Open Letter to Sirius XM Radio 30 comments
-
Font Size:
-
Print
- TweetThis
An open letter to Mel Karmazin, Director and CEO of Sirius XM Radio (SIRI).
****************************************
Mel, I want to help you.
Wall Street needs a visionary here, and not just a simple operator and number cruncher. Those skills are great and they are necessary, and thank you for excelling there. But you need to make your case now, before all the re-financing garbage about where you are going and where you want to take this company. They want to know how you plan to grow it besides simply putting it in more autos.
My major concern is that you understand these points and get the message that you need to walk the walk now. People want to know that you get this "vision" thing.
I've outlined the following points and I'd be happy to offer elucidation as I have flushed them all out. But you have got to step up and show people how this company has a vast and varied future across multiple verticals. Every time you open your mouth, the stock goes down, and that absolutely has got to change and soon. You need to start making these points immediately. And if you are not currently pursuing each and every one of them (in some form and at some stage), then you do, indeed, need help.
- Look fervently to add a music library component from the combined entity that dwarfs the iTunes (AAPL) selections with minimal additional royalty arrangements. Look for high end tiers that will include 2 or 3 free downloads / month with your subscription. The library will be open to anybody for $.99 / song. I want you to reference the article from the WSJ published on August 28, 2008 entitled "More Artists steer clear of iTunes". It was front page on the marketplace section. Mel, you need to embrace these artists and create a library that they are all proud to belong to. It's not necessarily going to be about making money on the library. You break even there and concentrate on driving more subscriptions to your service. You can beat iTunes by taking the artists away from them, getting good musician PR, and offering a much better value across verticals to your consumers. This one step is and absolute no-brainer.
- Develop a clear and comprehensive strategy involving branding and a huge retail push across new hardware for the upcoming holiday season. Start the press releases NOW! It's September already
- Let it be known that this service will soon be re-invigorated on the desktop with new Operating System software. OEM loaded software should enhance the capture and delivery of streaming across devices such as the new handsets from Nokia (NOK) and Samsung, extending its reach over multiple platforms. Forget about the iPhone. You must partner with Microsoft (MSFT) here and get this done. The iPhone will need to come to you by default once you get out in front on this and drive your service.
- Include with this desktop software a Pandora-like option, connected to the new library. Have a structure that is either advertiser sponsored or subscription based. This is not a hard software program to write. Again, Microsoft will be your best friend here, and not Sony (SNE).
- Challenge Clear Channel relative to concert promotion and on demand broadcast of concerts nationwide. Both live and recorded. Develop common ways to share revenue with the artists regarding downloads of entire venues by offering this pay-for-listen service. This step is as huge as the number one point, and I would recommend doing a major live concert broadcast as soon as you can, working with the artist to facilitate sales and downloads. Again, just breaking even provides a huge boost to the brand here. Another absolute no-brainer.
- Expanded video offerings and GPS inclusion in new car installs. Make your product more robust.
- Look to expansion in Western Europe beginning with Britain in 2011 / 2012. A longer term vision, but absolutely huge. Develop a relationship now with Branson and Virgin that will enable him to be your partner in that country. He is a definite possibility to supply reasonable debt refinancing for your due convertibles, if this is a business opportunity that makes sense for him. And it will.
- Also look for Sirius TV, which will be a show created for cable and the web that covers Sirius and all of what it is up to. It will include special features about artists, the industry, the studios and the glitz. It needs to be more encompassing than what you offer on your site currently. Paid for almost entirely by brand placement and promotion, this does not have to be a fancy production.
- Also use cheap guerrilla locally targeted marketing for innovative infomercials. A much better use of your advertising dollar, and production costs should be mitigated by using content and services from the Sirius TV endeavor.
Don't be afraid to show your VISION, Mel. Drive the brand and drive subscriptions through innovation and the use of available verticals.
The market needs to hear it and see it. And they need it now!
