Why Did Adelstein Reverse His Position on the SIRI-XM Merger? 76 comments
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I would like to first clarify that in no way is this article written in support or opposition of the Sirius (SIRI) / XM (XMSR) merger. It is strictly an opinion on the actions of the FCC.
So Wishy Washy Adelstein retracts his vote on the SIRI / XM merger after first setting conditions for approval and then stating that there was room for negotiation of his conditions. I would now like to dissect his statement regarding this reversal.
I was hoping to forge a bipartisan solution that would offer consumers more diversity in programming,
This was already confirmed with ala-carte pricing John. So point number one is irrelevant.
better price protection,
Agreed , a six year price freeze is much better than three, this way the NAB has enough time to dig themselves out of the ditch they are in while you force a company with 5% market share to suffocate under inflationary costs.
expanded choices among innovative devices and real competition with digital radio.
Translation: "By abusing my power I can get the NAB to piggy back HD technology and use Sirius / XM's equipment and money to accomplish it. Talk about a cost savings to terrestrial radio! Hooray for me!"
How mysterious that he retracts his conditional vote just before a press release that Commissioner Tate will probably support the merger under her own conditions. You see, this way Johnny boy still looks good in the eyes of his NAB (ahem) supporters.
John, on behalf of the entire sane wold, I hereby ask for your resignation and deem you incompetent to make the kind of decisions that impact our system of Government. All sarcasm aside, If after 18 months you still have to back peddle and not stand behind your own decision, how can you possibly be trusted? At least Commissioner Copps had the backbone to be decisive. I strongly suggest a new career path John. Perhaps one less demanding; like a Circus Barker.
Stock Position: Long.
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This article has 76 comments:
The FCC's handling of this merger has changed that.
Adelstein should be arrested for his blatant favoritism of the NAB and terrestrial radio in general.
1. Will Tate vote today?
2. How will SIRI react today, will it gain back some losses from yesterday or continue going down?
3. How and when will the 4.6 share merger work?
I wonder who is reasponsable for watching these crooks to make sure they arent abuseing there power. Its so ovious there using it to benifit themselves. why isnt anything being done this country is going down the toilet! We need a fing revolution!
[ED: Comment edited to remove abuse.]
I can appreciate that your comments are opinion and don't have to carry any burden for real proof. But really, you could've done better than to pander to a bunch of ticked-off shareholders (all 100 shares they account for). Look deeper and you may see more nefarious activity to report. This article is just a longer, more public version of a message board rant. Take a look at the rest of your comments on this article. Your fans of this article are the same all-caps crowd that posts this junk all day on Yahoo. No real substance. Just a keyboard vomit.
PS> I apologize for the typo in the article, it will be corrected soon.
We do not.
We CHOOSE to pay for it because we appreciate the content and the characteristics of commercial free radio. Stable pricing for 6 years is irrelevant! If they raise the prices too much, people will leave and go back to free radio. Period. The market and consumer will control the deal. This is not Cable TV where for some it is their only choice for content.
Let's face it, the competitors for Satellite radio are IPOD's, terrestrial radio, and CDs. Heck, my car came with a built in Hard drive onto which I can rip all of my music!
And the programming diverstiy request is bunk. I believe that almost everyone can find something they like on one of the hundreds of channels. Give me a break! If you cannot find something you like - DON'T BUY IT! It really is that simple. If you go to a store looking for a CD of the opera Carmen, and all they have is Rap, Rock, Punk, anc Country, you don't buy one of those genre's... you leave!
The bottom line here is that the consumer will drive the market dynamics of the company post merger. The NAB is scared, otherwise why whould they have spent so much money trying to squash this deal.
The political pandering bribery that has gone on behind the scenes (and not so behind the scenes) has been despicable. This has truly been a shining example of how our system is broken and corrupt.
