Every once in a while I choose an email from my inbox and publish it here with additional thoughts or opinions. Last night I was checking my emails in the usual way and noticed an email from a regular reader that sends me something pretty much every week. This email contained what was a comment somewhere on the Internet relating to SiriusXM and my coverage of it.
LET ME GUESS…..SPENCER OSBORNE IS GOING TO COME OUT WITH SOME HIT PIECE AGAIN
by devildtails . Jan 4, 2013 5:08 PM . Permalink
…casting some kind of doubt on subscriber growth going forward. This clown is a real piece of work.
Note to Spencer: If you are going to follow a sector, see if you can do it without being biased. Did you talk about any potential for global expansion? You know, the type of expansion Malone specifically indicated was on his horizon? Oh, I see, no. You didn’t. Did you talk about business subscriptions? You know, the ones that pay a higher subscription rate than retail subscribers and overlaps the population with an effective increase in potential subscribers? No. You didn’t. How about the previously owned initiative? How much did your hit piece devote to that promising segment which generates subscribers with an effective $0 subscriber acquisition cost? And how about the internet only subscription? This also has an effective $0 subscriber acquisition cost associated with it, and your hit piece didn’t even mention it? And since your hit piece was about subscriptions, and many subscribers upgrade their subscription with premium service, why didn’t you mention anything about enhanced revenues from this source? Investors are growing tired of your biased reporting Spencer. Give it a rest. We love your detailed fact based information, you’re good at it. But you’ve got to learn how to stop acting like a Goldman Sachs/Bank of America wannabe and stick with unbiased reporting if you want to gain the respect you undoubtedly seek. Enough said.
I found this most interesting because the individual in question seems to feel as though I have not been bullish on the equity. It is interesting because throughout 2012 I have indeed been bullish. There is a distinct difference in being bullish and maintaining objectivity. There is also a distinct difference in shorter term trading and longer term goals. Just because I do not wave pom-poms with each and every piece I write does not mean that I am not bullish. I see the attributes of the company and hold it to a high standard. We all know the positives, thus it is a good exercise to understand the risks even if they are small. Lets address this poster point by point:
“Note to Spencer: If you are going to follow a sector, see if you can do it without being biased.”
Bias works two ways. I write positives as well as negatives about this company. Being unbiased does not mean being a cheer leader. There are times to cheer and times to be critical. I offer up both.
“Did you talk about any potential for global expansion? You know, the type of expansion Malone specifically indicated was on his horizon? Oh, I see, no. You didn’t.”
In fact I have talked about global expansion and the statements by Malone. I have done so in articles as well as on radio shows. I see nothing wrong with expansion IF it is done smartly. Expanding the service via satellite would bring with it massive satellite build and launch expenses. Expanding by Internet is easier but has its own hurdles such as broadcasting rights, higher royalties, and a much more competitive landscape. Spotify and Deezer are monsters in Europe. In addition the company would need to have content offerings that appeal to the desired audience. By example, the suite of Latino channels is compelling for a U.S. based Latino community, but likely shy of what would be desired for a full blown service in Mexico, Nicaragua, etc. We may enjoy Sirius Hits 1 here, but does the morning Mash-Up show appeal to someone in Mexico City? Expansion can be great, but from an investment standpoint the company needs to ensure it is done smartly. I have discussed this in several pieces, so the poster likely needs to brush up on research.
“Did you talk about business subscriptions? You know, the ones that pay a higher subscription rate than retail subscribers and overlaps the population with an effective increase in potential subscribers? No. You didn’t.”
I have written scads of pieces about SiriusXM for business. One reason that subscription rates are higher is because the royalty costs for this category are higher as well. It is a niche business for SiriusXM and worth doing, but it is not a driver for the company. SiriusXM has many businesses that subscribe, but if it was something as compelling as this poster thinks, it would be a topic of discussion in conference calls and at annual meeting. In dozens of conversations with the company and analysts, not a single person bring up business subscriptions as a driver for the company. In fact, it rarely even gets mentioned. It is smart to have this service, but nothing that the company is being very aggressive with. It actually has more potential being fed over the net than it does by satellite. Many businesses want simply music and not jingles, bumpers, and station ID’s. Simply stated this is a great niche, but not a driver for the company.
