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Thread: Why the concessions are no big deal/ plus what I think of Satelite radios future.

  1. #1
    john is offline
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    Why the concessions are no big deal/ plus what I think of Satelite radios future.

    I said I would talk about them to you "zcuran" so here is what I believe to be true. Also you will see why the HD thing would have been worse then all the other concession put together, and why they would have never been accepted by Mel.

    Guys, the short term is not important, I know you think you have waited a long time already. But I am telling you this is going to be so big I think that a mere 15,000 to 20,000 shares if held onto for the next 3 to 4 years will be enough for many to retire.

    First lets go over the concessions.

    1.)Turning 24 channels over to non-commercial and minority programming.

    I know many think this to be the worst of them. I actually think it is one of the best. The reason is simple, from what I have read and understand SIRI and XMSR both already have most of the channels that comply with this. So one of two things happen both are not so bad. One is SIRI/XMSR do not have to give a full 24 channels up anyway. The second one, is the better of the two though. Because they already have many of these channels they can stop carrying them and let the Public Knowledge and minorities pick up the cost for the content. The best part is that as I understand, The enities dont pay anything for the lease but have to pay for their own content, and people still have to subscribe to get them. So in the end while the quality will go down on those channels, because of the need for more commercials to pay for the content will go up. It will actually save SIRI/XMSR money that they would have had to pay for at least 12 out of the 24 channels (that is being conservative).

    2.)Three year price freeze

    This is not so bad ether. Lets face it, if Mel could afford to keep the prices down he would he knows there is only so much the masses are willing to pay for radio. That is why I believe this is not even really a concession. They would do this anyway if they could.

    3.)Open Access

    Who here, would really think this is even a big deal at all anyway. I dont know if most know this, but manufactures are not breaking down SIRI/XMSR doors to build satellite radios. Even if they were, I am sure Mel is going to make dam sure, it is at the very least not harmful to satellite radio. As proof look at the concessions he was able to get.

    4.) A-La-Carte pricing available within 3 months of deal closure.

    I posted on this before this is what I said about that:

    Here is a thought, How many subscribers do you think hold both SIRI and XMSR right now, and are paying the 25.9 each month for both. I have to say, I think the percentage is very very low. Now how many subscribers do you think that have had all the content that they have been exposed to from ether SIRI or XMSR would go down to the 6.99 subscribtion that really only offers music channels. I think that percentage is very very low, as a matter of fact if they would go for that package then chances are there is a big percentage of those that would have (churned out) left anyway. Now how many people that pay 12.95 a month to get one would not mind paying 2 or 4 dollars more to get the SIRI/XMSR you have now plus the best 13 channels from the other. IMO, The al la cart will not only lower churn, but may actually bring up the ARPU. Give them a year and then you will have another price point that will offer, access to both full services, for some higher price.

    Here is an example I think we all can agree with: How much did you start paying for your cable/satellite tv when you first got it. Now how much are you paying. I would be willing to bet most have upgraded to the extra package and are now paying more then they did when they first started it.

    All I am saying is when you here analyst say the al la cart is going to bring ARPU way down think about what happen to your cable/satellite tv bill. Just a piece of common sense. I also believe Mel Karmazin has thought about it to.

    5.) have to have a interoperable radio in 9 months.

    Ho no, you mean that they are going to have to put out a radio, that when it comes out, (the sooner the better) will start the big savings and profits for the companies.

    6.) Have to provide service to Puerto Rico.

    I think that one speaks for its self, if you ask me. Sure there are cost to the towers but in a population of over 3 million plus it being a tourist spot. I think they will be able to find enough people and hotels that are able to afford a satellite radio subscription, to more then pay for the towers.

    So there you have it, there they are, all the big bad concessions. Maybe someone can tell me, where are they all that bad, because I just dont see the big down side.

    These concessions are one reason, I would get so pissed at people that put Mel Karmazin down. That he was not worth the pay cut he took to come to SIRI.