Disclosure: Author holds a long position in SIRI
Related Articles
|
Find People on SA
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largest
increase in followers
in the last 7 days-
1
David Fry
-
2
Philip Davis
-
3
Bill Gross
-
4
Tyler Durden
-
5
TraderMark
Fastest Climbers » -
1
-
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most activeSee all
Instabloggers.
Top Instabloggers » -
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 30 comments:
What a horrible waste of a company that could have been an example of success, rather than being relegated to a black mark on the biography of a "near do well" CEO.
The PPS of this company is not consistant with other companies in the same position, given the infrastructure of their revenue generating engine.
This fact is going to end up in the text books, and be a legacy of the company when they speak of how this company got delisted, and placed in Chapter 11.
I sure would not want to be a principal in this company when it goes south and someone has to account to the big players.
messages.finance.yahoo...
FWIW, this is not true. Karmazin stated that the NAB was shopping for a friendly Judge. Here's what this means...
If Sirius and XM took their time to close the merger -- then the NAB could have filed a quick appeal with the FCC or the Court of Appeals and at the same time, found a "friendly" Judge to issue a temporary injunction -- which would have prevented Sirius/XM from closing the merger until the Court of Appeals reached a decision on the NAB's appeal.
I speculated that this could happen quite a bit (before the FCC announced their decision and after). The NAB's goal was to slow down the merger as the process was killing these companies. But the NAB could not file an appeal until the FCC announced their decision. And if they hadn't closed the merger yet -- they could get a Judge to issue an injunction preventing it... and they'd still be sitting there today... waiting. While they'll likely win the appeal regardless, the continued waiting would continue to harm the companies.
They had no choice. Take the financing that was in front of them and close the merger as fast as possible... or still be sitting there today. And from what I hear from one of my contacts -- a portion of the XM financing had an 8/31/08 expiration date on it... had they not taken it and closed before that date, it was gone.
So I do not agree with your statement that the NAB had plenty of time; and do know that Sirius had no choice but to take the financing and close quickly.
---------
If I were running this company, I would restructure the balance sheet by entering bankruptcy, abandon subscription pricing, move to have ALL radios have XM band, and generate revenue through advertising on the stations.
Basically, I would be trying to get XM added to every radio manufactured and sold in the US. Forget about doing deals with the auto companies, go directly to the radio manufacturers so they add XM to every AM/FM radio made.
As long as they hold to the subscription model, this concept will not reach enough people to make a go at it.
The above open letter makes alot of sense! What is SIRI waiting for---a tank down to .25 per share??? Its time to crap or get off the perverbial potty Mel...
Access to music from the internet, if you made it ossible to purchase a song you heard on SAT. radio; you would be one step above apple!
First, in this case, one cut and paste certainly deserves another (Joe, please read this...below are Mel's credentials--what are yours? Believe it man, he doesn't need your help. In addition, I think he knows a little bit more about radio than you do):
***************
Mel Karmazin
From Wikipedia, the free encyclopedia
Melvin Alan "Mel" Karmazin (born August 24, 1943)[1] is an American business executive. He co-founded and was the president of Infinity Broadcasting and eventually became the president and chief executive officer of CBS. As of 2008, he is the CEO of Sirius XM Radio.
Born in Manhattan, New York, Karmazin was selling radio ads at the age of 17.[2] He graduated from Pace University with a bachelor's degree in business administration[1] and worked his way up from the bottom rungs of the radio ladder in New York City.
Karmazin presided over New York's WNEW-AM and WNEW for Metromedia when he was approached to run Infinity Broadcasting in 1981. Soon after he would add fellow New York stations WKTU-FM and WFAN into Infinity's stable. WFAN morning talent Don Imus often referred to Karmazin on the air, never by name, but by the nickname "The Zen Master".[3]
Karmazin ran Infinity for 15 years, then sold the company to Westinghouse, then parent of CBS. For most of his career he has been known as a "Wall Street darling" for his ability to drive up the price of his various companies' stock. "The joke about him was that he was so pushy that advertisers used to buy airtime from Mel just to get him out of their office," according to a Fortune magazine article.[2]
When Infinity merged with CBS Corporation in January 1997, Karmazin would first head CBS Radio as chairman and CEO. By May of the same year he would become Chairman and Chief Executive Officer of the CBS Station Group, overseeing the network's radio and television properties. He served as President and Chief Operating Officer of CBS Corporation from April of 1998 until January of 1999. Viacom, a media conglomerate that includes CBS, UPN, MTV, BET, Comedy Central, Paramount Pictures and Showtime, absorbed CBS Corporation as of 2000.
