By Rick King -
Every few generations our culture finds new ways to define itself. Usually there is no stronger indicator of culture’s shifting winds than the music a generation listens to. The method in which a generation listens to its music defines it as well. Is it possible we are in the midst of exactly that? Another media revolution of transformation in the winds, from terrestrial radio and television broadcasters to satellite media?
The current population wants access to information everywhere and on demand. Generation “Unlimited” has no concept of limitation. They live in a world where information of every type is available at the speed of an electron in more forms than they can count. Information and how it is channeled to a user permeates every aspect of business. AM and FM Radio don’t work everywhere geographically so it’s fading. Same thing for television, initially change came in the form of cable and now with continuing dominance by satellite media.
How many people still remember the world of no television? Black and White television broadcast? The days when AM radio was the mainstay of the American living room? In every single instance of such change, critics denied the very possibility it could happen. Emotions have always run especially deep in American society when it comes to our music and how we listen to it.
Evidence is mounting that we’re in the middle of such a cultural shift. Investors who recognize such a change early on are usually uncommon. There are several things to keep your eyes on right now. First is Sirius XM Radio’s (NASDAQ:SIRI) recovery during a difficult economic period. Despite one of the longest mergers in corporate history between then Sirius Satellite Radio and XM Satellite Radio, Sirius XM Radio has emerged from 2009 as a remarkable story in underestimation. On any given day diehard Sirius XM Radio fans and investors could rely on a myriad of articles decrying its existence. Half a year after its merger was complete, media sources continued to publish content claiming it was destined for bankruptcy despite a clear end to those fears. If not fear of bankruptcy, readers would easily find articles claiming everything from failure of the company’s iPhone application to rumors of Howard Stern leaving the company. All were obviously unfounded, but nevertheless the company emerged from 2009 going from a microscopic six cents (yes the number “6″ folks) way back in February 2009 to its recent peak of $1.18 in mid-February 2010. Since then gains have retraced slightly below a dollar, closing yesterday around .953 with after hours movement to 97 cents. Volume was a record-setting 609 MILLION shares as of today, April 7, 2010.
Now throw in a few other possibilities circulating the blog circles. There are so many at this stage even loyal blog followers are having a difficult time tracking them. One prevailing theme reigns: John Malone’s Liberty Media is up to something. Hints keep showing up each week. From his company’s efforts to delve into the recent Worldspace Satellite Radio bankruptcy proceedings to filings introducing the world to an entity known as “Liberty Satellite Radio,” and most recently signs Liberty might increase it’s ownership stake in Sirius XM Radio (which currently sits around 40%).
I would like to throw a theory to the four winds.
John Malone is undoubtedly one of the most successful corporate leaders to emerge post-crash. His maneuvers early in 2009 to provide assistance to Sirius XM Radio in sheer spite of efforts by Dish Network’s Charles Ergen to acquire the company shows the business leader’s mettle. Not only acquiring a 40% interest in a new media monopoly early in it’s fiscal recovery, but simultaneously thwarting Ergen’s bid at the Satellite Radio company’s assets and controlling his competition.
Consider what could come post-John Malone. There is no doubt Greg Maffei is a champion for the company, and Satellite Media as a whole. Add to this Sirius XM Radio CEO Mel Karmazin’s absolutely incredible survival ability, saving Sirius XM from an uncertain fate.
Why Liberty Media’s recent interest in the Worldspace assets? Little did many people realize at the time, but XM Radio’s infrastructure – now part of Sirius XM Radio – is compatible with the Worldspace Inc technology. It took a while for our readers to pick up on the significance of that (but they rapidly learned from our own Steve Garcia, who has pretty much nailed this situation down from the beginning.)
Now bounce to another part of the drama. John Malone stepping down from the DirecTV Board of Directors. Could John Malone be ready to turn the reigns over to widely recognized successor Greg Maffei? Think about this: if this occurs, would it not make perfect sense for Mel Karmazin, who steered Sirius XM through the 2009 minefield, to lead a combined global strategy headed by Liberty Media to push satellite radio content overseas?
