Is it all Doom and Gloom for Sirius XM?
The news of the Liberty bridge loan to Sirius XM radio has now been digested by the market. Not surprisingly, the mainstream media has managed to put a significant negative spin on the event. Already, talk of future bankruptcy has taken center stage and the stock has stalled.
It’s no wonder that SIRI investors are left confused and bewildered. All anyone wants is a straight answer yet the only clue given to investors has been an SEC filing which left armchair analysts like myself to figure out the meaning behind the deal. That filing did little to put investors at ease. In fact, it has made things worse as it smites current shareholders, and provides fuel for the naysayers to wreak havoc.
By now, everyone is aware that I am always willing to go out on the proverbial limb. I’ll begin with the issue of the media’s attempt at fear mongering utilizing the term bankruptcy. They are wrong. Investors in Sirius XM have become much more sophisticated in recent months. One important lesson has been that Sirius XM bonds dictate the price of the common stock. Several months ago, S&P and Moody’s both downgraded Sirius XM due in large part to its 2009 debt obligations, and the stock retreated to record lows.
The recent upgrades by Moody’s and S&P would dictate that bankruptcy at this point is in fact off the table. The media was quick to point out the downgrades, yet these same “news” agencies conveniently overlook the upgrades. If Liberty’s John Malone was seeking to get in front of other bondholders in the event of a future bankruptcy as some have suggested, the bonds would not have been upgraded.
No one has considered that the company is on the cusp of becoming free cash flow positive in 2009. That lower car sales in many cases benefits Sirius XM, and that the company has significantly reduced operating costs since the merger. If the company can achieve its 2009 goals, this bridge loan will in fact be beneficial to Sirius XM.
There are positives to look for going forward. One is NiceMac’s USirius StarPlayer application for the iPhone, which could be approved in the coming weeks. 2009 should bring with it news that Sirius XM has extended its service to Puerto Rico and worldwide on the Internet. Hopefully, Sirius XM is done with backroom deals and can now focus on growing its subscriber base.
Position: Long Sirius XM
Thank you for a succinct intelligent article. I tired of all the media naysayers trashing a stock when Liberty Media Direct TV owner Malone – a proven financier in the media field with probably more expertise than anyone just invested 1/2 billion $ in the company. If it’s good enough for him, it’s good enough for me. The comment above is correct – the satellite technology is the future.
To: Mark
Depends on what you’re listening to. I’ve been in several businesses where I DID hear the same stuff as on my individual account. It seems illogical that they would have two different types of formats due to the cost restraints they CLAIM to be under.
Hell, IF they don’t have yakking DJ’s on a commercial account I might consider switching.
The bar owner and I had a good conversation concerning SatRad while I was quaffing a Blue Moon. For all the “experts” on this board, you can get more information from a bartender about the current SiriusXM operation than 3 pages of shuffling around numbers.
The main point is the bar owner/customer is disatisfied with the service he is receiving and is canceling the account. He like most businesses these days has to watch every dime and keep his customers happy. If they complain, they ain’t happy and SiriusXM just LOST another account. Ergo, back to the ineptitude of Mel and his minions. Something that most of the posters on this site appear to ignore.
You can get into all the technical minutia you want to but when the ship is sinking that’s not the time to be concerned with getting 25% more out of the ventilation system.
Bottom line: You’re going to lose subscribers and I can tell you for a fact I don’t speak nearly as positive about SatRad these days as I did for YEARS. I cannot in all honesty enthusiasticly support a company that is pulling all these “boners”
Shouldn’t that tell you something???
So yeah, that is negative/bad news but it is HONEST negative/bad news.
(XM subscriber since Feb 2002;stockholder since 2005)
Hey I got a question for anyone out there………..
If it’s not all Doom and Gloom for this company, why are all the insiders selling ? http://www.secform4.com/inside.....908937.htm
It actually seems that outside of Mel’s buys, that’s all they ever really do with the stock !!?
SELL !!!
These are tax payments…. I let you figure out for what….
I see…………
They’ve changed the name of the company, that didn’t work.
They’ve changed the channel lineups, that didn’t work.
They’ve changed financing options, that didn’t work.
Fellas, the only change that is going to have a Major impact on this company is the change which has yet to occur. For Wall Street to perhaps give a bone or two, there must be a change at the top. That’s right, Melvin has to go.
His tenure as, In My Opinion, the most destructive force at the company, must come to a crashing finale. I see no other positive aspect in keeping Melvin in the role he assumed over 4 years and Billions of Dollars in Market Cap-ago.
No, its not the economy. No, not the state of the automotive industry. It’s not the Bond Holders or Banks. It’s the CEO who made choices, took gambles with investor capital, and failed.
At the current and constant PPS in the teens, what other evidence is needed?
Here’s what will happen, as I see it, in a Post-Melvin SiriusXM.
1. Salary reductions for Executive staff. Major savings vs. what is being transferred to Melvin. (Immediate Savings)
2. New Direction, new life as New Thinkers put the Entertainment behemoth on a path which will draw attention to the Benefits and “must have” characteristics of Satellite Radio.
3. Provide leverage when time to re-negotiate with Marquee talent, like Stern. Without the buddy-buddy relationship between Melvin and Howard, perhaps a bottom-line friendly contract might be negotiated. Ditto with Oprah, Martha, et al.
