Sirius XM's Internet Future Looks Bright

When Sirius Satellite Radio and XM Satellite Radio merged into Sirius XM Radio (SIRI), few people noticed that the word “satellite” had been quietly removed from the new company’s name. Ironically, the founder of Sirius recently made headlines in stating that Satellite Radio had missed its opportunity and that streaming free Internet radio represented the future. She may prove to be right for the wrong reasons.

“Free” Internet radio, as well as terrestrial radio for that matter, first have a huge hurdle to overcome in the way of performance royalties. By their own admission, this “industry” which made a total of 75 million dollars combined in 2008 will fold if it is forced to pay rates similar to what Sirius XM Radio already pays. Internet radio seems to forget that it made that money using products that it did not create and that it does not own. Its sense of entitlement when it comes to pirating the works of others for its own gain is mind boggling, and that is why it’s heading to court.

When the dust settles, Internet based radio stations will be forced into adding more commercials if they wish to continue operations. Terrestrial radio is already proving that radio advertisers are few and far between. Which leads me to challenge those who would doubt Sirius XM’s future.

In recent weeks we have learned that Sirius XM has plans to bring its subscription based service to electronic devices such as the iPod and iPhone. We have seen the company raise both the quality and price of its own Internet service in advance of this, citing royalty rates as the primary culprit. A new promotional event this weekend underscores the company’s desire to expand itself via the Internet. It appears that Sirius XM is quietly preparing for the demise of free Internet-based services, and positioning itself to be the first choice of Internet radio users.

Disclosure: Long SIRI

Comments

[matty3000:]

With the uptick rule coming back and this app release we should be easily above $0.50 by june, right?

long siri

Mar 26 08:04 AM

[Boots2001:]

Yep, but I think 50 cents in April and $3 by summer's end. Don't forget, it may be the super money is done raping the US economy and will turn to the upside to make just as much as on the economy as they did when they tore it down. Oh yes, we all do know the recent depression was not a fluke, it was all planned and well executed. We are such suckers in the US.
Boots

Mar 26 08:38 AM

[Rendog:]

Let's hope the short sellers don't ruin those figures you've put together Matty3000... let's just hope.

Mar 26 10:13 AM

[User 383441:]

3 bucks! I want more than anything for you to be right, but $3 before the end of summer is not realistic. Hopefully it gets to a buck or so, but I would be happy with .65 right now.


On Mar 26 08:38 AM Boots2001 wrote:

> Yep, but I think 50 cents in April and $3 by summer's end. Don't
> forget, it may be the super money is done raping the US economy and
> will turn to the upside to make just as much as on the economy as
> they did when they tore it down. Oh yes, we all do know the recent
> depression was not a fluke, it was all planned and well executed.
> We are such suckers in the US.
> Boots

Mar 26 10:17 AM

[JamesPS:]

I'd like to see SiriusXM grandually gain momentum in the market. Nothing but good new ahead. I would love to see a gradual gain of about .10 to .12 per month.

Mar 26 10:46 AM

[jmsithy:]

3.00 would be great, but there looked like there was manipulation of the stock from 9 am to 10:30 am

Mar 26 10:55 AM

[Neal Barkett:]

Again I would have to say that short sellers will be going by the way side,once this company moves forward. I beleive the worst is over. They have for the most part weathered a huge storm. I'm even noticing articles more & more looking at Sirius Xm from a more positive posture.
Remeber too, the market works off not just the numbers but also off emotion. So when things are bad everyone gets nervious and piles on. Once things start looking better, then everyone jumps on the bandwagon. I see a company that is fine tuning it's content while expanding its outlets to reach more of the masses. They will be offering great content @ optinial pricing to attract almost all levels of consumers. They are no doubt positioning themselves to become one of the largest audio media giants bar none! So when Boots says $3.00 per share later this year, that may be a little on the high side. But he's right about the $3.00 it's just a matter of time.

Mar 26 12:05 PM

[Malkiel:]

Matthews, are you aware that "terrestrial" radio has been using music without paying for decades? It goes back to a very old court case in which the radio industry got a ruling that their playing of music constituted "free advertising" for the music industry. When conventional radio plays a song, it's the songwriters who get paid royalties, hence the squabbling which goes on among famous musicians about getting their name added to songs as the "writer". There's absolutely no reason why the same logic shouldn't apply to internet radio (as opposed to satellite, which is subscription), but there's also the possibility that terrestrial radio could lose its questionable privilege and have to pay under the same model as internet broadcasting. It's a house of cards waiting to fall, but in the end everyone will pay some kind of royalties, and terrestrial radio will not be owned forever by the right-wing radio moguls who have decided to take new music off the air altogether, despite it being available to them for pretty much free. Stay tuned...

Mar 26 12:24 PM

[JamesPS:]

The future is awsome for this company. One thing to not forget, is that SiriusXM will be allowed to raise their subscription rates in another two years.

Think about it the additional revenue! By then, additional exclusive content, fine tuning of the music channels, and higher quality broadcasts will justify a couple dollars in the monthly fees.

Mar 26 12:48 PM

[BerkeleyBob:]

Please don't forget that terrestrial radio in the form of lobbying group NAB testified and threw its weight around opposing the merger of Sirius/XM. Performance royalties as opposed to songwriter royalties are still being haggled over in the context of internet radio. Many providers of internet radio are non-profit or provide extreme niche material (I am sure there is a streaming source for Norwegian death metal thrash). The House hearings on the merger were interesting bare-knuckles stuff. The FCC unconscionably delayed approval of the merger, which had as much to do with the depressed share price of Sirius as short-sellers and/or market manipulation.

