Sirius XM In Trouble Again
It is with great distress that I put pen to paper, or in this case fingers to keyboard. Sometimes people believe that SiriusBuzz is SiriusPump. Nothing could be further from the truth and the buzz right now, is chapter 11. In a filing with the SEC, Sirius XM states:
- In the event such uncertainties remain unresolved, management anticipates that KPMG LLP’s auditors’ report relative to the Company’s 2008 consolidated financial statements will contain an explanatory paragraph indicating substantial doubt about the Company’s ability to continue as a going concern.
- … the inclusion of such a paragraph by KPMG LLP would result in a default under certain indebtedness of the Company, XM Holdings and XM Satellite Radio Inc. (“XM Inc.”) which defaults, if not cured or waived prior to the expiration of the applicable grace period, would result in an event of default under other indebtedness of the Company, XM Holdings and XM Inc. Such events of default, if they occur, provide the lenders the right to demand all amounts due under the respective agreements immediately due and payable.
In a nutshell, unless Sirius XM retires its May debt prior to its 10K being released, its only choice is Chapter 11. A simple statement of potential default is reason to cause a default in this case.
A further problem develops as we learn that that company itself is examining whether it makes sense to continue operations under such economic circumstances. All of this had been relative to operational results as of December 31,2008.
Management has not yet completed its evaluation as to whether substantial doubt exists relative to the Company’s ability to continue as a going concern for a reasonable period of time. A significant element of that evaluation relates to uncertainties associated with funding of amounts stipulated in the aforementioned Investment Agreements. These uncertainties may not be resolved by the time the Company files its Form 10-K with the Securities and Exchange Commission.
Unfortunately, auto sales data for the first two months of Q1 2009 shows that it is even more likely that the company will come to the conclusion that it cannot continue operations under its current debt and contractual obligations. A 9.1 million run rate and 1.7% churn rate equal a net loss of nearly 2 million subscribers in 2009 by my calculations, which have been heavily challenged in the SiriusBuzz forums.
I have used the following assumptions in my calculations:
9.1 million auto sold times 50 % penetration rate = 4,550,000 new installations.
4,550,000 new installations times 50% penetration (currently running below that) = 2,275,000 new oem subscribers.
21,000,000 subscribers times 1.7 % monthly churn = 4,284,000 deactivated subscribers.
4,284,000 – 2,275,000 = 2,009,000 subscribers to be lost in 2009
As for any talk of why Malone would have stepped in. The answer may be as simple as intending to keep the assets out of the hands of Charles Ergen, so that some form of Sirius might emerge after bankruptcy.
Position: Long Sirius XM
Sounds like someone is selling out…………….and making out like a bandit as more people Panic and Sell dirt cheap !!
Sad, dunno if I should remain here………………………………………….
Yo this is crazy the things i read on this board. I deliberately stopped going to the yahoo board because of all the child’s play..
Yo Brandon…. due diligence… due diligence..
The process of investigation, performed by investors, into the details of a potential investment, such as an examination of operations and management and the verification of material facts.
Now… enter John Malone…. Helped Ted Turner in the 90’s … helped Bob Johnson start and eventually sell Black Entertainment Television… need i say more…
Yo Brandon, just because you uttered this baseless misinformation i’m buying 7,000 more shares on monday…
“A newspaper burns in the sand
and healines read.. “man destroys man”
extra extra read all the bad news
on the walls of peace where everybody would lose
the rise and fall the last great empire
the sound of the whole world caught on fire
the ruthless struggle the desperate gamble
the gain that the whole world in shambles”
Melle Mel
So Brandon, no retail afermarket subs will be added in 2009, right. You still can’t explain this and refuse to correct your BOGUS information on this blog.
WHY, what motive do you have to keep such a ridiculous obvious mistake published and possibly picked up by other news sources ?
You still have a chance to not be considered a hack and a coward, so do you want to relook at your net sub additions for 2009 or continue to hide.