Dr. Remulac, The reason there are such comments on these boards is simple and something you would have not seen, if the FCC and the DOJ would have done there jobs better by stoped playing to the political pressures that were there and are still there. this decision should not have taken this long. I for one, would have been fine if both would have said no, 9 or 10 months ago. For the DOJ to have come to the decision they did shows that that decision should have come way sooner then it did. As for the FCC I will not even get into that one. But investors have a right to be pissed at these to departments, I have a feeling though that once a decision is reached that is favorable to the companies then most will drop it just has they did with the DOJ which in my mind still did a terrable job.
France, (I know..It's France) just approved rewritting their constitution to bring it up to date. Why in this modern world do we have to have people with their hands in someone elses pockets making decisions for taxpayers? Enter all the data into a computer and let it spit out some answers that at least have some logic behind them. As much time as this is taking, it could have been voted on by the public. We would have had less forked tounge debates from Sat Radio and Terres Radio then we have from those seeking a vote this November. The Boston Tea Party was a wakeup call. What do we need now? Common Sense would be a great start.
[ED: Comment edited to remove abuse.]
Merrill Lynch analyst Jessica Reif Cohen issued a report today on Sirius and is bullish about the sector. Cohen, a media analyst is highly respected in the field, and likely offers insight from a media perspective. Of note, in the late 90’s, Cohen once called a stock price of $50 for CBS when it was trading at $18. One year later CBS surpassed the $50 mark.
Cohen sees the OEM channel as a growth story for SDARS and states in her report, “satellite radio is well on its way to becoming standard in new auto production.” She projects that installations will climb to 50% in calendar 2008 and to 85% by 2013, thereby yielding double digit growth despite plummeting OEM sales. Cohen notes that while sales of cars will be down in the neighborhood of 14% in the next couple of years, that a 66% growth in installations will still be a NET positive for SDARS.
Cohen maintains a BUY rating on Sirius and is raising the P.O. to $4.50 from $2.70.
Catch SiriusBuzz Radio Live On Thursdays at 9:00 PM EST
Tyler Savery Position - Long Sirius, XM
Mudslinger is right, positive comments have no impact, whereas negative comments devastate the stock price. Once again my assertion is:
There is no faith in these companies by anyone other than a bunch of small-time investors.
I'd like to start throwing blows at this point!
Injustice? Outrage at government abuses or games? Here are two ideas, there are plenty more: How about putting that energy into protecting soldiers who are effectively abandoned by our government when come back from Iraq and can't get proper health care or financial support for their sacrifices. Or fighting credit card companies that, due to loosening of govt regulations, charge default interest rates that were once considered usury; government collusion with industry to tap your phones. Those are real problems that affect real people, not just SIRI investors.
Stop whining. It's the stock market. Things happen. Deal with it or buy mutual funds or something instead.
I have enough spine to know that whining a crying "but mommy, it's not fair" on a forum is meaningless.
Where's your spine, bradley010a? Please tell us about the congresspeople you wrote to, and how you persistently followed-up until you got a real response instead of a form letter; or about the demonstrations or petitions you organized and delivered; Or other real, concrete actions you've taken to display this prized spine of yours.
You made your point in an earlier post (here are your exact words):
"I whine about those things on other blogs. I can whine all I want about Sirius on this Sirius blog."
Is *that* what a spine is about? Anonymously whining?
This is an issue that effects not only shareholders, but could be a bad indicator of how things in gov't are run for the future. If the gov't abuses their power to keep out competitors with greater technology, quality, efficiency, new technologies, and innovation, to protect one company's market dominance we step closer to a socialist state or dare I say, dictatorship. All innovation and motivation for better products are stalled because nothing will be worth the effort to pursue. If revolutionary products introduced to the market are killed because of gov't incompetence or corruption after all the hard work, sacrifice, investment, and innovation because they threaten 5% of a complacent company's market dominance, we will be in a truly troubled America. The socialist state or dictatorship may be a dramatic example, but we would only move closer in that direction.