Mar 26 02:19 PM

[Satwaves:]

Perhaps you should familiarize yourself with this piece of legislation. Terrestrial radio's free ride is also coming to an end. Thanks for playing!

www.opencongress.org/b...




On Mar 26 12:24 PM Malkiel wrote:

> Matthews, are you aware that "terrestrial" radio has been using music
> without paying for decades? It goes back to a very old court case
> in which the radio industry got a ruling that their playing of music
> constituted "free advertising" for the music industry. When conventional
> radio plays a song, it's the songwriters who get paid royalties,
> hence the squabbling which goes on among famous musicians about getting
> their name added to songs as the "writer". There's absolutely no
> reason why the same logic shouldn't apply to internet radio (as opposed
> to satellite, which is subscription), but there's also the possibility
> that terrestrial radio could lose its questionable privilege and
> have to pay under the same model as internet broadcasting. It's
> a house of cards waiting to fall, but in the end everyone will pay
> some kind of royalties, and terrestrial radio will not be owned forever
> by the right-wing radio moguls who have decided to take new music
> off the air altogether, despite it being available to them for pretty
> much free. Stay tuned...

Mar 26 03:10 PM

[olesage:]

There's a reason this merger was held up longer than any merger in history. T-radio was, and is scared out of their minds. With each passing day the justifications for this fear becomes more evident.

Streaming Sirius over wireless networks, and through devices is a game changer. The future looks bright for this company, however I doubt 3 bucks by summer's end is realistic.

My prediction is by 2014 this is going to be a $20 stock, at least.

Mar 26 04:23 PM

[connorport:]

Unfortunately we will probably see $20 this year but it will come by way of a RS. Don't forget what will happen when Liberty cashes in on their 3billion shares. Lets hope Mel has a plan to trade the soon to be unneeded XM satelites with plenty of change left over to pay down some other debt. RS will happen! Lets just hope its 10-1 and not 50-1. I am long SIRI but the quick up on the stock will level off and we are still looking at delisting while under a dollar. Mel i believe wants the RS.


On Mar 26 04:23 PM olesage wrote:

> There's a reason this merger was held up longer than any merger in
> history. T-radio was, and is scared out of their minds. With each
> passing day the justifications for this fear becomes more evident.
>
>
> Streaming Sirius over wireless networks, and through devices is a
> game changer. The future looks bright for this company, however I
> doubt 3 bucks by summer's end is realistic.
>
> My prediction is by 2014 this is going to be a $20 stock, at least.
>
>

Mar 26 06:39 PM

[Stephen Fra...:]

listening to pandora.com as i write this...

Mar 27 01:34 AM

[Asitoughtobe:]

Waiting for the short interest to get it and cover their shares.

Mar 27 09:55 AM

[mlongj:]

Terresterial free ride coming to an end! That is really the best part yet! I wonder if they have budgeted for this? Probably not!

Long Sirius XM

Mar 27 08:02 PM

[holmesnmanny:]

It's not really quick up, imo. You notice it gradually moving up over the last week or so from .30 to now .38 or so. I think even at the lowest reverse split that they are authorized to do at the moment 10-1, which I find to be strangely high, I think that as we get closer to april d-day(d for delisting), I think that Mel would be best served to request another extension rather than to do a reverse split that could seriously hamper the growth of the stock price, which could easily just come back down from the 3 dollar level(assuming the current 30 cent level stays around).

Assuming that Sirius manages to continue to get even closer to breakeven or perhaps even a 1 cent profit by next earning reportings time, I really think this stock has the potential to get over the 1 dollar mark in anticipation of even better things to come, given the portential value and the threat of great business model offerings within the next year.

At that time, I think a more manageable 5 to 1 reverse split would be more appropriate. As more time passes I really find the 40 percent stock dilution via the liberty agreement to be more and more troubling to all us investors.

On Mar 26 06:39 PM connorport wrote:

> Unfortunately we will probably see $20 this year but it will come
> by way of a RS. Don't forget what will happen when Liberty cashes
> in on their 3billion shares. Lets hope Mel has a plan to trade the
> soon to be unneeded XM satelites with plenty of change left over
> to pay down some other debt. RS will happen! Lets just hope its 10-1
> and not 50-1. I am long SIRI but the quick up on the stock will level
> off and we are still looking at delisting while under a dollar. Mel
> i believe wants the RS.

Mar 28 04:46 AM

[I'm Not Jim...:]

Brandon: Ask anybody under 21 what their favorite radio station is, and they will have only two possible answers. The first will be some local terrestrial radio staion, and the second will be NONE. Sirius is in still in business because they made a great deal with the carmakers to give people something they didn't ask for or want with the cost hidden in the price, and pretty good deals with Howard and Major League Sports. NOBODY, or next to nobody, buys Sirius for the music!!!!!!!!!!!!!!! Almost nobody listens to internet radio because they can get music anywhere. If internet radio disappears because of royalties I can simply line up my youtube playlist and get far greater variation in performances than any radio station could give me. Why on earth do I need to pay for music?
Go trading, go Sirius, but don't buy this stock for your children's college portfolio! lol

Mar 29 11:55 PM

[shure46:]

connoport - yes I think RS is coming too ..... I am not too crazy about the implications of that , but we'll see

Mar 30 11:23 AM

[holdon:]

i n j cramer,
many friend's of mine and myself bought siri sub's. FOR the music content! i run my strata thru a vacume tube amplifire in my shop for a warm sweet sound. some dj's are musicians very knowelageable of the music they play. theres more content than just the music.
example, the sinatra station has nancy sinatra , who more intresting to listen to than his daughter!
my point is, there is much more content than the music itself.
still long ,still holding,still adding !

Mar 30 05:20 PM