By Steve Garcia
Just days ago, Sirius XM Radio (NASDAQ:SIRI) released its latest version of their internet player. This is one of the benefits of the company finally being completely merged. The company’s online sites have undergone a transformation to one single stop for both the Sirius and XM sides of the service. Additionally, the online player has been upgraded so that one player can be used for both Sirius and XM subscribers. This is just a small sample of things still to come as the company continues to see the definitive synergies it boasted were coming from a merger of the separate companies. Going forward, it appears more significant cash numbers will be hitting the bottom line and impacting the price of the stock, so long as subscriber churn remains anywhere below 2%.
The launch of XM 5 this past October was the beginning of a period of financial, as well as operational, improvements that will more than justify the merger which took place over 2 years ago. XM 5 replaces 2 separate back up satellites as it can broadcast both the Sirius and XM signals for retransmission. Starting with the launch petition of XM 5, Sirius XM also managed to gain permission to reposition its fleet of satellites in the name of better and more complete coverage of the continental United States.
However, the untold story is that in doing so, they have also increased their coverage area. Exactly how much is still a point of contention, but Puerto Rico, Alaska and Hawaii are now fully within the umbrella of coverage with the NAB even recently bringing up complaints regarding repeaters which were approved for use in Hawaii by the FCC on behalf of Sirius XM. Sirius XM intends to launch FM6 sometime late in the third or early in the 4th quarter of 2011.
This satellite will be a Geo Stationary Orbit Satellite (GSO), the first of its kind in the Sirius fleet. All previous Sirius satellites have been Non Geo Stationary Orbit (NGSO) satellites. This will, in simple terms, allow for better and more even coverage on the Sirius side of the house with less signal interference, or fade, as the satellite antennas they broadcast to will not have to reposition in order to maintain signal and communication.
After the launch of FM 6, Sirius XM says there will be no more satellite launches until 2019 or so. This will help the company save a significant amount of money over the next several years, and in the future, as the transition to GSO satellites will reduce the number of satellites the company will need.
Another interesting side note to the recent developments is that subscribers to Sirius XM internet who are premium subscribers for that service will automatically be able to listen to the Howard Stern show. This may have been part of the hold up with Stern’s recent contract renegotiation and renewal. You can read the subscription information here on Sirius XMs newly overhauled website.
It comes as a bit of a surprise but no shock that Sirius XM has not been a bit more vocal about their internet service. As someone who has been following the company and the stock, and has been a subscriber for several years, I believe the internet version of Sirius XM is going to be the first wave of expansion outside United States territory. The addition of Stern, as well as recent short term programming featuring Russell Brand - which ended January 15th, has some significance in the opinion of this author as to the importance of the internet version of Sirius XM. Howard Stern has recently been out promoting himself and Sirius XM on both the Piers Morgan show on CNN, as well as The David Letterman show on CBS television. In particular, Stern was magnificent and surprisingly genuine on the Letterman show, and no doubt has stirred interest in both his show and Sirius XM, to the delight of management I am sure.
There have been so many death notices regarding the demise of Sirius XM they are literally too many to mention. Facts being what they are, it does not seem that Sirius XM is going away any time soon, if ever. The list of competitors/pretenders to take the Sirius XM crown continues to grow, and the fake stories continue to pile up. There is simply no competing product with the exclusivity of content or possible other significant revenue streams out there. Imagine the possibilities and you will see why so many people are passionate about both the service and the stock of the company. If you drive a significant amount of time, you can’t help but like the service, and if you are sick and tired of 40 minutes of commercials and 20 minutes of music or talk coming at you, you will definitely be pleasantly surprised with what Sirius XM has to offer. As always, some people will have a different opinion. Please feel free to give us yours.
Disclosure: Long SIRI