“4,284,000 – 2,275,000 = 2,009,000 subscribers to be lost in 2009″ (Brandon says)
I will not let up on this.
Brandon WILL YOU ADDRESS RETAIL? Everyone here has called you out on this and you refuse to answer?
This form (http://idea.sec.gov/Archives/e.....nt10vk.htm
Refers to the XM subsidiary!!!
I could give a rats @$$!! About OEM’s right now!!!
In a nutshell, unless Sirius XM retires its May debt prior to its 10K being released, its only choice is Chapter 11. A simple statement of potential default is reason to cause a default in this case.
HAH!! You need to remove SIRIUS from that statement!!! This is all about the XM SUB/SID!!
Let the turd subsidiary go into 11!! Force all of these turd contracts to be renegotiated!!!! ^&@&@&!!! Oprah/MLB/ ect….!!! If these clowns refuse to rework their deals then @&%^@&!! THEM!!!
People!! Read this very carefully, nowhere is the parent company mentioned!!!
In addition to resulting in termination of further funding pursuant to the Investment Agreements, the inclusion of such a paragraph by KPMG LLP would result in a default under certain indebtedness of the Company, XM Holdings and XM Satellite Radio Inc. (“XM Inc.”) which defaults, if not cured or waived prior to the expiration of the applicable grace period, would result in an event of default under other indebtedness of the Company, XM Holdings and XM Inc. Such events of default, if they occur, provide the lenders the right to demand all amounts due under the respective agreements immediately due and payable.
RTFM!!!!
The bigger question is why Brandon is refusing to post a response to the Retail Market. His calculations don’t include 1 Retail sale at all. This site even stated than an iPhone App is coming. Brandon there will be no retail aftermarket/internet adds this year?
Why won’t Brandon address the Retail Market? How about internet? how about used cars?
Brandon stated the following:
” I have used the following assumptions in my calculations:
21,000,000 subscribers times 1.7 % monthly churn = 4,284,000 deactivated subscribers. ”
My question is this: How can you calculate churn ( deactivated subscribers) on 21 million subscriptions? Where has that number ever been reported. To the best of my knowledge, we are in the 19 million range.
Are you guys all retarded? Why won’t you let this go? This is old news now…you need to get passed this as your not helping the situation with you’re ridiculous bad news speculation and sensationalism…Liberty Media now owns 40%, do you really think they are going to let this drown with a 20,000,000 customer revenue stream. Who else has 20,000,000 million customers paying for a subscription service? that’s almost the population of Canada dickhead. How about writing something positive for a change, or does a “good news” story not make good news??
There is so much wrong with the article it has to be on purpose. How could someone so versed in Siri ignore all the other income streams, especially retail sales. I bought mine retail in Q4. Why doesnt my Sub count? Only thing I could imagine is he had a kneejerk reaction, knows hes wrong but his pride wont let him admit it.
Not to mention that but the only part that says “SiriusXM” is the part he wrote. The copy/paste part doesnt even mention Sirius. You dont think that was just overlooked by the lawyers do you?
This is really mindboggling. If Charles and Tyler are concerned about the credibility of the site content they should find out why Brandon is refusing to answer the retail question. Somebody should step in here.
Tyler do you have an opinion why Brandon excludes Retail from his sub calculations?
Now that Brandon has included his “calculations” it’s even more clear to me that he hasn’t got a clue. He’s factoring his churn on 21million subscribers and not the current 19 million number. That makes a significant difference. Not to mention “self pay churn” is for “self pay subscribers” of which there are in the neighborhood of 16 million. He should be using fully loaded churn 2.2% which factors in the take rate after OEM promotional periods or built in subs and considering the entire penetration which looks to be in the range of 5 million.
we are talking about 2009, not 2008.
Exactly – The churn should be based on CURRENT subscribers not a projected future number. It changes every quarter. By adding your gross subscriber estimate for the year and THEN factoring in the churn you have substantially inflated the number.
