Is Sirius XM Positioned for Government Contracts?

| About: Sirius XM (SIRI)

By Lee Culp, Contributing Writer

Since the merger of Sirius and XM radio, there have been many advocates and skeptics about the value of the company’s service. On one hand, you have people who are absolutely fanatical about the quality and content of Sirius XM (NASDAQ:SIRI), and on the other are the people who denigrate it every chance they get, believing it will go nowhere. In the middle are the majority of people who know nothing of the service due primarily to a lack of advertising.

What all of them should agree on is that Sirius XM is a media platform that has a decent paying subscriber base, substantial contracts throughout the automotive industry, and a content line-up that is unique unto its own. It can also be said that Sirius XM has successfully avoided bankruptcy. These factors lead to the logical conclusion that Sirius XM is here to stay, whether or not they continue to grow or suffer.

Many of the skeptics believe that applications like Pandora and Slacker will put a damper on the growth of Sirius XM within the mobile applications realm, or maybe shut Sirius XM down altogether. The advocates believe that because Sirius is the number one music download application on the iphone with over one million downloads in just two weeks, that it will counter and crush the others. The reality is probably somewhere in between – Sirius XM, Pandora, and Slacker will all have a reliable subscriber base, turning profits for all of them. Who turns the most profit seems to be the real argument.

Now, one debate that has failed to be mentioned, and again, one that everyone should agree with, is that only Sirius XM is in a position to acquire lucrative government contracts with its capabilities. Satellite radio is the pinnacle of radio communications, the only one easily capable of globalization, and only Sirius XM has that capability – well, them and the U.S. Government. Now, the government is not in the business of entertainment, but Sirius XM is, and has a tremendous advantage over its competitors with the potential to enter the business of national security through government contracting. Critics and advocates should also be able to agree that not only does the company have the potential, but a tremendous advantage already, as President Obama recently appointed a former Sirius XM board member, Jeffrey Zients as the country’s newest Chief of Technology. Effectively, Sirius XM already has the ear of the government.

Imagine a satellite radio receiver replacing all the clunky, antiquated radios within the military aviation arsenal. This would condense the Vietnam/Cold War era radio packages currently in use into one, nice, neat package, reducing weight in the airframe, saving fuel and maintenance costs to taxpayers. Even the cumbersome survival radios carried by the aviators could be replaced with a sleek, slim version, improving ergonomics and giving our pilots cutting-edge technology to possibly save their lives in a downed aircraft situation. Sirius XM has the potential to become a one-stop shop for aviation communications. The aviator can now communicate worldwide, the taxpayers and government save a ton of money. It is a win-win situation for everyone. This concept can even be applied to civilian aviation.

Sirius XM doesn’t have to stop there. They can also design an earpiece receiver for the National Park Service. Imagine tourists getting a guided tour of Niagara Falls, Yosemite Park, Mt. Rushmore, and the Grand Canyon, all with a little portable earpiece. Stations would be pre-programmed, and one would only have to dial in the frequency displayed at America’s historic landmarks to heighten the sensations of their beauty. This same concept could also apply to sports arenas, the Olympics, or any event drawing a large crowd.

Communications is a constant within all societies of the world, and only Sirius XM is in a position to offer unique entertainment, national security, and globalization. Consider that Sirius XM already has already demonstrated its ability to help victims of natural disasters as an example. It is now up to Sirius XM to seize these opportunities.

Position: Long SIRI