Liberty Media Would Accelerate Sirius XM IP Platform
Ever since the day Liberty Media (NASDAQ:LMCA) and Sirius XM (NASDAQ:SIRI) became attached at the hip a few years ago I have followed Liberty more closely than ever. As March 6, 2012 approached indicating the date at which Liberty Media was free to make any move they desired many Sirius XM investors began to focus on Liberty themselves. One natural question is that if Liberty were in control would they do anything different.
Up until now Liberty has been very curt, if not respectful in their answer to this question. Essentially stating that current management is doing a fine job with the running of the company. It is the type of answer you would expect when there is an active poker game happening. That is not to say Sirius XM is doing anything wrong. It is simply a case of everyone keeping their cards close to their vests.
The first glimmering that Liberty would enact some changes came when the company requested De Facto control of the Sirius XM licenses from the FCC. In commenting on the issue Liberty Media expressed to their shareholders that they intended to appeal the FCC denial and offer more detail as to what they will be doing with the company. The next hint came this week when Liberty Media’s Greg Maffei spoke at the Barclay’s Global Technology, Media and Telecommunications Conference. During that conference Maffei spoke to Sirius XM’s Satellite Radio 2.0 initiative and the Internet delivered side of the business.
Maffei stated that he had excitement about some of the technology and would likely accelerate the Internet side of the business more so than is currently planned by Sirius XM’s current management. This was music to my ears. I have long wanted Sirius XM to offer a more robust Internet offering. Sirius XM has a lot of potential in this area and can actually offer even more content over the net than they can on satellite. In addition, the Internet side of the business actually allows two way and interactive communication between the service and the company. The possibilities are almost without limits.
While there is a lot to like about current management at Sirius XM, there are some aspects that can be frustrating. Management is so focused on the bottom line that areas like customer service, the number of program directors, marketing, and even top tier channels suffer. Investors may love the cost cutting, but from a consumer standpoint Sirius XM is not an A+ company anymore.
Essentially it is interesting that Liberty Media would accelerate the technologies. I see this as a good thing. Whether Liberty takes control of Sirius XM or not is a matter of opinion, but if nothing else, we know a few little nuggets of information about some small changes that would happen.
I’m somewhat torn when the subject of IP radio is brought up. On one hand, I see the desirability of two way communication and the growing momentum of IP radio. On the other hand, I understand Mel’s reluctance to fully commit, for the simple fact there is little to no money to be made. In the long run, I suppose it would be wise to develop the IP side, especially if Siri is successful in their music royalty battle.
While I understand this reasoning in developing the Internet side of the company, the beauty of satellite radio was to have access to all this programming in your car. A couple of years ago, online programming via your smart phone or other mobile device was attractive as all the carriers had unlimited data plans. However, it appears the trend now is away from unlimited data plans into much more expensive and limited data plans. It seems to me that if the company slacks on continuing to develop the satellite side of things, they will lose the edge that sets them apart from the other Internet providers. Heck, even the paid Pandora plan is substantially cheaper than SXM’s online plan. And SXM doesn’t have a free Internet access plan. I would like to see the company increase bandwidth for the satellites, while I know that is insanely expensive, and continue the migration to the XM side of things. I recently got a new car that is a Sirius based system and now I greatly miss the baseball that was available on my XM-based system. Also, the sound quality on the satellites is substantially inferior to the sound quality on the Internet side and they need to improve that somehow. So my hope is that they continue to develop the satellite side of things or they will lose a substantial edge.
Yeah, i caught that too when I listened to Maffei speak. When asked directly would he change ANYTHING about what SIRIUS is doing, he said that he thought SIRIUS was doing really great, and he was really excited about some of the stuff SIRIUS was working on internet wise and with sat 2.0 at their Florida facilities…. but that Liberty would definitely accelerate the internet aspect as well as market it better. He pretty much hinted what alot of us investors have been frustrated with over the years – the seemingly complete lack of marketing of SIRIUS and their neglect of the internet side.
I have no doubt that SIRIUS has been working on some great stuff like Maffei said…but it’s nice to hear that Liberty would accelerate and help this along.
Sounds good to me.
Absolutely spot on Spencer. Liberty needs to take SIRI to the next level and this would be a great place to start. On another subject, do you still feel the share price will be brought down to crazy pps numbers like $1.78 or $1.65 as certain people suggest? And, if you do believe this pps takedown could be in the cards, do you think it’ll be short term? And why would this happen? There is no fundamental reason.
There are technical reasons why those pps prices could happen. Key support is at $1.83. If that breaks, low $1.60’s is next support