You need to reread the filing. There is a very important word in the statement: “reasonable,” as in a reasonable amout of time.
Management is indicating that if it deems the outlook on its current model to be unreasonable, that it may just throw in the towel.
That is a HUGE red flag. Who is going to decide this and based on what? The auto sales data was released days ago. GM is on the verge of BK. Chrysler is on the verge of BK. An investor has to take these things into consideration because management surely is.
Management has not yet completed its evaluation as to whether substantial doubt exists relative to the Company’s ability to continue as a going concern for a reasonable period of time…These uncertainties may not be resolved by the time the Company files its Form 10-K with the Securities and Exchange Commission.
Brandon, I’ve read the filing. I’ve seen the language. What it means and why it’s there is definitely up for debate. My issue with your article is that you make a claim about the company losing 2 million subscribers next year and back it up using FUNNY math. It doesn’t add up based on the information we have now.
Retail is negligible! Want to take a guess at how many retail subs were added Q3? 107,000! They don’t matter. The company has billions of dollars worth of talent that they have done absolutely NOTHING to promote. Nothing! No commercials. No print ads. Nothing. Where do you people think 2 million retail subs will come from? At best you will get 500,000 in 2009. That leaves 1.5 million more just to break even. It cannot be done and I do not believe the company has any interest in getting it done.
Brandon are you talking about gross retail adds or net retail adds? If you are going to include the churn for retail you are not going include the gross retail additions????
Xmas time gross retail adds are negligible? Are you serious Brandon? You can’t be serious.
Tyler yoiu really have to step in here. This is getting totally out of hand. Hit us with you gross retail additions for the year Tyler. The number will turn Brandon’s numbers completely around.
Yes. X-mas subs are negligible. Possibly 150,000. We, and notice I said WE because I’m in this as deep as anyone else, need 2 million retail additions in 2009. That is an unreasonable expectation based on the previous data.
Brandon you have always impressed me as a smart guy but this post man….
Xmas gross retail adds are negligible? And iPhone internet subs will be negligible? And used cars will be negligible? Huh???? Where are Tyler’s numbers?
Your man Charles said the most anticipated iPhone app yet, and you think everything besides new cars is negligible? What happened Brandon?
From Brandon’s recent Q4 article:
http://siriusbuzz.com/looking-.....#more-3255
“130,037 subscribers will have been lost if churn remains at a historical constant of 1.7%. This would bring the total end of year subscribers to 19,361,520. If we add retail and multiple subscription packages such as the highly cross-promoted “Best Of” packages, the company should easily reach its year end goal of 19,500,000 subscribers.”
——————-
What happened to these assumptions? On the one hand you’ve grossly underestimated churn for the 4th quarter while grossly overestimating churn for 2009. Don’t get it…
I failed to multiply the monthly churn by 12. I thought you guys figured that out already.
Brandon you are looking pretty stupid that was not an explanation of that number you gave. Listen I will do this ONE MORE TIME 19 million X 1.7% = 323,000 per month X 3 months (in a quarter) = 969,000 lost to churn in a quarter.
Muscle -
It is time to give up. brandon is mixing net vs Gross and doesn’t understand that this is in his churn % already. In addition OEM deals are 3 mos, 6 mos, 1 year so you can’t just plainly say 9.1 X 50% penetration X 50% take rate on that. Also there are many otehr types of deals where they are not counted as subs until after 3 mos expire, penetration rates increasing to 60% this year and likelt 70% next. It’s funny how some people just have a mental block on certain things, but seem so intellectual on others.
S&P upgraded SIRIUS immediately after the
Direct TV deal was announced , Correct ??
Why didn’t S&P immediately DOWNGRADE Sirius when
Sirius made the Mar 2nd filing ??????
Apparently they didn’t interpret the filing as you did.
Muscle.
