It seems that satellite radio generates a lot of passion in people. That is a good thing when that passion is grounded by a healthy dose of reality. Recent events in the satellite blogsphere seem to created a heated debate between Satwaves and Motley Fool. Somehow through the course of their "debate", SiriusBuzz got dragged in. Motley Fool challenges the accuracy of Satwaves, and for whatever reason, Satwaves makes a decision to deflect that attention to SiriusBuzz in the opening paragraph of their rebuttal.
I had the honor this weekend to attend the Charity Awards Gala at the Ritz Carlton in Washington D.C. It was being at that event and dinner that made me reflect on a rather detailed and pointed response I had already started writing as a rebuttal to comments made by Mr. Matthews and Satwaves in his response to Motley Fool.
The Charity Awards Gala is an annual event that celebrates the giving of people and organizations. I had the pleasure of meeting and speaking with icons like boxing great Joe Frazier, presidential historian and advisor Doug Wead, music entertainer and movie star Pat Boone, and Fox News host and past presidential candidate Mike Huckabee.
It was a brief set of words spoken by Mike Huckabee event at the that caused me to stop and reflect on this article as well as the tone it would take. Mr. Huckabee stated, "if you do not give, you have not lived." What Mr. Huckabee was stating was that the act of giving carries huge rewards for ones quality of life. People that generally carry a positive attitude, and are generous with their time and money have fuller lives because of their generosity. I had begun penning a rather pointed and detailed response to Mr. Matthews. Upon taking some time to reflect on what has transpired, I thought it best to approach this issue in a more positive way that perhaps can bring about good changes.
It was not by choice that SiriusBuzz got embroiled into the debate between Mr. Matthews and the Motley Fool. this site had nothing to do with the comments made by Motley Fool. I could have simply let Mr. Matthews rebuttal to the Motley Fool pass without response, but a response is needed because it goes to the heart of the issue written by Motley Fool. There are many things that I or any reader could be critical of Mr. Matthews and Satwaves for. However, rather than go down that path, I will take it upon myself to take the higher road in hopes that by through this example satellite radio blog readers get the gift of better websites and more accurate information.
I do need to address the two specific issues that Satwaves decided to bring up in the opening paragraph of their response to Motley Fool because those barbs were cast at me rather than Motley Fool.
Mr. Matthews states, "From websites that all but guarantee Sirius XM Radio would lose over 300,000 subscribers last quarter while promising accurate information compared to Satwaves (as we continue to wait patiently for Sarah Palin's new Sirius XM channel)..." This is a veiled reference to SiriusBuzz.
Mr. Matthews is casting his stones at me. He speaks of "the speck in his eye" and the "planks in everyone else's". He requests that "those without Sirius XM sins cast the first stone". These are noble theories, but if one is going to bring these up, they should ensure the purity of your own work and actions, as well as review that which was actually written.
Mr. Matthews insinuates that SiriusBuzz projected that Sarah Palin would get a channel on Sirius XM Radio. Anyone who takes the time to read the Palin article would see that I in no way made such a projection. The piece was about the speculation that Sirius XM would be a great home for her. Even the title asks the question, "Could Sarah Palin Wind Up On Sirius XM?" The issue here is that what Mr. Matthews portrayed was something entirely different than the facts, and what was actually written. It is this type of action that the Motley Fool was pointing out in their criticisms of Mr. Matthews. Whether Mr. Matthews simply did not do research into the issue, or did not comprehend what was written is unknown. What is known is that readers who take the time to read the article will clearly see that there was not projection made of Palin arriving at Sirius XM. This is exactly the types of misrepresentations that the Motley Fool was referring to in their piece, and perhaps the ultimate irony is that Mr. Matthews demonstrated this shortcoming once again in his rebuttal.
Secondly, Mr. Matthews goes after my Q2 sub loss projection of (300,000 to 340,000) and challenges the accuracy record of SiriusBuzz. I found this attack quite interesting given some of the subscriber projections offered up by Mr. Matthews for Q1 and Q2 of 2009, which were far more erroneous than those offered by SiriusBuzz. In particular, Mr. Matthews called for positive subs in Q1. He also called for positive subs in Q2, but then changed his projections to a range of a big negative to a big positive (a subscriber range that was essentially valueless to the reader). Readers can see the detail of my projections in my Q2 preview which goes into far more detail than simply subscriber projections. I outline where I arrived at my number, and have even discussed where I was wrong in my projection subsequent to the quarterly report. The OEM channel was not as negatively impacted by the Chrysler and GM bankruptcy's as I anticipated. That being said, I stand behind the accuracy of verifiable facts when I write, and stand behind my opinions with an explanation of how and why I arrived at those opinions. I will let readers decide the accuracy of the various sites they follow.
