Sirius Weekly Thread May 3, 2010

[john]

John,

You have to be careful with how you count OEM's. Toyota, Nissan, Hyundai, Kia, etc. are not counted as subs at the sale of the vehiclle, but rather 3 to 4 months later IF that person decides to become self paying.

It would appear, given Mels statement, that about 60,000 subs were added in April.

That is true and why I under estimated. I never included any of the retail in that figure or any used OEMs Just because of that. You will notice that at a 1million sales rate that is about 100,000 new subs just for OEMs (at some point to be sure) but there are still subs that have to be included like retail (losses which is already taken out by all - churn of 500,000) but they will have some NEW ones sign up. So I come up with a simple number that will include (to the most likely low side) of just using OEM sales numbers alone. I figure the others will cancel out each other (if not yield a higher number of adds) I like to underestimate and then be happy when a surprise of a higher number comes in. I think the other way gets us nowhere except pissed off investors when things are worse then they figured.


As for Mel, we all know the way he works!!! He said we have as of LAST WEEK BEATEN our old HIGH??????? He never said by how much. We just know by AT LEAST how much and that number is at least almost 70,000. Lets also remember this is the same guy that does not want to project anymore then what he has said about revenue (which is over 2.7 billion) and they would have to add almost nothing to get to that number already.



P.S. It is nice to have you posting in the forums more. I like to be question (by intelligent people havasucker not dumbasses, that is just a waste of time).

[Sirius Roadkill]

I am not up on that kind of action! where do you get that 11.11% from is that the normal or what.

ok john . . . good question . . . here's how I get that kind of action . . . on June 26, 2009 . . . Sirius XM was dumped from the Russell . . . the "tape" from that day is presented as follows:

Jun 26, 2009 0.45 0.47 0.30 0.36 432,449,855

As indicated above, the High was $0.47, the low was $0.30. More importantly, the Open was $0.45 . . . the Close was $0.36 on total volume of 432,449,855

Thus . . .

($0.45 - $0.36)/$0.45 = -20.00%

Therefore, starting with an assumed close price today of $1.00 (actually closed at $1.01 but I was estimating well before the close when I made that post to Pluc) and by extrapolation to Siri being added-back to the Russell in June:

$1.00 X 1.20 = $1.20

$1.20 - $1.08 = $0.12

$0.12/$1.08 = 11.11%

Pluc never buys and holds . . . Pluc is a shaker & a mover . . you must understand the mind of Pluc . . . Pluc has an itchy keyboard finger . . . Pluc needs action . . . Pluc is in and out of this website several times per day

So I gotta show him a way out on a quickie trade or Pluc loses interest . . . and the Russell Rebalancing is Pluc's way out . . . Pluc gets in and Pluc gets out . . . that's how Pluc dooz it.

Disclosure: I am not an investment adviser. This advise is for Pluc only. All others DYODD. Historical returns are no guarantee of future performance.

[Sirius Roadkill]

spam busting thread bump

screw you tmobile and your inflated prices

[john]

ok john . . . good question . . . here's how I get that kind of action . . . on June 26, 2009 . . . Sirius XM was dumped from the Russell . . . the "tape" from that day is presented as follows:

Jun 26, 2009 0.45 0.47 0.30 0.36 432,449,855

As indicated above, the High was $0.47, the low was $0.30. More importantly, the Open was $0.45 . . . the Close was $0.36 on total volume of 432,449,855

Thus . . .

($0.45 - $0.36)/$0.45 = -20.00%

Therefore, starting with an assumed close price today of $1.00 (actually closed at $1.01 but I was estimating well before the close when I made that post to Pluc) and by extrapolation to Siri being added-back to the Russell in June:

$1.00 X 1.20 = $1.20

$1.20 - $1.08 = $0.12

$0.12/$1.08 = 11.11%

[/SIZE]

Thanks, I would like to think I could take that to the bank but with this pig I have trouble thinking there is even any becon in it, anymore, LOL.

I see Tyler is still crunching the numbers to see it my estimate on subs makes sense.

I also would like to ask you if you saw my replie to you and Tyler in the other thread. I think Tyler has to much going on. I know he knows about the 3 and 5 dollars SIRIXM pays to Ford and GM, ON A MONTHLY BASIS. Yet they are also included in the ARPU number. SOOOOOO (Your right I like that "so" thing) If Tyler doesn't have a problem with that (at least any I know of) and it has been there since forever, what is his problem with something like royalty fees that is treated almost the very same way.


I cant wait to see Tyler try to get around that conundrum.