You are right about the other larger issues, but this is not the forum for that. If the gov't can not handle a small issue like this one, be it incompetence or corruption, how can it even begin to tackle the major issues? I ask this on all the blogs, "Can anyone truly have a monopoly on audio entertainment?"
jmb476 -- Yeah, you're right about alot. But, I disagree with the evils of govt regulation -- Enron, banking and credit card abuses, airline failures, etc. -- I'm old enough to remember when these were properly regulated industries. They made their profits, and consumers weren't abused too badly. And about the loses of small investors -- Look at how long it took to help small mortgage holders, and that's a national crisis. Will anyone in power really pay attention to the abused SIRI investor?
Let me guess...A podiatrist Doctor!!!!!
Hair Pie, I agree with 163888 that your name is tough to type without LOL. More seriously though, you have picked a great product company to subscribe to, but a painful company to invest in for your first stock investment choice. I do think that if you can afford to sit back and observe all the extraneous factors that are affecting your company's stock price, watch the company not these factors as it executes it's business plan, and ignore all those who protest to much of this company's demise, you will be happy with the result in 12 - 18 months. (at times, sooner) If all you want to do is try and play this company's stock price on a daily or weekly basis, spare yourself the misery. Look at the postings on this board by folks who have invested money for a long time to see what I'm talking about.
Just for a laugh!
You know what I keep thinking and I can't help but laugh when I do is, after this is done and in 6 months when all is settled down. I just keep picturing Mel standing at the head of a table and slapping his hands together (once) and saying OK now that that is done, I have an idea we should merge with????? Dont get me wrong, I would *NOT* personally be in favor of it. Something about getting 1 share of that company for 50 of SIRI bugs me, especially when I think the value of SIRI will go up faster then if I had that company. I just cant help but remember what he did before and as fast as he did it. Plus the vision of that just cracks me up everytime. I imagine How the other people in the room are looking at each other, with eyes poping out of their sockets, hands going over their faces as they slam their heads to the table crying. I dont know, I have a good imagination so it may not be that funny to others, but I laugh every time.
The long awaited conclusion of regulatory purgatory that began on February 19, 2007 for Sirius, XM and their shareholders is over. The merger was officially approved when the consent decree was signed moments ago. As advertised, the commission vote fell along party lines with a 3 - 2 split decision.
I thought you knew that is why I said: The nightmare was over now we can get to the real growth, sorry.
Depends on how fast the first lawsuits are filed, probably 9am Monday.
The roller coaster hasn't returned to the station just yet...
First lets go over the concessions.
1.)Turning 24 channels over to non-commercial and minority programming.
I know many think this to be the worst of them. I actually think it is one of the best. The reason is simple, from what I have read and understand SIRI and XMSR both already have most of the channels that comply with this. So one of two things happen both are not so bad. One is SIRI/XMSR do not have to give a full 24 channels up anyway. The second one, is the better of the two though. Because they already have many of these channels they can stop carrying them and let the Public Knowledge and minorities pick up the cost for the content. The best part is that as I understand, The enities dont pay anything for the lease but have to pay for their own content, and people still have to subscribe to get them. So in the end while the quality will go down on those channels, because of the need for more commercials to pay for the content will go up. It will actually save SIRI/XMSR money that they would have had to pay for at least 12 out of the 24 channels (that is being conservative).
2.)Three year price freeze
This is not so bad ether. Lets face it, if Mel could afford to keep the prices down he would he knows there is only so much the masses are willing to pay for radio. That is why I believe this is not even really a concession. They would do this anyway if they could.
3.)Open Access
Who here, would really think this is even a big deal at all anyway. I dont know if most know this, but manufactures are not breaking down SIRI/XMSR doors to build satellite radios. Even if they were, I am sure Mel is going to make dam sure, it is at the very least not harmful to satellite radio. As proof look at the concessions he was able to get.
4.) A-La-Carte pricing available within 3 months of deal closure.