With those points addressed, I had planned to detail several very bad mistakes published on Satwaves this year in the form of detailed errors, why they were errors, and pointing out the facts. Instead, I will bring up only a few, not to "Brandon Bash", but rather as a way to encourage Mr. Matthews to take some more time to better understand the subjects he writes about.
In his speech tonight, Mike Huckabee spoke about the fact that giving is an important facet in life. He stated that if you have not given, you have not lived. Writers about satellite radio carry a responsibility to ensure that the information they write about is accurate, and grounded in good research. Those that make the decision to write about satellite radio should do so to give interested readers good information which they can use in the process of their own research. Mr. Matthews is passionate about the company. This is good. He also tends to shoot from the hip, and that can be dangerous. I do not think Mr. Matthews intentionally tries to mislead people. Perhaps this is the reason he is so sensitive to the criticisms leveled at him. What is needed in the satellite radio blogsphere is humility by the authors. Readers all to often rely far to much on what is written, and take it as fact. Writers who do not acknowledge their errors are doing a dis-service to those readers.
The examples of errors outlined below are not intended to embarrass Mr. Matthews. More likely than not, he is well aware that there are many that were critical of these errors. Instead, I am pointing these out in hopes that Mr. Matthews will take some time to reflect on what he has written, and better understand his weakness in research and understanding of SEC filings. These are areas that Mr. Matthews should strive to improve upon, and readers also need to be aware of why what Mr. Matthews wrote is not accurate.
A case in point is an article Mr. Matthews penned stating that the Liberty Media deal can be reversed and that the preferred shares could come back to Sirius XM Radio. Some basic research would reveal that the deal was not reversible, and further that the preferred shares are and were Liberty Media's to keep. The issue here is that there are many readers who believed in what Mr. Matthews wrote. So much so, that the "atta boys" referred to by the Motley Fool were under that article as well. The Motley Fool is correct in their assessment that this should be a major concern. Had Mr. Matthews simply pickled up the phone and made a call, or read the Liberty Deal more thoroughly he would see that the facts were that the shares belonged to Liberty, and were theirs to keep. Instead of acknowledging this fact, Mr. Matthews goes down a path of saying that some day the shares can be back in the hands of Sirius XM, thereby "reversing" the deal as he originally stated. The problem is that if Sirius XM ever gets these shares back, they will have to BUY them. Liberty got the shares for essentially for free. Sirius XM BUYING them back does not reverse the deal at all. A reversal would be the company getting them back virtually free. This type of mistake is a HUGE mistake, and investors of Liberty as well as Sirius XM deserved better research. This was an error about BILLIONS of dollars. It impacted investors not only in Sirius XM, but Liberty Media as well. The facts were available prior to his publication. Mr. Matthews either did not do the research, or did not comprehend what he was reading. These words may sound harsh, but they are simply the reality of the situation.
Another instance is where Mr. Matthews says that Liberty does not control 40% of the company. Such language gives readers the impression that perhaps there is some way that Liberty does not control 40% of the company. The facts are that Liberty's preferred shares are technically not counted in the float unless converted. This was a correct statement made by Mr. Matthews. However, it is also a fact that the Liberty preferred shares carry VOTING RIGHTS. This gives Liberty power. This voting right is something that is not common with preferred shares. Liberty can also control and or appoint up to 6 members of the Board of Directors. Again, this gives Liberty power. Lastly, Sirius XM themselves list Liberty Media as an owner of the company on various SEC filings. The fact is that Liberty DOES control 40% of the company. Mr. Matthews piece on the subject does not spell out very important aspects of the Liberty Deal, and left his readers the impression of something that really is not there. Again, readers praised Mr. Matthews for his article. On top of all of that, Liberty has purchased $150 million of debt in the last two offerings.