[Sirius Roadkill]

I also would like to ask you if you saw my replie to you and Tyler in the other thread. I think Tyler has to much going on. I know he knows about the 3 and 5 dollars SIRIXM pays to Ford and GM, ON A MONTHLY BASIS. Yet they are also included in the ARPU number. SOOOOOO (Your right I like that "so" thing) If Tyler doesn't have a problem with that (at least any I know of) and it has been there since forever, what is his problem with something like royalty fees that is treated almost the very same way.


I cant wait to see Tyler try to get around that conundrum.

Yes, I did read your rebuttal . . . you made several very strong points that I had not thought of.

The one I had thought about when debating this with Tyler was that it was my belief that, until permitted to do so under the FCC Merger Approval, the Company had been paying this as a normal operating expense straight out of existing revenue . . . consider the following:

U.S. Music Royalty Fee

Effective July 29, 2009, a U.S. Music Royalty Fee has been added to subscriber invoices. Details about the specific costs being passed through to subscribers in this U.S. Music Royalty Fee are provided below.

1. Why does SIRIUS XM pay music royalties?
Music royalty rights were established by Congress and are the product of the Copyright Act. Unlike terrestrial radio, both SIRIUS and XM are required to pay copyright music royalties to recording artists, musicians and recording companies who hold copyrights in sound recordings (the actual recording of a work). These royalties have risen dramatically as a result of a decision of the Copyright Royalty Board. Like terrestrial radio, SIRIUS and XM must also pay music publishers who hold copyrights in musical compositions (or the lyrics and music) through their collective organizations, ASCAP, BMI and SESAC. These fees have also risen since March 2007. Finally, SIRIUS and XM must also pay certain copyright owners to facilitate the recording of content on portable devices.

2. Who is the Copyright Royalty Board?

The Copyright Royalty Board consists of three Copyright Royalty Judges who determine rates and terms for statutory copyright licenses that are set forth in the Copyright Act. These administrative judges are appointed by the Librarian of Congress.

3. Who benefits from the U.S. Music Royalty Fee?

100% of the U.S. Music Royalty Fee will be used to offset payments from SIRIUS and XM to the music industry.

4. How is the U.S. Music Royalty Fee calculated?

We are passing along the increases in our costs attributable to statutorily or contractually required payments to the music, recording and publishing industries for the performance of musical works and sound recordings or for device recording fees since March 20, 2007, the date on which we applied to the FCC to approve the merger.

5. Do all SIRIUS XM subscribers pay the same fee?

All subscribers who receive a given package containing music pay the same fee. We believe charging each SIRIUS XM subscriber the same fee most equitably apportions the increased fees to subscribers. Note: some packages, such as News, Sports and Talk contain little music and are not subject to the U.S. Music Royalty Fee.

6. How much is the U.S. Music Royalty Fee?

The fee is $1.98 a month on our base $12.95 subscriptions and $.97 for base plans that are eligible for a second radio discount. Your actual fee may vary depending upon the Package and Plan term you choose.

7. Will I have to pay the U.S. Music Royalty Fee on the free months I received for buying an annual plan?

No, free months do not incur any U.S. Music Royalty Fees.

8. When will I pay the U.S. Music Royalty fee?

For plans renewing after July 28, 2009, the fee will be automatically added to your next bill. There will be no change to your current plan and that plan will remain in effect without change until your next renewal date.

9. Is the U.S. Music Royalty Fee applied to activations and other fees?

No.

10. Do you anticipate further price increases or additional fees in the near future?

No. We are committed to providing our customers the best value for their entertainment dollar.

11. Is this fee consistent with SIRIUS XM’s merger commitment not to raise prices for three years?

Yes. This fee is consistent with our commitment not to raise the base price of specific service plans for three years after the merger. The FCC decision approving the merger between SIRIUS and XM permits the companies beginning July 29, 2009 to pass through to subscribers any increases in music royalties since March 20, 2007, the day the companies first asked the FCC to approve the merger. The U.S. Music Royalty Fee implements this FCC decision.

[Sirius Roadkill]

So, based on the above, it only seemed proper accounting convention to offset the operating expense with a corresponding revenue stream.

As can be gleaned from the wording, it would appear that there is some "catch-up" on the reimbursements so that a portion of the Royalty revenue being generated now "makes the company whole" for prior period Royalty Fees that were not passed through.

Thus some of what is being collected now may not be entirely offset by a corresponding expense. This kinda foils Tyler's contention that Royalty Fees are a complete 100% pass-through . . . although he did acknowledge this as a footnote to our original discussion as follows:

Spencer says:
May 4, 2010 at 9:16 pm
correction….

I said they will never profit from it…..I do not believe that to be the case. stay tuned

He also mentioned this briefly on SB Radio on Thursday but I do not believe provided any additional details of what his sources are telling him.

