Sirius Xm CEO Mel Karmazin Buys 2m Shares of Sirius Stock
I didn’t think it was possible, but I am actually more excited about this insider stock purchase by Mel Karmazin than I was following the approval of the merger. This could not have come at a better time for Sirius and its investors, as the stock has been in free-fall mode lately.
It has been my opinion, that the company had to do something to reignite investor confidence. In fact, just 2 days ago I wrote that Mel and Company should buy shares for just this reason! This is a huge step in the right direction and should signal that a bottom has been reached and the worst is over. At the very least shorts have been put on notice that company executives are willing to buy at any time. I would not be surprised to see Mr. Parsons step it up himself and follow through as well.
Mr. Karmazin increased his position to 8,500,000 shares. This latest purchase of 2 million shares came at a cost of 1.3732 per share, for a total investment of 2,746, 400.00 (plus commissions). With today’s purchase, Karmazin owns $11.8 million of the stock directly and 33,800 shares through a retirement plan.
Coming just days before Sirius is to release Q2 numbers, this can only be seen as a positive to Wall Street critics.
[ SEC Filing ]
Position: Long SIRI
I agree, Brandon. I’m thrilled Mel took action. Let’s hope a few other company executives follow suit, before the SIRI bashers claim it was an isolated stunt. Company executive at eTRADE did the exact same thing and ETFC went from $4 to $5 within weeks!
Brandon said,
>>>”Mr. Karmazin increased his position to 8,500,000 shares, which he has purchased in the open market.”
One correction with this statement:
Today’s purchase takes him up to 5.5 million shares purchased on the open market, not 8.5 million. The other 3 million in the 8.5 million outstanding total on his Form 4 — is from the stock grant that he received when he started with the company; these shares have been vesting each November, 20% at a time.
Karmazin did an initial purchase of 1.5 million shares on the day he was hired; then did two 1 million share purchases in 2006. This was his 4th open market purchase in the last 3 years.
I’ve estimated that he has (in all) purchased $21.4 million worth of shares — at a cost basis of approximately $3.90/share.
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We need Parsons to step up next and buy even bigger – with his personel stash !
Brandon,
Can you do a piece about the advantages and disavantages of SAT radio going free basing their revenues soley on commercials? Or at least doing what Slacker is doing charging for a premium type service, in our case for no commercials, and free service for ad related stations. That would mean every single SAT radio out there would activated and generating some type of income. I think this needs to be further discussed.
Sirius Investor….
There are a few issues here:
1. Early on XM touted a commercial based service, and felt that the ad revenue would bring total ARPU up by a healthy margin. Some estimate this is one reason XM was so willing to give GM a sweetheart revenue share deal on the subscription side.
2. The license allows for a subscription based service. Going free will see challenges by the NAB. The way around it is to offer some channels.
3. Sirius XM can do what Slacker is doing for their internet service if they so desire.
I had sent Mel a personal e-mail on friday pleeding with him to buy big on the open market with his personal $ either Monday or Tuesday and it appeared he heard me ! Too bad I mostly capitulated early a.m. waiting for the news and had to buy back at 1.44 with my cash, so now I have less shares.
What a disaster this has become for me. Need a nice short squeeze runup to take some gains and lower my losses.
I knew when I sold it was the bottom as I always sell at the wrong time.
Tyler,
So you see this as a viable option? What about a potential revenue number? This must be looked into by Sirius.
SI….just want to add the following to what Tyler said…
Back in July there was a patent approved that allowed the simultaneous transmission of ad free (subscriber based) and ad supported streams.
For arguments sake, lets assume that Sirius intends to adopt this strategy. We would not see radios on the market with this capability for at least 1 – 2 years.
FWIW, Years ago I drove a suburban that had xm capability but only got a few trial channels…I don’t know if this still exists but it may fall in the realm of your question…
Mel is what investing in Sirius first and not Sirius XM Radio has been about. He does believe in having “Skin In The Game”. I will be looking to see who on the management team follows suit. Having Senior Execs follow suit will go a long way to building back Investor Confidence. This is a good sign that the Reverse Split is off the table.
correction …. and now Sirius Xm Radio
Who gives a shit? … it will be back to 1.25 next month.
All Bull Shit
The stock price will be 1.25 to 1.20 mark my word.
the NAB will win BK to 0.01 if that
FUCK MEL and HIS BANK ROBBERS
I could see ads being included as a free subscription service in units that were not captured in initial take rates (used cars). The exclusive content must remain exclusive with maybe limited spots leading up to events as “teasers” being given free with commercials and cut off before the exclusive event, without a commitment of subscription, even six months. It all has to be a part of an overall marketing plan that brings in subscribers to the exclusive content.
oh and before I forget, “Homer” you are the man! thanks for the detail.
Sirius should immediately turn on all SAT radios that have been canceled over the years. Give those radios a few stations to sample for 30 days with ads. Then offer them a $6.99 plan for 90 days similar to the pick 20 music stations only. No premium stations. Then at the end of 90 days see how many stay on. Sirius would need to have an awareness campaign to inform those who have non-activated SAT radios.
Homer,Tyler,Brandon,Anyone –Can someone please explain to me whether a hedgie who bought the 6% converts and then shorted against them, can cover for a profit when the pps goes down and continue to short against the convert endlessly when the stock price is higher, for the term of convert?? Are there any limitations?
Thanks for any insights …
Tyler – I recently spoke to both the legal dept. and investor relations at Sirius to inquire about the legality of ad-supported programming. According to them there were no restrictions on their licenses. To make their point, they even reminded me that they already offer ads on their talk channels. Their main opposition to the ad-supported idea is that they want to promote subscription-positive thinking. They’ve spent millions of dollars trying to distinguish themselves in that regard and want to keep it that way.
SiriusInvestor – I like your suggestions but what would you have them do after the free 30 day trial is up without a sale? Do you give up on that listener or extend them another free trial? If 20% of these “dead” radios get activated doesn’t that still leave 80% of tens of millions of receivers unmonetized? I think it makes sense to offer 2-3 ad-supported channels all the time and a few premium channels that non-subscribers can sample from time to time.
How do you guys feel about the record label idea someone recently proposed?
Ditto Siriusinvestor on the turning back on of the canceled SAT radios. It would cost next to nothing to do plus it would be a great public relations move.
Mel has to start thinking outside the box. If OEM’s are slowing down Mel needs to figure out how to generate income. They may have to adjust their business model. If the service were free, would you still listened to sat radio over terrestrial radio?
Here is my line-up:
All music stations free…most of all terrestrial ad revenue would flock to Sirius.
All talk radio requires a premium.
All live sports requires a premium.
All live music events requires a premium.
Then create different price packages for the above premium events. You will not lose subscribers with this plan and stand to gain every single car listner.
This would be the demise of terrestrial radio as we know it.
I almost forgot. I suggested to Sirius management about a year ago to stream ads once the name of the song was displayed. Once you know the name of the song why continue to show it when you can use that space to generate money.
How about a Sirius discount card to subscribers. Get discounts from the advertisers. $1.00 off at Dunkin Doughnuts, Starbucks, McDonalds, this could be endless.