“How about the previously owned initiative? How much did your hit piece devote to that promising segment which generates subscribers with an effective $0 subscriber acquisition cost?”
Once again, this segment has been widely written about and discussed in my writings and radio shows. I projected in late 2011 that SiriusXM would expand this program substantially in 2012 and roll out announcements regarding the pre-owned market with announcements pretty much each month. With over 6,000 dealerships participating the program is a new supply bucket for the company. Investors need to bear in mind that the promotional trials are unpaid and thus not counted as subscribers unless they convert to self-pay status after the promotional period. I have written and discussed that this piece of the market will be an integral part of the growth model for the next few years and will ramp up with each passing month. It is indeed worth doing and will allow for the growth curve to continue upward even when new cars sales begin to flatten out again. If this poster had researched what I have written just a little bit (it takes about 30 seconds) he would see that I love the used car segment. Alas, most do not even bother to look but would rather post a hit piece about me. Quite sad.
“And how about the internet only subscription? This also has an effective $0 subscriber acquisition cost associated with it, and your hit piece didn’t even mention it?”
This is another subject that has been covered many times. I find it interesting that this poster keeps referring to a hit piece. It does not exist. Alas, let’s continue. Internet only subscriptions are not really $0 cost. I was one that felt early on that the company needed to ramp up this side of the business despite the higher costs associated with it. I was one who stated that SiriusXM should take on a leadership role in IP delivered services rather than allow Pandora and Spotify to run the table. SiriusXM’s Internet offering is taking many positive steps. In fact, I have written before that the IP side can offer far more content and can actually be a bigger giant than the satellite side. Again, a lack of this posters research.
“And since your hit piece was about subscriptions, and many subscribers upgrade their subscription with premium service, why didn’t you mention anything about enhanced revenues from this source?”
The theme is getting repetitive here and for that I apologize. I have written many articles about the premium service and what it means to SiriusXM. I penned a piece when SiriusXM launched its “All Access” and hailed it as a huge positive. I even broke down the revenue side. The fact is that ARPU is climbing. It is climbing because of the price increase and people see the value in the “All Access” plan. Please Mr. Devildtails… try to conduct just a small amount of research here.
“Investors are growing tired of your biased reporting Spencer. Give it a rest. We love your detailed fact based information, you’re good at it. But you’ve got to learn how to stop acting like a Goldman Sachs/Bank of America wannabe and stick with unbiased reporting if you want to gain the respect you undoubtedly seek. Enough said.”
I suspect you are saying that my reporting is biased because I have the nerve to talk about the good as well as the bad… the positives as well as the negatives….the potential as well as the risks. NEWS FLASH – That is exactly what investors need. They do not need a talking head to cheer and offer only Rha Rha chants about how amazing satellite radio is. Investors need to try to determine if this equity will appreciate in price more than anther one out there. They get the positives from the company, rarely do they get the risk side from the company. There are indeed bias writers out there. On both sides of the equation. We have permabulls that only print positives and permabears that only print negatives.
They say that the devil is in the details. I would suggest that you go through my postings of the last year here on SiriusBuzz as well as Seeking Alpha and investigate just how unbiased I am. Those details will demonstrate it rather clearly. In fact, I challenge you to take all articles published in the last 12 months and categorize them into bullish, bearish, or neutral. I think the results may surprise you. Of course I would not expect that Mr. dtails would actually do such a thing. It is easier to be lazy and cast stones.
In summary, there are many positives in 2013 that will make SiriusXM stronger than ever. There will also be trading opportunities for the more active traders out there that like to play the ranges. The company will have record revenue this year and continue a growth curve that will impress. I have been long this equity for over a decade. It has performed well in the last year and will continue that trend in 2013. I have no issue with someone being critical. That comes with the territory. I am sure that Mr. DevilDtails is a pretty nice guy. I just can’s fathom how he can think that I have never covered any of these issues when they have each been covered extensively. I am not a basher, nor am I a cheer leader… however, I have been labeled as both. Interesting!