As an executive of an even bigger conglomerate, Karmazin and Viacom chief Sumner Redstone had many differences, leading to Karmazin's resignation in May 2004.[4] Karmazin later said he didn't get along with Redstone and found it difficult to be "No. 2" at a company, but particularly under Redstone. The two executives continued to snipe at each other through the media even a year after Karmazin left Viacom.[2]
Karmazin accepted the top job at Sirius in November 2004. He was a strong supporter of radio disc jockey Howard Stern at Viacom,[4] and Karmazin joined Sirius Radio after Stern did.
In his first year at Sirius, Fortune magazine reported in November 2005, Karmazin reached deals with Ford and BMW to include the company's radios in their new cars and helped launch Sirius's first portable music player (both initiatives were in the wake of Sirius's rival, XM Radio, pioneering those moves). He also recruited Martha Stewart to Sirius, acquired the programming rights to NASCAR, and raised $500,000,000 in debt financing.[2]
Karmazin has been inducted into the Broadcasting Hall of Fame, the Radio Hall of Fame, a recipient of the National Association of Broadcasters National Radio Award, and the IRTS Gold Medal.
****************
With all due respect, kt, many of us longs are glad you are not running the company...
Mix in Homer with the rest of Relm, and there you have it. Let's face it, one of the hardest things to watch is a stock freefalling (when you also know you own it and are losing money. As tough as it was at the time to hear Cramer speak the truth about the stock headed south due to the short connected to the financing, he was right on (obviously, he's seen and done it a thousand times--right from the Wall Street 101 playbook). So as Cramer put it, there was no compelling reason for him to recommend the stock (then). He knew it was going to a buck because he knows people. Many of us do not know the same people he knows--who were all privy to "the plan." (Btw, this doesn't necessarily absolve Cramer from guilt of being obnoxious and misleading much of the time). Unfortunately, back then it was hard to hear or to see the bigger picture due to the cloud of uncertainty (as any long watched their portfolio continue to shrivel). As Relm outlines, it has eventually all become clear as to what "the plan" was and is. The last piece of the puzzle was the "after Labor Day" news (lowered guidance). Another sign was Mel's stock purchase @ 1.37. He wants to make some coin on the way back up too, but it just wouldn't look too cool if he bought at the low (and under a buck). Though he knew the stock was going lower briefly, buying when he did was strategic. And it's also easy to see that his "rally" efforts were basically all part of the show--he's (they've) known all along how this was going to go. So my advice for anyone still holding shares is: you own a ticket to an E ride--sit back, chill and enjoy the ride.
As I have said here before, first, it hasn't even been 60 days since the deal was completed--can people give the company a little time to do their thing? Jeez. Second, the plan was set--Mel even said on the Cramer interview, the financing was ugly, but it had to be done. And it as Mel essentially said then too, it was done, but there was already a strategy in place to correct it going forward. Again, please give this company time! They know EXACTLY what they are doing. Do any of you really think they would have done this deal and just "hoped" they wouldn't spiral into BK? Come on, man! If you really do, please read Mel's credentials I have provided above. I'm not here to rip anyone, but if that's case you also have no clue how Wall Street works. Another part of this is that look back at any leveraged buyout or acquisition in history (even all cash deals). The leveraging company always takes a decent hit to their stock price due to the short related to the financing (which acts essentially as further collateral against the debt) (or as in all cash, the hit to their balance sheet--which creates an easy shorting opportunity for the hedges). Wall Street 101. Hang in there longs...TIME is the answer!