I posted on this before this is what I said about that:
Here is a thought, How many subscribers do you think hold both SIRI and XMSR right now, and are paying the 25.9 each month for both. I have to say, I think the percentage is very very low. Now how many subscribers do you think that have had all the content that they have been exposed to from ether SIRI or XMSR would go down to the 6.99 subscribtion that really only offers music channels. I think that percentage is very very low, as a matter of fact if they would go for that package then chances are there is a big percentage of those that would have (churned out) left anyway. Now how many people that pay 12.95 a month to get one would not mind paying 2 or 4 dollars more to get the SIRI/XMSR you have now plus the best 13 channels from the other. IMO, The al la cart will not only lower churn, but may actually bring up the ARPU. Give them a year and then you will have another price point that will offer, access to both full services, for some higher price.
Here is an example I think we all can agree with: How much did you start paying for your cable/satellite tv when you first got it. Now how much are you paying. I would be willing to bet most have upgraded to the extra package and are now paying more then they did when they first started it.
All I am saying is when you here analyst say the al la cart is going to bring ARPU way down think about what happen to your cable/satellite tv bill. Just a piece of common sense. I also believe Mel Karmazin has thought about it to.
5.) have to have a interoperable radio in 9 months.
Ho no, you mean that they are going to have to put out a radio, that when it comes out, (the sooner the better) will start the big savings and profits for the companies.
6.) Have to provide service to Puerto Rico.
I think that one speaks for its self, if you ask me. Sure there are cost to the towers but in a population of over 3 million plus it being a tourist spot. I think they will be able to find enough people and hotels that are able to afford a satellite radio subscription, to more then pay for the towers.
So there you have it, there they are, all the big bad concessions. Maybe someone can tell me, where are they all that bad, because I just dont see the big down side.
These concessions are one reason, I would get so pissed at people that put Mel Karmazin down. That he was not worth the pay cut he took to come to SIRI.
Next I was rushed the last time I started to write about just how big this is going to be. Now I am just tired. So I will make another quick reason, why I think this is going to be big. Mel did not take a pay cut and come to a smaller company to just sit back and bide his time til retirement (he is not like me LOL). He could have done that anywhere and made more money to boot. I beilieve he came to SIRI with this merger already planned. He is by far no fool, and he could see the slow death of terrestrial radio coming. I believe he came to SIRI to become a even bigger legend then he already was. He in one fail swoop has control of more spectrum then all the terrestrial radio stations combined. He will be running a media giant almost over night. When you consider how long it took all the other terrestrial radio companies to become as big as they are today. He knows that if internet radio does ever become a real business that SIRI/XMSR will be the best posittioned to take advantage of it. The biggest reason is simple internet has to do something that terrestrial doesn't pay royalties. You think terrestrial has alot of commercials just imagine how many they would have, if they had to pay for royalties on top of everything else. the same problem will be there for the internet radio companies. They will have to start to go to a subscribtion base business model. Well SIRI/XMSR are going to have a hugh jump on them. Think of how much it cost SIRI/XMSR to start up in the beginning. I will just say it is not going to be easy when SIRI/XMSR are the 300 lb gorilla, which already has alot of the people that are willing to pay for radio. The well is going to be shallow by the time internet can even become a viable player. Just some common sense with some speculation tossed in.
Got to get some sleep. Talk to you later.
Not that I think what happens to the stock is all that important in the next two weeks, but I know a lot of folks do. The stock can only move up. Why would you dump shares now? That happened last week. A little patience even in the short run will get us to 2.90- 3.10, an old technical channel (4 -6 months ago). Then the company will let out the PR dogs, "Retaliate Against" legal issues (because now they can), give meaningful future guidance, introduce new products and details on what you'll be able to do with existing equipment, and report good third quarter retail results because of all the pent up demand. The fourth quarter will be all about "Inter-Operable" Radios and "Where can I get One?".
Pop or Drop? Where do you think this stock will be on December 31, 2008, 2009 ??