The last couple of quarters for Sirius XM have bolstered the confidence of many investors, but as always there is still some housekeeping to do, and the company performance needs to be proofed. The company accomplished a little bit of housekeeping last week by consolidating two of their wholly-owned subsidiaries. Effectively, XM Satellite Radio Holdings was rolled into XM Satellite Radio, Inc.

What does this mean to the average investor? At this point very little. The benefits of this move will more likely bear fruit later on. What is happening should be considered a big step for the future of the company. Sirius XM Radio is cleaning up their balance sheet, and simplifying things. It is moves like this that will bring more investors into this equity as their quarterly performance continues to demonstrate that the satellite radio is on the right path for growth and profits.

As with many filings, people tend to read and react without understanding what is really happening, and often this creates confusion, and by extension, a series of e-mails to my in-box. Some even derive extremely complex scenarios by trying to “read between the lines”, when the most logical explanation is often the most simple one. The 8K which detailed this transaction is simple and straight forward. There is no reason to draw conclusions that simply do not exist.

The most popular question I have received is whether or not Sirius XM can now re-negotiate contracts (especially the MLB contract). The answer is that ANY contract can be re-negotiated at any time so long as that ALL INTERESTED PARTIES are open to that type of discussion. This latest move by Sirius XM did not materially change anything in these contracts. With regard to the MLB contract, one only needs to ask what is in it for Major League Baseball? The simple answer…NOTHING. Major League Baseball has NO REASON to re-negotiate. They are being paid handsomely for the current contract, and hold an option to extend that handsome pay-day for another three years at the same handsome payment. Baseball has all of the cards, and would be fools to re-negotiate. Rest assured, Sirius XM has likely sat at the table with MLB more than once regarding this issue, and has always walked away with nothing. Simply stated, the baseball deal will stay exactly how it is.

Housekeeping is a good thing. Cleaning up the balance sheet is a good thing. Neither are very sexy, and neither will drive the price up instantaneously, but BOTH will pay off as the quarters continue to roll by.