Sirius XM Adjusts Guidance On Loss For 2008
In a bit of good news today, Sirius XM radio has adjusted their guidance on their EBITDA loss from ($300,000,000) to an EBITDA lost of ($200,000,000). This is $100,000,000 better than first outlined by the company, and would seem to indicate that merger synergies, and cost controls are having a positive impact. An adjustment such as this is substantial, particularly during these economic times.
One substantial move that until now has not really been quantified is the savings generated by the changes in the channel lineup. The company estimates that they will save $35,000,000 annually, and while passionate fans of each service have been vocal, there were less than 10,000 cancellations due to the channel line-up shift.
Sirius XM noted that prior to the changes, the company had total production of 130 music channels. The channel changes brought that number down to 67 channels. As things stand now, SIRIUS and XM both feature 69 commercial-free music channels, 63 of which are shared.
For 2009 the company expects $425,000,000 in merger synergies. For the first time, the street can now get a sense of where the company is seeing cost savings. This should help analysts build better models for 2009 and forward. Synergies will be derived from ares such as:
- Satellite & Transmission: $20 mm
- Programming: $60 mm
- Customer Service & Billing: $20 mm
- SAC: $50 mm
- Sales & Marketing: $150 mm
- General & Administrative: $50 mm
- Research & Development: $25 mm
- Revenue Synergies: $40 mm
- Capital Expenditures: $10 mm
These positive pieces of news still do not solve the 2009 debt issue. The company states that they are working with JP Morgan and Evercore in three key areas including operational improvements, existing debt holder discussions, and new investor discussions. The company has a goal of completing all by March 1, 2009.
Position – Long Sirius XM
nice article, thanks for keeping us updated
This is just not a case for a BK. We just need to ride it out. When I first heard that Evercore was highered a few days ago, I was conerned that it was heading towards a distressed transaction. Now that I know that JPMorgan is involved as well, I am a bit more hopeful.
I wonder if the guy at Business Week knew that both firms were involved and only discussed Evercore to be more negative.
BTW, I am not dogging Evercore as a company. I don’t now anything about them other than what is on their web site. Its just that they looked like an M & A company for distressed transactions, that’s all.
Thank you Tyler, but, what happened at the meeting?
Did the Reverse Split win or lose?
Did the additional shares win or lose?
Were any of the executives voted out?
Did public comments bring up the issue of the constant interruptions by DJ’s on Sirius Music channels?
Did the public bring up the fact that Howard Stern has been talking about leaving when his contract is up?
Did anyone discuss how Sirius plans to pay Howard to keep him on after his contract expires or what they plan to do to offset the subscriber CHURN if Howard leaves sirius?
can somebody please post the results of the Save Sirius / Michael Hartlieb effort that was to take place at the Shareholder meeting yesterday?
Did the executives respond to his concerns?
hey “unsophisticated investor” – the meeting is going on today.
No, He failed like always!
Everything proposed by Sirius management and approved by the Board was passed by the shareholders.
OOPS! My bad! I thought the meeting took place yesterday.
Thank you You Know Who!
Well, when it’s over, can someone please post the results?
i.e. What percentage voted against the RS and what percentage voted for it?
What effect if any did the SaveSirius/Michael Hartlieb group have on the meeting?
Is there a link to watch the simulcast online?
All issues passed. See latest article for details
Thank you, Tyler.
I’ll check it out.
Also thank you for doing what you do!