At this point, do you really think SIRI doesn't have a pipeline? What I'm reading from posts here is SIRI is just happy being a stagnant company--which in no way can be true. That's never been Mel K's M.O. Don't forget, their main focus has been on content and recruting top talent lately--which costs money (and which for the time being may limit what they can do with hardware upgrades, etc). You can't do everything at once. Considering Mel's background, he's no stranger to partnerships and creating synergy (read his bio)--and he's no stranger to knowing what it takes to grow a company--he's done it several times on major scales. As I have said, this has been the year of the merger for them--this is where their focus has been and those delays helped create delays in them moving forward. Now that the deal is done, they will have nothing to do but focus on growing the new company. Regarding that, not only do I think they have a pipeline stocked with ideas (similar to what is mentioned in these posts but done by their own thinkers) but I also have to believe between the new XM creatives that have just come together with the existing SIRI's, that there will be even more new things on the horizon that will move the company and the stock. Again, remember that they have been concentrating on recruiting top talent the past few years, which they have done successfully--all the while raising their subscription base, EVERY Q, without fail. You also have to remember the current stock price is due to the merger, not lack of vision--looking at their YTD will tell you that. The next generation SATRAD bells and whistles, deals and partnerships are what's next (certainly not bankruptcy!). As for the present, because of a complex merger done in the very hostile business climate of today (for all companies btw) none of the "ideas" listed today (even if already implemented) were going to prevent the stock from crashing (if you can call down only a couple of bucks crashing)...to that I say welcome to Wall Street, it happens all the time. It's been a tough year for many stocks regardless of sector. That's my opinion anyway.
As far as people think-tanking and offering their ideas, I think that's cool and begrudge no one on that score. Consumer feedback is what most companies use to better their offerings. I just don't think throwing out "coulda, shoulda wouda" ideas and blaming the company for lack of vision, without being on the inside of the management team to know what's ACTUALLY going on in there and why, makes much sense. For the record, I'm long SIRI and have lost some decent cash (on paper), but I'm confident the company knows what it's doing. If I didn't, I wouldn't have bought in. '09 will be the year of the SIRIXM!
So crfceo and FNG take your plagerism shouts and stuff them in a sack.
I decided it needed more exposure and took the time to massage it a bit and post it here.
I've also sent this to Mel personally.
And as regards SL62's comments, the fact of the matter is, in order to entice people to want to refinance due convertibles, provide needed capital and go long the stock, SIRI needs a broad plan and they need to state what it is. They need to do this for the benefit of their current shareholders, the market and potential future consumers.
I'm not sure they have such a broad vision and can actually see the forest through the trees. In fact, they seem stuck on the minutia.
So again, Mel, what is YOUR vision? What is the future growth story?
I stand by what I have thought of and what I have printed.
'nuff said.
not taking responsibility for one's own actions. The very thought that they would take advice solely from someone on TV or on a board that everyone else is watching as well makes me chuckle. The Cramer blamers make me laugh the most. Worst of all are the people who trade this and other stocks expecting to get a 1 to 3 month 50 to 100% pop and then blame someone when it doesn't happen. Please people, don't ever call yourselves INVESTORS. That's called gambling. You might as well blame the lovely lady nest to you when lucky 17 red doesn't come up on the wheel.
As for this company. They have a lot of reorganizing to do. You will probably hear news that will make that look bad as well. These jobs cut, this place closed, and so forth. But soon there is going to have to be a "coming out party" of SIRI XM onto the public scene. All connected with one radio, all services available. I'm hoping for this Christmas season like most longs are here. I feel when this happens it's going to be like Y2K in reverse. Everyones going to wonder why they DON'T own this stock.
Markus.
My confucius comment for you. Respect everyone - fear no one.
Joe F., maybe you missed my "if true" qualifier. Chill out--but if you don't, pardon me for not taking any more bait. I'm focused on matters having to do with the SP. Whatever it takes ethically, legally, realistically to get the SP pointed north. Long SIRI. No position GS.
messages.finance.yahoo...
