ratcliffe noted that the Liberty will continue to benefit from the positive performance of its equity affiliate, Sirius XM(SIRI_), as the satellite radio company's shares makes up 45% of gross assets Liberty Media Capital's value. Sirius has been a key driver of Liberty's share performance over the past year. Liberty Media Capital is up more than 145% over the past year, while Sirius has risen 133%.

    Liberty Media Capital shares are up more than 2.1% to $59.78, while Liberty Media Starz is up 0.6% to $66.94. Liberty Media Interactive is up 0.9% to $15.95 and Sirius XM shares are up about 4% to $1.46.

    -- Written by Theresa McCabe in Boston.

  9. #19
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    Ernst & Young Fraud

    If you know your Siri history . . you will understand how this news story is relevant to this thread . . .

    NY case alleges Ernst & Young fraud as Lehman auditor

    NEW YORK | Tue Dec 21, 2010 3:24pm EST
    (Reuters) - New York prosecutors accused accounting firm Ernst & Young of helping to conceal Lehman Brothers Holdings Inc's financial problems before it collapsed in 2008.

    The following are highlights from the civil fraud complaint filed by the office of New York Attorney General Andrew Cuomo in New York State Supreme Court:

    - Ernst & Young approved Lehman's policy on Repo 105 transactions created in 2001 that allowed Lehman to park tens of billions of dollars of highly liquid fixed income securities with European banks for the sole purpose of reducing Lehman's balance sheet leverage.

    - Senior Lehman personnel, including Kristine Smith, discussed the proposal with Kevin Reilly, the E&Y "engagement partner" in charge of E&Y's relationship with Lehman, and with E&Y partners William Schlich and Matthew Kurzweil.

    - E&Y knew Lehman was treating the transfer of tens of billions of dollars of securities in Repo 105 transactions as "sales," not "loans" according to the complaint.

    - Rather than expose this fraud E&Y year after year gave clean opinions on Lehman's financial statements even though they concealed massive Repo 105 transactions.

    - In 2006, one of E&Y's auditors, Bharat Jain, became concerned about the heavy use of the Repo 105 transactions.

    In a September 7, 2006, email to his senior manager, Jennifer Jackson, Jain noted that he would "like to know what is our thought process behind how much of these Lehman should do from reputational risk, etc. perspective. Are we comparing to other competitors, are we referring to any industry publications, any regulatory guidance, etc.?"

    - In May 2008, E&Y was given a copy of a letter to senior financial executives at Lehman from Matthew Lee, an executive responsible for Lehman's global balance sheet, which raised serious questions about Lehman's financial statements.

    - In June 2008, Lee told Schlich and another E&Y partner, Hillary Hansen, that Lehman was removing $50 billion in fixed income securities from its balance sheet each quarter by purporting to "sell them" to European counterparties.

    -- Hansen raised concerns about Repo 105 with Schlich "who casually dismissed the concerns" by telling Hansen that they were being properly recorded as sales.

    - In subsequent meetings about Lee's allegations, Repo 105 was not even mentioned even though E&Y had been instructed to tell Lehman's audit committee about Lee's concerns.

    - E&Y misrepresented Lehman's compliance with applicable accounting standards, the complaint said.

    - It said E&Y failed to challenge public statements by Lehman's management concerning the reductions in leverage that E&Y knew had been accomplished largely by the use of Repo 105 transactions.

    (Compiled by Grant McCool; Editing by Gary Hill)

  10. #20
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    Index Funds Quarterly Report

    Opening price on October 1 was $1.20 with a low of $1.18 and a High/Close of $1.24 on over 120M Shares:

    Oct 1, 2010 1.20 1.24 1.18 1.24 122,399,084

    Assuming a buy-in at $1.20, a close-out at $1.50, would lock-in a 25% gain for the quarter.

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