Big Doings in Satellite Radio?

Well the merger between the 2 satellite radio companies, Sirius and XM, has gone through. How good is that for shareholders? Not so good so far. The stock is down 20% since the closing and sits at a not too sturdy $1.32. Goldman Sachs analyst, Mark Wienkes, last week put a "sell" rating on the company and put his 6 month price target at $1. The guys who are behind "regular" radio say that free radio will always win out because after all who would ever PAY to listen to the radio? But not so fast my friends.

You know back in the early 70s they said the same thing about TV when this thing called "Cable TV" and "HBO" came along? You pay for your TV now boys and girls? You bet your sweet bippy you do. Some of you I bet to the tune of close to $200 a month! The bossman of Sirius-XM is a fellow by the name of Mel Karmazin who ran some big departments in the past. You mightve heard of Viacom? Or CBS? He also just dropped $2mm of his own scratch into the stock. They also have this product coming out called "Best of Both Worlds" which allows subscribers, for an extra $4 a month, to pick and choose the channels they want from both XM and Sirius. Interesting.

Why is this interesting you ask? Well I have my $69 specially designed boom box for XM blaring right now in my home (of course I can also take the little transponder and put it in my car or bring my boom box to the beach or to the family picnic). Yep I'm listening to XM 7 which happens to play commercial free 70s tunes 24 hours a day every day. For this and about 150 other channels one can pay $12.95 a month. But if you pay upfront for 3 years one pays like $9.95 a month. As far as being a customer, I couldnt be happier. As a sports fan, I also get every baseball game and with this "Best of Both Worlds" package, I'll be spending the $4 a month so that I get every pro football game which is on the Sirius network now.

Now we know all of you are smart that read this blog and you are saying, "yeah but you are really happy as a customer and seem to be paying relatively little for a good product. Doen't that mean they are "giving" away the product and hurting the bottom line?" Well yes thats a good observation you smart folk, but if this guy Karmazin bumps the prices a little, I'm still staying. If he also works some deals with ALL the cars sold in this country to have them installed at a profit to Sirius-XM he's going to be on the right track. At $1.32, I'm not as bearish as Mr. Wienkes from Goldman. Let's call me neutral which is something I haven't really said about a lot of stocks lately. Go forth and prosper Sirius-XM, I love it.

Finally, this one and many of his other songs are playing on XM 7 this morning in a tribute to the "Black Moses" himself, the incomparable Isaac Hayes. God rest his soul. Maybe you should go out and find what kind of deal you can get now on a subscription to Sirius-XM. This little clip should get you motivated. Oh and yes for you youngsters, that man in the afro is the younger Reverend Jesse Jackson: 

Comments

[RPB]

Satellite radio is not the same as paying for premium television channels/cable/sat. tv. I do not think you are comparing apples with these two markets.

With premium cable/satellite channels there exists a stranglehold on the content you can view if you do not pay for a prescription. I cannot watch many of my favorite shows without paying for CNMX/HBO/SHOW. Conversely, I have not only already purchased most of my music collection, but I can easily access it through the use of a muli-disc CD changer or a juke box MP3 player. I can already listen to whatever I want without commercials or interuption. I have access to most of the content I want already. And since I've already paid for my music collection (mostly in time spent pirating) I see no reason to pay for it again.

While it is great to be able to listen to any non-local sporting event I want to, I am too cheap to pay for this privledge. Aside from sports radio and Howard Stearn, I see no content motivation to purchase a satellite radio. Also, I'm in the car for only an hour or two each day. And if I am at home I can use my multi-disc stereo or computer to listen to music.

Marketing these radios as an addition to automobiles will attract new users. However, at the end of the day it seems as though most people do not spend enough time in their cars for this to make sense. It would seem more logical to market sat radios to truckers who are always driving and often away from markets where they can listen to/view their favorite sports teams. And aside from that they can just fire up an iPod and listen to their Merle Haggard collection.

I just see a lot of competition for the sat. radios, not the least of which is traditional radio. Then again, maybe I just don't have the vision.

[richie]

KM, thats exactly right. You know big Mel Karmazin might have another gameplan in place. Like, I wonder if my former boss Old Man Redstone over at Viacom would like a piece of this thing that absolutely EVERY customer LOVES. This thing we know as satellite radio aint goin bust anytime soon. Now they may want to pray that Howard Sterns contract runs out sooner but hey it'll be around.

[KM]

I have never heard ANYONE complain about satellite radio. I then received it as a gift for xmas...have in home and car. It rocks. I will never go back to terrestrial radio. A billion different stations, covering all genres of music plus sports and anything else i could want? with no commercials?! ( i hate commercials). NO BRAINER. caveat..i dont know how their biz model is, but as a product sat radio is the proverbial sh*t.

[richie]

Red, I'm not positive what Jesse is doing but I do read lips pretty good. If you look at the clip again right before he hands the microphone to Isaac I think he says, "I'd like the 100s stacked in small piles in a brown paper bag in the back alley at about 10:30pm".

[red]

What the hell is Jessie doing?