Sirius XM Radio (SIRI)

Sirius has been making strides working with automobile manufacturers to put Sirius radios in cars and will see subscription counts and revenue increase as many of its deals go into effect over the next few years. It will also add a substantial number of subscribers as NFL and NASCAR fans sign up for service in order to closely follow the respective sports seasons.

The $25 Billion that the government is putting up is actually not a true bailout, it is a loan. A quote from the article: “… the loans would probably amount to at least $5 billion for each of the Detroit 3, plus smaller amounts for suppliers.” Is Sirius XM considered a supplier for the automakers? I would sure consider them one, but then again, this is the government we are talking about, so who knows. If in fact they do fall under this provision, it would allow them to borrow money from the government at interest rates as low as 4%. How much would be available to them is another question. This could be one possible way for Sirius XM to refinance at least a part of their upcoming 2009 debt.

Regardless, the automakers having a nice infusion of cash will allow them to produce better and more fuel efficient cars and sell more cars, which would definitely be a win for Sirius XM.

Sirius XM reported a total net gain of 83,000 subscribers and a 22 percent reduction in operating costs during a mid-March conference call. The fact that Sirius XM added to their subscription base while all other satellite company subs. declined bodes well for the financial future of SatRad, in particular SIRI.

The company is displaying such confidence in its ability to succeed as an 'ongoing concern' that it recently offered a "Lifetime Subscription Discount".^[1]

SIRI will rise again, just as it has done so often before. The trajectory for the stock will follow their satellites to ever higher orbits!

Ken Michael Zappala - San Diego, CA

1. ↑ Sirius XM offers lifetime subscription discount

Compared to "terrestrial" radio, the ability to have commercial free radio with dedicated sports, traffic and music channels, will eventually take-hold and take-off.

There will be a lot of people paying $3 or $13 (depending on the package) instead of purchasing a satelite receiver for the car. The Iphone can be hooked up with an AUX cable to any car radio. The application will offer 120 channels of sports, talk and music. What is concerning is that Stern will not be available as part of this package. Could SiriusXM be working on another application seperately? Only time will tell. Another huge step for SiriusXm is Toyota installing the receiver at the factory

Mel's reputation seems to be in the gutter. However, most people fail to realize that Sirius XM's CEO is doing the best with the resources available to him. When most investors (including professional analysts) turned their back on SIRI during the Company's recent debt negotiations and the stock price dropped, true believers were given the opportunity to snatch up these undervalued shares in the style of a speculator. The point being that underestimating Mel's business experience was a costly mistake made by many investors. The lesson to take away is that due diligence does not exclude the confidence earned by a successful CEO in a tight spot.

Liberty Media Corp. (LCAPA) will acquire two board seats and as much as 40% of Sirius XM Radio Inc. (SIRI) in exchange for $530 million in loans. The deal creates a satellite-media juggernaut combining DirectTV Group Inc. (DTV), the largest satellite-TV provider, and the sole U.S. satellite-radio operator.

The deal also marks another chapter in an ongoing saga featuring John Malone, Liberty’s CEO, and rival Charles Ergen, the satellite-TV pioneer behind Dish Network Corp. (DISH) and sister firm Echostar Corp. (SATS). The two have occasionally worked together but are major competitors in satellite, as they were when Malone controlled cable-television company Tele-Communications Inc.

Under terms of the agreement, Liberty would provide a $280 million senior secured loan to help Sirius repay $171.6 million in convertible notes due yesterday (Tuesday), which are owned by Ergen. At a later date, Liberty would provide another $150 million loan to XM Satellite Radio, Sirius XM’s wholly owned subsidiary, and purchase up to $100 million of XM’s credit facilities, according to Bloomberg News.

The loan will pay Liberty a whopping 15% interest rate and mature in December 2012. When the second loan is completed, Liberty will get 12.5 million shares of preferred stock convertible into 40% of Sirius XM common stock.

The deal allows Sirius to avoid bankruptcy and a major shuffle of talent. A bankruptcy filing could have threatened contracts with such luminaries as Martha Stewart and Bob Dylan, as well as the company’s five-year, $500 million pact with Howard Stern.

Sirius has never been profitable, mainly because it was burdened with massive interest payments on its debt. After acquiring rival XM in July, it was hit hard by the credit crunch and poor auto sales - its main distribution channel. Sirius XM has about $3.25 billion in total debt.

“Sirius is in the process of getting out of the woods because Liberty is putting up a lot of money," David Joyce, an analyst with Miller Tabak & Co., told Bloomberg News. “It shows that Sirius will be around for a long time."

Malone and Ergen, who have been fierce rivals over the decades, were again pitted against one another by Sirius Chief Executive Mel Karmazin to save the company he formed just seven months earlier.

In 2003, Ergen abandoned a bid for DirecTV’s then-parent company, Hughes Electronics Corp. because he couldn’t get regulatory approval. Malone gained control of DirecTV last year after buying out Rupert Murdoch’s News Corp.’s (NWSA) stake. Ergen’s Dish Network had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million.

The Liberty deal came after recent efforts by Ergen to acquire control of Sirius by purchasing its maturing debt, following an unsuccessful takeover bid in December, according to the sources cited by Bloomberg.

Ergen, a former professional gambler, bought the majority of a $300 million batch of discounted Sirius bonds that came due Tuesday. The company, said Feb. 13 it might have to file for bankruptcy if it couldn’t reach an agreement to restructure the debt.

Ergen offered to restructure the debt and invest several hundred million dollars into Sirius in exchange for control of the company. That plan was scuttled by Liberty’s “white knight" move, which allows Karmazin to keep his job as CEO.

This is a product that the world can enjoy. It is neither national nor international but global with limitless possibilities worldwide.

In response to an article currently featured in the bears section of Sirius, Rick Munarriz weighs in on why he is still Bullish on Sirius:

See the full article here: http://www.fool.com/investing/high-growth/2009/04/06/im-still-bullish-on-sirius-xm.aspx

"If I was bullish on Sirius XM Radio (Nasdaq: SIRI) last week, Tim Beyers' bearish argument only helped speed-dry the concrete for my freshly poured optimism.

I don't think that Sirius is a perfect company. It has some serious debt and dilution concerns that worry the heck out of me come 2010. However, if my buddy Tim's pessimistic outlook is as bad as it gets, Sirius XM is going to have no problem coasting higher."

Citi analyst Tony Wible issued a report on Sirius’ financial results Thursday, August 7, 2008 citing a bullish outlook for Sirius on grounds that “Operational results were strong as revenue came in ahead of our original expectations while costs were lower…”^[1]

Furthermore, possibly giving ARPU a boost is new "Best of" program that Sirius launched October 6, 2008. The “Best Of” service will enable subscribers with legacy receivers to hear certain programming that is from the other service as a result of either the Sirius service or the XM service broadcasting content from the other carrier to the legacy receivers for a fee. The company selects the “Best Of” programming, not the consumers. One popular assumption is that Howard Stern will be made available to XM subscribers for an additional fee above and beyond the existing XM service.

1. ↑ Full Article of Discussed Anlaysis

The best reason to have Sirius XM is Howard Stern. You can say what you want about Howard, but there is no doubt that show is funny.