4. With the aging Melvin gone, the company should be re-positioned to speak to consumers of all ages. We see just today, that the Hearst Corporation is shutting down another “old tech” biz in the form of the San Francisco Chronicle! See a pattern? Out with the Old, (Melvin), in with the new.
5. Provide investors with a new feeling that the company is taking REAL measures to ensure the successful implementation of marketing strategies that work in the new Media landscape. Melvin’s model is broken and disengaged from the marketplace. He knows it, but a certain ego-problem keeps him from admitting the same.
There is but a few of probably many, many reasons “Its all Doom and Gloom for SiriusXM”, as the title of this forums states. Of course, these are My submissions.
What say ye?
I say you’re right. Too may of Mel’s “minions” are locked into the old world of terra radio and won’t let go. Without them leaving along with Karmazin there won’t be much improvement
Could this same deal help SiriusXm in the United States???
SIRIUS Satellite Radio Canada and Live Nation Canada Sign Exclusive Partnership.
http://www.tradingmarkets.com/.....cfm?purl=/
If you think the company is doing well, or not, the fact remains that they have no where to go but up. There are too many investments at play. I can’t see a BK.
I think the upside potential is tremendous. I’m guessing on the following:
1. Sat Radio on QVC
2. Partnerships with DirecTV (cross marketing).
3. increased # subscribers (they are still growing).
4. Additional Partnerships with perhaps an Apple or Microsoft (Both need a boost that could be provided by Sat radio).
5. Internet only subscriptions will come down in price and reach a broader market.
6. Sirius XM will make some progress in contract negotiations/restructureing with top tallent.
7. Addition on unique content.
8. Should see pick up in marketing.
9. additional chanels for backseat.
10. A few free channels for current non-subscribers.
All of these could provide additional upside for the company. I’ve got to belive that they are working on some of these.
Investing in this stock because you like the service is a terrible idea. From reading these and other comments I get the idea that people are buying the stock because they like the services and not because theybelieve the company is a sound investment.
If you like the service why not support the service instead of throwing your money away in the stock market? Just get 5 radios on a plan and give them to friends. At the end of the day you will probably be left with more cash and your friends will appreciate the free service. Contrast that with heartburn and loss of hundreds of thousands of dollars and I think we have a clear winner.
Subscriptions might even grow the SatRad industry and bring us a company with even better content.
I USED to be RABID about the service (pre-merger) but since the merger and decline of quality, I am nowhere near the fan I used to be.
A company with a lousy product will never survive. Sirius XM does not have that problem. Their problem is debt. liberty did a lot to reduce that concern for Sirius XM. While not out of the woods. Sirius XM can focus on growing their core business now. Like I said previously…No where to go but up.
Hope you’re right JPS…………….But, there seems to still be some room beneath us unfortunately………….so it appears!!
I have to strongly disagree. The quality of programming has deteriorated quite a bit since the merger.
I listened (painfully I might add) to “RawDog” for over an hour last night while driving & 30 minutes on the way to work this morning(I had not listened to “RawDog” for quite a while due to that reason but thought I would see if the programming had improved). Way too many “no-name comedians” whose attempts at comedy were pittiful. No Lewis Black,Bobcat Goldthwait,Richard Pryor, Kathleen Manigdan,etc. in 1.5 hours of enduring sub-quality product. The reason is obvious;it costs less to feature comedians who are one step away from “Amateur night at Club Laugh” than the talent that used to be featured on XMComedy ch. 150. SiriusXM will play just enough big name comedians to keep it from going totally under. “Blue Collar”(ch. 48)?? Forget it,it’s on a loop. In no time you hear the same bit again. Very frustrating if you’re driving for any distance. Just how many times can I hear “Larry The Cable Guy or Jeff Foxworthy in a few hours??? It’s happening on just about every channel.
Word of mouth is the best advertising and the word is out that SatRad AIN’T what it used to be.
Prove to me where I’m wrong and please don’t use that old chesnut that in order to get back on its feet, a company must lower its standards for a while. That’s like saying GM needs to make a car like the Yugo for a few years untill things get better.
I’m hearing a lot of “Yugo” stuff on SiriusXM these days. I cannot recommend a subscription to anyone these days unless I say that programming is inferior to the pre-merger period. If someone told you that in all honesty, would you subscribe?
I hear a lot of folks saying that the quality has gone down. Personally, I don’t think so and the alternative is what? FM? Not even close.
Since I have a good broadband service now I do listen to a good bit of FM radio stations around the country when I am on my home computer. There is a GREAT station in Charlotte,NC (95.7/”The Ride”) that gives “Classic Vinyl” & “Deep Tracks” a run for their money. The DJ’s on 95.7 are SUPERIOR to what SiriusXM has to offer that’s for sure. There ARE some great FM stations that one can access via internet.
To be honest with you I am serioulsy considering Slacker or Pandora. I have been able to access “Slacker” on my home computer and the comedy selection is SUPERIOR to what passes for comedy on SiriusXM these days (and I say that with no joy in reference to SiriusXM). Only disadvantage is having to deal with dowmloads,etc but sometime soon that will be solved and SiriusXM may very well become extinct. Again, I get on pleasure in posting that.
My extended subscription runs out next year and honestly I am on the fence about renewing. I’m giving SiriusXM a chance but so far I feel let down.
But hey, only Mel & his minions have themselves to blame if that happens.