Lastly, Mr. Matthews brings up the most recent refinancing and his opinion that there will be no charges attributable to the refinancing of the debt. Mr. Matthews even bolds this statement. Mr. Matthews cites language in the filings that state that there are no PENALTIES associated with the offering, and arrives at the conclusion that this means there will be no one time charges associated with the $250 million financing used to pay back Liberty Media. The opinion of Mr. Matthews is in direct contradiction to my own opinion that investors need to be prepared for one time charges again this quarter. If Mr. Matthews referred to the latest 10Q published by Sirius XM, he would see that the $250 million Liberty loan is mentioned, and that the company has discounted the loan by $122.9 million. Now that they have refinanced the loan, the company has to account for that discount. It is an accounting function, but it WILL bring charges. Once again, readers pat Mr. Matthews on the back, and unwittingly absorb erroneous information. Mr. Matthews uses his incorrect interpretation of the Liberty Media deal, as well as some opinions that can be debated, to inform readers that the company may, in a resounding way, post an EPS profit in Q3 of 2009.
The reason I bring these up is not to slam Mr. Matthews. He has passion for the company, and passion for what he does. As I stated, this is a good thing. However, because he has decided to be a conduit of information via a website, he should take the necessary steps to try his best to ensure the accuracy of whet he writes, or inquire to sources that can help him understand certain aspects of satellite radio that he is weak on. Opinions are opinions, but when facts can be verified, there is no excuse for not verifying them if you are running a web site. The items above are critical of a fundamental lack of research, not a difference of opinion.
Mr. Matthews seems to feel that everyone on the Internet is attacking him. This is not at all the case. What happens is that Mr. Matthews tends to make mistakes about very key components that could have been verified with a little additional effort. What I would encourage Mr. Matthews to do is to take the extra step and fully research issues before publishing an article. I feel he owes this extra step to his readers. If the subject is something he is unclear about, he can make a phone call and get information that can help make the his final published piece more accurate, and by extension people would not be critical of the piece.
The Motley Fool is right in that the "atta boys" are quite scary. Imagine someone invested into Liberty that hears from the company that Liberty now has a 40% stake in Sirius XM Radio, only to read a piece that states the deal can be reversed. Imagine the impact of Sirius XM investors who suddenly feel that a potential 40% dilution will disappear. By the comments of Satwaves readers, that is exactly what transpires. This is why being careful, and taking the time to GIVE readers accurate information is so important.
I myself oft get questions relating to something written on the net. Whether penned by Mr. Matthews or someone else, questions do happen and need to be addressed. There are readers out there who are getting confused because they are receiving mixed messages on various facts. In particular, if these are issues that represent hundreds of millions or even billions of dollars, correct information needs to be in the hands of investors. It is for this reason that Mr. Matthews tends to see people correct the record. Readers should NEVER take anything on blind faith (from SiriusBuzz or any other site). Even if a site tends to disseminate very accurate information and opinions, mistakes can happen. Readers should refer to as many sources as they can when considering their investments. Sirius XM also has investors that tend to have a great passion for the company, and often they want something to cheer about. That is fine, but we need to remember that this is an investment and not a love affair. Personally I get accused of being a pumper as well as a basher. It is an interesting dynamic. Perhaps it is because I tend to give both sides of the picture when I write. I may not always be correct, but typically I am in the right ballpark.
In his piece Mr. Matthews brings up inaccuracies of others. Ironically, much of what he brings up are issues that I have addressed in the past. The writer that projected a loss of 1.6 million subscribers for 2009 was Scott Morritz. I responded to his analysis in an article titled Moritz Gets Snarky On Sirius XM. The interesting thing is that Mr. Matthews is being critical of Mr. Moritz when Mr. Matthews did the exact same thing! I was also critical of The Motley Fool for their portrayal of the XM SkyDock in a piece titled Sirius XM SkyDock Already Getting Misrepresented.
My suggestion is this. Mr. Matthews should take a step back and assess what is happening at Satwaves. He should understand that people are not out to attack him. What people want is good and accurate information. They deserve to have information that has been vetted out. As a writer about satellite radio with a website, he has the ability to offer up quality information. He just needs to take the step to do it. As a site that is dedicated specifically to satellite radio his responsibility goes even further than sites that cover the sector in a more general way.
If you do not give, you have not lived. Mr. Matthews, please take these criticisms as constructive and make the decision to GIVE your readers a higher quality product. My initial response to your article was quite harsh and took many aspects of your writings to task. While it may not seem like I am giving with this piece, in actuality I am. I am giving you the chance to step back and look at what you are doing in a way that allows you to save face. This is not about slamming you. This is not about personality differences. This is about having some humility. This is about the readers, consumers and investors in satellite radio, and the level of quality they deserve. This is about GIVING readers the level of attention and accuracy they deserve.
Position - Long Sirius XM Radio, No Position Liberty Media