There are more sides to the story than facets on a 100-carat diamond. Any investor covering the satellite media companies will quickly declare something is going on. As the plot thickens, readers continue to look for answers as it unfolds.
Who can blame them. Many retail SIRI investors have already experienced gains other investors dreamed of during their entire investment experience.
Factor in more problems with terrestrial broadcasting companies keeping the lights on.
Stay tuned.
Disclosure – Long SIRI/No holding in Liberty Media
Another beauty. Hmmmmm, the possibilities.
Is is certainly an exciting time to be a shareholder AND a member of KOAT. The future is looking bright. Where’s my sunglasses……ah, that’s better.
Excellent theme and perspective on then/now! Very nice piece of writing, with a soothing flow into what could lie ahead on the global front!!!! Make no mistake folks, KOAT is the place to be to obtain excellent insight and educational information!
SIRI is certainly a fascinating story that continues to develop daily. Beyond those die-hard SIRI stockholders, this story should capture the attention of Broadcasters and listeners, Tech Geeks, Innovators and Wall Streeters.
Rick
Nice work! But did you really have to throw another scenerio out there for us to ponder? Definitely gives us longs something to chew on!
Liberty’s position here makes the most sense. I don’t think a leak of a renewal of Howard Sterns contract would cause this massive volume swing without so much as a peep hitting the street. If Liberty is adding shares then the disclosure should be published soon further moving the stock north of speculation of takeover. I think the simplest explanation is usually the right one. These guys aren’t rocket scientist but they are the kings of media and all have billions to prove it. One other speculation that may be overlooked is that Malone himself may be taking a personal interest in the company. He recently locked a deal that netted him $4 billion in profit so he definitely has the money and insider knowledge of both companies. Im sure we will know something soon.
Thanks, Rick, for sharing your perspective. You have a very engaging writing style. Good work.
Occam’s Razor…
What we need to do is offer Sirius radio all over the world with no restriction, and
every country who refuse to let us in, should be Tax on everything they bring in here.
This country need people who understand that capitalism does not run one way, and
if they afraid of free information, kick them out with tax and kick them good because they
undermining our country and we will not take anymore. Long live Siri.
Fight greed, love Radio and hate manipulation.
Zora1
OR consider this: Malone was looking at Worldspace because of compatibility to XM & he resigned from the SIRI Board BECAUSE – He is going to buy XM, retire part or all of his 40% stake in SIRI & go write a new history for XM.
Malone does not own the 40% stake, Liberty does.
To use hedge funds to drive Siri price to the ground and then getting 1/2 of company for CHANGE , is hypocritical, outrages and totally wrong, because it is nothing but stealing from shareholders. Shareholders fought for this company to win the merger to be robed next day.
Liberty in to “steal” this good company and that is the fact. If not for Liberty Media and theirs hedgies this stock would be $5 to 6 dollars. Those who think that there are no shenanigan, living in the dream world and better wake up. There is truth in everything and payback is coming, because shareholders will write books and fight them for manipulation, deception and fraud in court. Liberty Media is for a Kill and forcing Mel to do reverse Stock Split.
The stock value base on projection by Mel (50 to 90 mill. subscr.) should be easy above $2 today. The small shareholders don’t short the stock in volume. They love this baby.
It is the best Cash Cow you can steal. The meat for Liberty and the bones to shareholders.
Mel don’t do Reverse Stock Split, the momentum is in your hands. Look at KIA for example.
Only the time will tell if I am right.
zora1
I found this site by doing some research on the internet and I pointed out to some readers about your positive articles recently about synergy and wave bands and put your link http://www.kingofalltrades.com on another site I use to go to for information. I wound up being BAND from that site for passing on great info that I found here at KOAT. This other site was positive then negative the next on the same issues they reported and could never predict or had any insight why the stock rose in price but only complained after a decline. This didn’t bother me as much as the fact that information provided was madeup of bull….. Thanks for the info and fair valued foward looking thinking! Good bye sat waves hello KOAT- information here is my opinion – The other site fails to realize we the readers still have that right!
