Mel and Howard
By Steve Garcia
Once again this week, Sirius XM Radio (NASDAQ:SIRI) has been the brunt of some bad writing and less than accurate information from the likes of several “Financial News” sources on the internet. The death of satellite radio as we know has been an ongoing source of comic relief to any investor who is worth their salt and does even a small amount of research, including reading some SEC filings. Fomented lies about satellite radio may grab some sensational headlines but they do not give a true and clear picture of what satellite radio is or whether they truly have any direct competition.
Allow me to help clarify the picture for those of you out there who have not been following for the last 10 years. Satellite radio is here to stay, having survived the onslaught of negativity from multiple media sources and a merger which became prohibitively expensive to finalize, as well as the economic meltdown of 2008-2009. That said, Sirius XM, which is the company resulting from the merger of Sirius satellite radio and XM satellite radio, once two very distinct satellite radio companies has spent the last year and a half shedding a lot of excesses and duplicity of effort and cost as it streamlines and transforms into a much leaner and stronger company.
Those who know little, or at least pretend to, love to tell a sad tale and paint a rather dire picture of satellite radio’s future. However allow me to inform you that satellite radio has been “competing” with internet and terrestrial radio over the course of the last decade or so. In that time, it has managed to carve out a “nice little subscription model” all its own with over 130 channels of music and premium content like Howard Stern, Opie and Anthony, The Playboy channel, The NFL, NHL, MLB, College Sports, Oprah Winfrey, Martha Stewart, Rosie O ‘ Donnell, Jamie Fox’s Foxhole, Mad Dog Radio, Eminem’s Shade 45 and so on. I have yet to see anything like this package of offerings available anywhere else. Pandora, Slacker, IHeartRadio etc. etc. are all just music, which is fine, but not a real threat to satellite radio. It’s like my father used to say “that’s like comparing apples to oranges” both are good but different. Incidentally, I find it quite interesting that data streaming charges are always left out when discussing internet radio through a cell phone. Perhaps that is because it makes the “free” case not so free after all. I personally have tried Pandora and have two of those 60 million subscriptions…free ones of course, and I can tell you from my own personal experience, the novelty wears off in less than a day. I usually find myself going back to Sirius XM whether it is in my car, in my yard listening to my XMP 3 or in my house listening to Sirius XM online through the internet version of the service, (ooops, did I just say internet version of the service which is also available for streaming on all smart phones with a subscription) and Sirius XM has my musical and audio entertainment choices covered.
In closing, a little information can go a long way to alleviating any unsubstantiated fears about satellite radio and its now 10 year impending demise. If you are not familiar with the service or the product, now is a great time to get acquainted with it. Sirius XM is here to stay and so are its subscribers. Company metrics suggest that they are experiencing healthy and steady growth as well, but don’t take my word for it, check out the last several quarters of pure and simple growth in their filings right here; http://investor.sirius.com/. Verified facts always trump speculative opinion. The more you know, the less snakes and charlatans can deceive you in your decision making. Feel free to tell us your opinions regarding Sirius XM whether they be bullish or bearish.
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Disclosure: Long SIRI
totally bullish
You hit the nail on the head!….
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…..and the so called ‘free’ service that these internet based companies provide is also chucked full of advertisements, unless you ‘pay’ for a subscription! In addition, its not that easy to connect your phone to most cars. IF your radio has the necessary inputs, you will need to connect the cable from your phone to the audio component and don’t forget the charger cables or your phone battery will die! I would rather get in my vehicle, turn the key and start listening…just like turning your TV on to watch cable – simplicity!
My best friend was hooked on Sirius about 4 years before me, and I always ridiculed him about paying for something that you could get over radio. Then one day, I tried for myself…..in my opinion; it’s not radio, it’s the most convenient access to the best audio programming selection in our atmosphere (literally) and this planet. I have been a paying subscriber of 4 receivers for many years now. Even through the recession, I never dropped my subscription – and just like cable or sat TV, my family will always subscribe to it.
Battles may be lost but Sirius will win the war, sad that i must sell this week to pay bills
next time
Great article and accurate.
Additionally, you forgot the fact that they own patents on the “create your own channel” technologies for broadcast, meaning that the only way people can have that experience (which will be sans the sports, news, talk… offered by Sirius) will be through streaming over the net. Regarding the latter, in the wireless sphere the cost of data packages is set to go up and/or become based upon data transfer rates due to the necessity of infrastructure buildout resulting from bandwidth shortages caused by the growth of smart-phones.
Final note: while I am not a SIRI employee or subscriber (though I travel 90% of the time and it’s always in the rental) I love the service, will subscribe once I move on to my next position (hope to not travel all the time someday) I am an expert in satellite networks, financial and competitive analysis., among others. The point, after their last bird (satellite) is put in orbit next year their costs will drop significantly and the barrier to entry in this market is not small.
Absolutely right on. The recently coordinated articles from a cabal of media types hyping the demise of Sirius XM at the hands of Pandora smacks of a last ditch effort from the “shorts” to slow the upward momentum of SIRI which has brought them tremendous losses – with more most likely to accrue into the future. Those who stand in front of the Sirius XM steamroller do so at their peril.
What is curious is how people can honestly think they are fooling anyone with the silly claim that Pandora will kill Sirius. If it is going to kill Sirius why has it not already done so? The assertion is years old and always the same, “down the road” everyone will stop paying for Sirius because they are going to instead listen to music in their cars on their phones and not use radios. This argument essentially predicts the death of terrestial radio as well not just Sirius. But is anyone actually claiming it will kill off terrestial radio? Nope. They are instead saying those people who now CHOOSE to pay for Sirius’ content over listening to radio on their phones or terrestial radio will all suddenly down the road not want to pay for such content anymore and will change over to using pandora instead. The scare tactics are obviously because they shorted the stock and want to try to beat the price down. This nonsense worked for a while but new arguments will be needed because if you keep shouting the sky is falling year after year and it doesn’t fall then eventually like Chicken Little you will go ignored.
A nice article. Simple, to the point and straight forward.
Sorry, NAB and others. The new era is moving into satellite radio. …and there’s nothing you can do to stop it.
Content + convenience + little cost = a great value.
ASM I have a bone to pick with you you always mention everyone except nascar when describing sxm content . i hope this will help remind you in the future. hahahahahahahahaha