On Thursday, Liberty Media (LINTA) made a $1 billion bid for bookseller Barnes & Noble (BKS). While not done, the proposed terms make the deal look as if it is ready to be signed on the line that is dotted. Personally, I am happy.
Unless you live in Manhattan or San Francisco, the notion of a local bookstore on every block is pretty much dead. And, as much as I love Amazon.com (AMZN), I still like looking through the stacks. In Santa Monica, I have access to the greatest public library west of New York City and a Barnes & Noble downtown. I lament the demise of the local, but that's they way things are going, therefore I make the best of it. If this deal goes down, it could have implications beyond books.
Sure, you might be able to pick up a Barnes & Noble Nook on the QVC shopping channel (Liberty has a major stake in QVC), but you might also see more of Sirius XM (SIRI) when you walk into a Barnes & Noble later this year. As you may or may not know, Liberty Media also has a significant interest in Sirius XM as well as seats on the satellite radio provider's board. And Liberty is on record as stating, repeatedly, that it's excited about Sirius XM's long-term prospects.
Not much bad came out of Sirius XM's Q12011 conference call. CEO Mel Karmazin said all of the right things, inspiring such confidence that SIRI has had absolutely no problem keeping a real cushion between its present bullish levels and the key psychological marker of $2.00. If somebody told me I had to come up with something bad to say about the call, I would point to two interrelated things:
- No real details about SatRad 2.0;
- And nothing encouraging on the sales and marketing front.
Neither point concerns me much because I think I know what the Amazin' Karmazin has in store -- SatRad 2.0 details on the next conference call followed by its rollout and an all-out advertising blitz. It will be fantastic because if he's lacked anywhere, Karmazin has failed to really get Sirius XM's name out there into the mainstream. It has made sense to hold off, however, given the cash/debt problems of the past and the idea that subscriber growth has been huge minus enormous outlays for advertising.
Here's what Sirius XM had to say about sales and marketing expenses in its 10-Q:
Click to enlarge
It's refreshing to hear that the company intends to increase its sales and marketing spend. There's no doubt that much of the uptick will be associated with the launch and initial push of SatRad 2.0. I expect a full-court press to accompany the NFL/holiday season. And that's great news if you're long SIRI or appreciate well-done ad campaigns.
What's even more encouraging is the potential that SatRad 2.0 could receive prime placement at Barnes & Noble stores across the country as well as at BN.com. It's all about synergy these days, and there's not a better way to make it happen than for Sirius XM to take full advantage of being part of the Liberty Media family and vice versa. SatRad 2.0 needs to be huge. And front-line exposure in a key national bookstore chain could be exactly what the Amazin' Karmazin ordered. As much as I love WKRP-style free publicity - it's part of what makes radio great - Mel needs more than the fleeting exploitation of Charlie Sheen's psychological problems.
While a Barnes & Noble/SatRad 2.0 partnership is only a possibility, I think it's a pretty good one. It makes perfect sense. There are several ways Barnes & Noble could benefit, mainly through increased traffic simply by having what will be a much-hyped product prominently displayed and by hosting promotional events attached to the launch. "Come See Howard Stern at Barnes & Noble Fifth Avenue."
I took my own advice and went long SIRI. I'll like my move even more if increased exposure via a Barnes & Noble partnership or something else gives Sirius XM a bit more social cache than it has today.
While I outlined several ways to play it for readers, I went with the dollar cost averaging method. My thinking - it's a long-term play for me, as in 5, 10, 15 years burnin' down the road long-term. And while I see the stock price steadily rising - probably past $4.00 by the second half of 2012 - I expect dips and pullbacks. By setting up an automatic monthly investment plan on SIRI, I can close my eyes and hope to take part in the next several legs up. If I want to make things a bit more exciting, I will collect some LEAPS options as discussed in the above-referenced article.
Disclosure: I am long SIRI.