[Sirius Roadkill]

Why now & how come the analysts didn't know?

Perhaps the timing of the decision to include Rolaty Fees in ARPU has something to do with the timing of the accounting cycle . . . as it is the 1st Quarter of a new year? (the pass-thru only commenced on July 29, 2009)

The analysts have far greater access to the Company than any of us do and it is their professional responsibility to fully understand the accounting protocols that effect their valuation models . . . would discussion about "treatment" of Royalty Fees not be a part of Barton Cockett's dialogue with David Frear?

In any case, even if you back-out Royalty Fees from revenue in order to derive a quasi "proforma ARPU" because you want an apples-to-apples metric against Q409, you cannot evaluate the ARPU decline in a vacuum . . . it has to be taken in context with subscriber growth and revenue growth, particularly because, all other things being equal, metrics like ARPU and SAC could be naturally influenced by economies-of-scale anyway.

Finally, in the big picture . . . after the 40% doorprize given to Liberty, there is an apparent lingering distrust of management by some. An "unexpected change" in accounting protocol rouses suspicion that management is attempting to "mask" a real decline in ARPU by grossing-it-up with Royalty Fees.

Even though this information is clearly detailed in the filing, I suppose management could have done a better job of getting out in front of it so as not to be perceived by the street as smoke and mirrors accounting.

[john]

I think Charles also made mention of the fact that the numbers do not work out and the fees they are charging now are way more then the present ones being paid. It gos to reason and I think was also mentioned then that the extra was to make the company whole for past fees they had to pay themselves (from revenue which came from subscribers mainly).

I also believe it is all bullshit. I think they should have included it from the beginning and it is the correct place to show it. There is nothing dishonest about it what so ever.

Here if they were being dishonest on this then you have to say they were always being dishonest because they have always included the subsidies they are paying to the OEMs on a monthly basis. Just imagine how low the ARPU would be if they did not include that 5 and 3 dollars a month they pay GM and Ford. Hey isn't that money in that gos right back out???????

My point is, it is stupid to try and now say ARPU is different then it used to be because of these royalty fees being added in. It also adds further gas to a bashing analyst fire like the Street.coms ilk when you bring up such stupid premises. I know they dont care about the facts we are talking about but Tyler should have not played into their hands because while he will see the light on this, they wont and the story will be out scaring people needlessly. Tyler is right most of the time but here he is dead wrong.

[Spencer Osborne]

This could be something we see at Siurius XM. Note that revenues and subscriptions rose, but also notre the expense to do so.

http://finance.yahoo.com/news/Dish-N...&asset=&ccode=

[Spencer Osborne]

I think Charles also made mention of the fact that the numbers do not work out and the fees they are charging now are way more then the present ones being paid. It gos to reason and I think was also mentioned then that the extra was to make the company whole for past fees they had to pay themselves (from revenue which came from subscribers mainly).

I also believe it is all bullshit. I think they should have included it from the beginning and it is the correct place to show it. There is nothing dishonest about it what so ever.

Here if they were being dishonest on this then you have to say they were always being dishonest because they have always included the subsidies they are paying to the OEMs on a monthly basis. Just imagine how low the ARPU would be if they did not include that 5 and 3 dollars a month they pay GM and Ford. Hey isn't that money in that gos right back out???????

My point is, it is stupid to try and now say ARPU is different then it used to be because of these royalty fees being added in. It also adds further gas to a bashing analyst fire like the Street.coms ilk when you bring up such stupid premises. I know they dont care about the facts we are talking about but Tyler should have not played into their hands because while he will see the light on this, they wont and the story will be out scaring people needlessly. Tyler is right most of the time but here he is dead wrong.

The monies paid to Ford do not come out of ARPU per se. They come out of the revenue generated. Thus, they collect $12.95, then from that revenue pay an OEM subsidy. The theory on the OEM deals is that the company will make money on this at some point.

The royalies have always been out of revenue as well. However, the pass-thru was designed as a catch-up. When it started, I had projected a bump in ARPU for the following quarter only to find out that at the quarterly call that the money collected was not included in ARPU. It took me by surprise then, just as the sudden inclusion took me by surprise this time.

I think at this point the company has collected $275 million in royalty fees, and stands to collect another $75 million in Q2. What I was told when they first excluded it was that is was excluded because it was a pass-thru.

given the change again, there has to be a reason for it. perhaps it is the new year, perhaps it is because they have caught up on the costs. However, the point is that ARPU was down quarter over quarter, but the metrics will never show it because ARPU is non-gaap.

It is not stupid to say that ARPU is different now than it used to be because of this change. It is a Fact. It is stupid to paint something in a light that is wrong. If you were to go and restate 2009's ARPU, you will see that ARPU went down, not up.