Another author did the write up, and you laid claim to the ideas as your own. I don't think that's right.
Tell me the issue and volume.
Yeh, I thought so.
Joe F...no disrespect to you. I know there is a high level of frustration out there right now as we have all temporarily lost some 'Sirius' cash--if only on paper. All I say, is give the management a little time post-merger to show you the money. I don't think there is enough consideration of the process itself. I know this is Wall Street and the only thing it ever cares about is immediate gratification, performance and results. It's kind of how the music industry is now where an artist gets no time to develop--it's "make me a hit or I'll drop you tomorrow" mentality. But as I mentioned, it's a tough time right now for all companies. Many have been beating the street by a penny or just in-line each Q partly through internal cost cuts and consolidation--CapEx has been down in most organizations. And for good reason, cash looks way better on hand these days than invested in future intiatives to the Street. And jeez, we've just lost two 100 year old financial institutions in Bear and now Lehman (the latter who built the freaking rail system in this country). Business is spooked. This entire year has been nothing but basic survival and hope to "just make the numbers," rather than open the floodgates of CapEx and doing deals. Look at IPO's. I think there have been about 5 all year--which says a lot. Frankly, some companies are only still in existence and reporting adequate numbers from the '02-'03 downturn mainly because they downsized labor/brick and mortar big time and never rehydrated--yet are still handling the same client/product volume or higher. They have stayed lean, forcing their existing reduced labor to multi-task even more (which sucks)--I know, I'm one of 'em. Another example of business surviving (and thriving) on the backs of We the People--while our reward is nothing more than we get to go to work tomorrow and be able to pay our bills (which although not the most exciting, better than the alternative). Sucks to be us I guess... but I digress.
So I'm just saying...nothing wrong with the ideas you posted--or that you have sent things to Mel himself. That's the right of any investor because you as such, you are a part owner of the company. I would suggest waiting until sometime in Q1 to evaluate what the company is or is not doing right post-merger, what they have or have not announced from the pipe, and of course what the stock price is. By doing this, you will have given the company a chance to prove themselves a little and show their future direction as a new entity--and which you are right to say, as a public company, they are beholden to do. I just say, give them some breathing room and I'm certain they won't disappoint you near-term. Hang in there longs...
I do not have any new ideas that anyone who has the time and gets paid to think of them has not brought to the table already. Though I will say that as a predominately talk radio listener I would want these issues to be addressed. Good - Local News, Weather, and Traffic. I see how it is handled with cable so perhaps radio will move in that direction as well. It's nice to know that while you are listening to radio there is a team ready to inform you of important news or weather situations locally. Perhaps that market is a drop in the bucket compared to music listeners I don't have the stats. I'm just thinking of the things that would need to be in place to make me never need to listen to terrestrial radio again.
One note, I produce video productions and have placed many CEO's from UPS, Coca Cola, Budweiser, Home Depot and various other successful companies in front of the camera to respond to good times and bad. To be a good CEO.. there is a little bit of magic there.
Markus.
We are talking about Mel here "The smartest in the business" right up there with the guru at the top of the Fox News enterprise. My disclosure is I do not work for Sirrus but I own 20,000 shares - taking a hit now but I am confident in the brand and the product. There is not credible reason (in my opinion) for the stock price spiral.
My professor at the time of returning our papers indicated that even though some of us expect 100% grade he did not think anyone would have deserved it...WHY" because while everyone's plan for all three scenarios were well thought out no body though of the impact of negative media, CEO gasps and the emerging Blog. My recomendations to everyone is to review SIRRUS financials and XM financials and make up your own minds. The brand is solid, the product is futuristic, the direction is inevitable and combining the two make a lot more sense than not. If any of you doubt the power of negative media - take a moment and listen to the election campaign. Our president today and presidents of the past use freedom as one of the corner stones of why we are the best place on earth and parts of our unpleasant history include wars to secure this freedom. While in this great nation is free and that includes the Blogs, media you name it...this freedom also includes making up your own damn minds. Just look at the facts for yourselves and cool you'all.