Strikingly similar to my post yesterday, good to see other share the same thought process. Thanks for posting Rick.
Posted April 7, 2010
A few years ago I wrote about the backseat video and why it was only three cartoon channels, it almost seemed not worth the attempt to launch this. It showed up certainly shortly thereafter, but not a mention of it since. I remember writing that it was more about the license to broadcast video to mobile vehicles. This is my take,
Malone is obviously connected to studios, as is Mel. I think when we look at DTV and that other guy in sat TV. the one that tried to take over the company before Malone stepped in. So Mel is the TV guy, Both Sat. TV companies fought hard to get in on this deal. WE know who won…so follow this…
They get Worldspace…I dont think they want the sats, but I am confused about that whole part, them not being part of assets in BK court. Maybe its broadcast equipment or licenses to broadcast or something..
The boys get together, expand reach globally, I think this on is already a foregone conclusion. Now it becomes a mobile video content distributor…Hmmm. think about it, whats the new name SIRIUSXM…not SIRIUSXM SATELLITE RADIO…JUST SIRIUS XM…maybe soon to be SIRIUSXM ENTERTAINMENT COMPANY… This goes in a zillion directions when you look back at the last 10 years….(yes I have been here that long) There is certainly a clear path to Cell Phone companies ditching talk to expand data…now there is the crazy great IPad…If you have one and get the ABC app, and look at it, this is what I envision for SIRI, already apple connection…could quickly scoop up and old fifties TV shows, except Lucy, she still makes money, and for nearly nothing create a huge library of movies AND TV AND Radio history, stuff the regular networks dont both with because they can sell ads for them, no money…with the Ipad future,
It dawned on my with todays headline, “SIRIUS TO CARRY CABLE CHANNEL MSNBC? I remembered the old post because my first thought was, are they going to broadcast the show, visually, what a great use of the broadcast capability…then I read it, and it doesnt really say that, just lists channels, Just something like channel 90 and xm something else…whats to keep these two giants from actually launching a TV network with live video, like TV, just a new approach like SAT TV..HMMM remember the SAT TV GUYS FIGHTING TO GET IN THIS…so maybe somehow the goods from WS help make it a live TV broadcast entertianment company…maybe its not going global but just acquiring assets to beef up North American service…? Or maybe they can upgrade NA Service as well as bring it global….Later Murdoch!
…it would be like a cable company huh? Pay service…monthly…channels, music, and hey, not so long ago chit chat about the Live Nation deal…hmmmm, could in person concerts be a thing of the past, like Laptops? bad cell phones? CD’s, DVD’s , it changing, and its changing fast…there is not other company that could pull this off, no one has ever been closer to having all the moving parts..It is possibly? I sure think so. Is it Feasable? Not Sure…Would love to hear everyones take on this view of the future…of this company, of entertainment, of news and content, and content, and content…and CONTENT IS KING..Right Mel. Maybe this explains pulling out of Cable relationships last year.
TV’s themselves are next up to be a technology that will become a thing of the past as well, after all isnt that what apple is building…music library, video library, Apple, TV, all these viewing devices or receivers? They will get content and broadcast as a new era of TV, or something totally new and TV, something we explain to our kids , there used to be this thing called TV…they call that thing a TV because thats how people used to get entertainment and news…fun isnt it…
I very nice read Rick. The possibilities of where this company is going continues to grow with excitement. The future is truly bright. As far as what is going on with the stock right now with huge volume, if its Liberty buying on the open market that will become evident shortly since, as a 5% holders they will need to file with the SEC. I, for one, hope it is Liberty bringing its holdings up to the permitted 9.9%. To me, this would be as good as a share buyback by SXM…effectively, removing these shares from the market thus improving the supply/demand situation…something that will effectively increase the pps…
worldspace satellite technology is incompatible with car radio technology, if it was… but it’s not. Worldspace has no car radios and is too expensive in foreign countries … their satellites are about to decomission or be sold