Do you have an iPhone app? No. It was blocked by XM. There is no iPhone app. All this talk of iPhones, and internet and used cars is great. Yet sirius is not the one talking about it. They rely solely on oem growth. Have you seen a commercial or ad that promoted addind Sirius XM to your used car? How you seen a new radio hit the store shelves in over a year?
Brandon your site says an iPhone app is coming from Sirius very shortly. YOUR SITE!
Sirius and XM have working deals for certified used cars which in time will outpace new car additions because used cars sell about 3 or 4 times the amount of new cars in the US.
XMP3 hit the shelves. The new Starmate hit the shelves, the Mirge will hit the shelves and Audiovox projected $100 million in sales from aftermarket radios.
What were Charles words about the iPhone – Arguably the most anticipated iPhone app ever? You disagree? You don’t think its coming? Are you saying Charles is wrong?
Come on Brandon, I have heard you speak. You are a smart guy. You just got this wrong.
This is all great info. but, Can someone tell me what happened to Sirius XM e-mail that “next week find out why xm makes more sense than ever” Was this it ???
http://satwaves.com/
Well, looks like all the conjecture about the “going concern” can be put to rest for now.
http://biz.yahoo.com/prnews/09......html?.v=1
frigginregan,
I’m with you, man. All this speculation is a waste of time. This company is reluctant to disclose their wheelings & dealings, so we might as well chill as best we can. All I care about is that they have the subscribers best interest in mind. The evidence would seem to be to the contrary, but I will reserve judgment (as best I can), until this soap opera runs its course.
Hang in there. This has been HELL; I feel for all of you fine people.
Saatradical,
The plug/dock & plays are the way to go if you want to listen in multiple locations for the price of one subscription. This obvious fact seems to be lost on the idiotic American public. I have had my Sportster Replay for over 3 years – moving it from car to house hundreds of times – and it still works great. If it was in the dash, I would have to drive the car into the living room. My doors are standard width; ain’t gonna happen! You brought up a good point.
If you have an older replay as I do, I’m going to let you in on a little secret. You don’t have to bring it inside at all.
If you use the wireless transmitter, just tune your home stereo, am/fm clock radio or whatever to the same station you listen to in your car and Voila….Sirius in every room in your house!
OEM Subs was NEGATIVE in Q3, and insiders have seen a further decline in OEM subs since. If Brandon takes OEM into account, the net loss of subcribers in 2009 will be greater than 2M.
A few of his numbers were however incorrect. He used 50% penetration of receivers in new cars, Siri puts this close to 55%. Lets give Siri the benefit of the doubt and say 50% of these new cars with receivers installed will turn into paying subs (Remember, the first 3-6M of these subs are free).
There is currently slightly less than 20M subs, not 21M, and the monthly churn has historically been closer to 1.6% so lets use that figure since you longs want alot of benefit of the doubt.
Using these rosier numbers for Siri performance still shows a NET LOSS for 2009. The only question is, is the 1.6% churn a monthly figure, or quarterly? This would reduce the projected losses, but still the total is a net LOSS. Also, Siri does not account for an increasing churn as more of the new car sales are sold to existing customers who will be shutting down their old receivers.
As stated earlier, in Q3 2008 Retail Subs was a net LOSS. The only new receiver released for the 4Q holidays was the XMp3, which I have only found available online. I estimate Retail for Q4, and going on into 2009 will contine to lose subscribers as EVERYTHING retail has declined in recent months.
9.1 million auto sold times 55 % penetration rate = 4,950,000 new installations.
4,950,000 new installations times 50% penetration (currently running below that) = 2,475,000 new oem subscribers.
19,700,000 subscribers times 1.6 % monthly churn = 3,782,400 deactivated subscribers.
3,782,400 – 2,475,000 = 1,307,400 subscribers to be lost in 2009
Note: In the first paragraph of the preceeding comment, OEM was mistakenly used. The author meant to write Retail, but found the lost hour last night to been too much.