    Holy crap, people have no idea, just how big that spectrum is. Terrestrial radio will never be the same. Thats why they fought to keep this from coming, thats why it took so long for the FCC. They knew full well, just how big this is going to be, they did not want to be the ones that turned terrestrial into what it will end up being. That spectrum is bigger then all the other stations combined think about it this way it took CCU 20 years to get were they are today which is about 750 stations. That only covers not even a tenth of the area that satellite radio covers. Does that tell you how big this really is. God help terresrial if they ever get slapped into paying royalties. My god we have just seen the begining here. Canada has just started to pick up.This thing is going to be almost as big as DISH and DTV.

    Next reason why I think this is going to be big. Mel did not take a pay cut and come to a smaller company to just sit back and bide his time til retirement (he is not like me LOL). He could have done that anywhere and made more money to boot. I beilieve he came to SIRI with this merger already in his head. He is by far no fool, and he could see the slow death of terrestrial radio coming. I believe he came to SIRI to become a even bigger legend then he already was. He in one fail swoop has control of more spectrum then all the terrestrial radio stations combined. He will be running a media giant almost over night. When you consider how long it took all the other terrestrial radio companies to become as big as they are today. He knows that if internet radio does ever become a real business that SIRI/XMSR will be the best positioned to take advantage of it. The biggest reason is simple internet has to do something that terrestrial doesn't pay royalties. You think terrestrial has alot of commercials just imagine how many they would have, if they had to pay for royalties on top of everything else. the same problem will be there for the internet radio companies. They will have to start to go to a subscribtion base business model. Well SIRI/XMSR are going to have a hugh jump on them. Think of how much it cost SIRI/XMSR to start up in the beginning. I will just say it is not going to be easy when SIRI/XMSR are the 300 lb gorilla, which already has alot of the people that are willing to pay for radio. The well is going to be shallow by the time internet can even become a viable player. Just some common sense with some speculation tossed in.

  2. #2
    spanyo is offline
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    Joined: Jul 2008 Posts: 135
    john, I like your vision here!

    by the way, how much money do you think is enough for "many to retire"?

  3. #3
    john is offline
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    Thank you spanyo, but it is nothing more then common sense. Considering I believe that is different for everyone. I believe for me 2.5 million is enough. The reason for that amount for me is, I am a believer one should never go into the principle amount and just live off the interest. Noone knows when they are going to die, so how do you break that principle amount down??? I also think if somebody was able to have 15,000 to 20,000 shares of SIRI they have at the very least another 500,000 to 1,000,000 invested somewhere else. I believe the question you are getting at though is what do I think it will be in 4 or 5 years. I believe It could get as high as 60 to 70 but at the very least be at 20 to 30 on the low side. You have to remember these companies will be almost one in the 5th year. DTV is already going into Asia. I know people think satellites are expensive, but they are not as expensive as it would be to build the infrastructure for cable in China. The USA is a small portion of the total population. Canada should have show investors that. I know people say, well those are companies by themselves, but besides SIRI and XMSR having big stakes in both. Who does Canada get all its satellite support from and almost all of their content from? Thats right SIRI and XMSR, and while they may be letting Canada off the hook for now, defering most lease payments and content payments. Those will all come back to SIRI and XMSR some time when they are better able to pay for it. As a example of why I believe this, XMSR of Canada just had positive FCF last quarter and they only had about 450,000 subscribers. I bring this up because investors always seem to forget their are almost a million (most likely over a million by now) other subcribers to the north. That is going to be another revenue stream soon enough. I am sorry I tend to go on and on. Have a good day and stay for the long run. Dont even look at the price of the stock for the next few weeks if you cant take the ride, you will be better off.

  4. #4
    spanyo is offline
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    Joined: Jul 2008 Posts: 135
    Thanks John.

    I am right with you about living off the interest. $2.5 mill would work for me. I was imagining between 20 and 50 for this stock, assuming they do serious buying back at some point. I think I read that Mel brought Infinity stock to $170 before the CBS buyout. Obviously there were quite a few less shares outstanding, but once they reach profitability, I think Sirius will become a juggernaut. I hope they expand overseas.

    I'm definitely going to hold. I look at it like I recently planted a money tree. It will take a while to take root. But once it does it will thrive. I can't help looking, but I figure by xmas it will be just starting to really grow.

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