WRSPQ Archive

17

Sirius XM Radio (NASDAQ: SIRI) Validating Itself and Moving Up

By
Andrew Montero
– October 27, 2010
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There’s a reason why the stock of Sirius XM radio is moving up. The recent refinancing of some of its debt has left the company in a much more favorable position going forward with significantly reduced interest on their debt,that, along with the fact that more money stands to hit the bottom line as CAPEX will be reduced for the next several years, has left the company primed for success. There will be substantial differences, tangible ones on future quarterly balance sheets after 2010. With Sirius XM beginning to  show it will be routinely profitable, those $ 8 billion dollars in NOLs will really have some positive effect on the bottom line going forward.

So…. the market believes that Sirius XM is more valuable at the moment than Netflix( NASDAQ:NFLX).  Not a surprise since there are only 3.9 billion shares being traded and available right now and not really the 6.4 billion shares outstanding constantly quoted.  Liberty Media owns preferred shares with the potential to convert into another 2.5 billion or so common. Those shares are attributed to Liberty Capital (NASDAQ:LCAPA,LCAPB) And while that value percentage of the company has to be accounted for, it also makes  the available shares not so available.  Sirius still has another $3 billion in debt, but it is much more manageable debt.  Sirius XM commands an enterprise value of roughly $11.7 billion. But let’s take a closer look at that.  Enterprise value is calculated by adding a corporation’s market capitalization, preferred stock, and outstanding debt together and then subtracting out the cash and cash equivalents found on the balance sheet. The reason the cash is subtracted is that once you have acquired complete ownership of the company, the cash becomes yours. I will come back to this part of the article a little later.

Sirius XM has kept monthly churn down and has reported churn of 1.8% latest quarter. Not a surprise really since Sirius XM subscribers receive significant discounts for pre  paying their subscriptions. Lets talk growth. Sirius XM’s subscriber base has grown from 1.6 million subscribers in 2003 to 20 million strong in 2010 just 7 years later, with no signs of stopping as the Auto industry recovers. We know and understand that OEM radios are the driver so far for subscribers, but the company has been smart if not aggressive in leveraging their content over the internet and portable devices as well.

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15

The Dawn of a New Media Era as Defined by Liberty’s John Malone and Sirius XM’s Mel Karmazin

By
Rick King
– April 8, 2010
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By Rick King -a_sunrise_over_earth

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.

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31

Worldspace De-Orbit in Lieu of Sale Contingency Plan Approved

By
Andrew Montero
– March 24, 2010
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What is left of Worldspace (OTC BB: WRSPQ) was granted permission(docket #0962 dated 3/24/2010) on March 24th in a Delaware courtroom to either find a suitor for their satellites, or de-orbit them. Liberty Media (NSDQ: LCAPA, LBTYA) attorney representatives were present when the decision was made. Although the satellites are actually owned by Worldspace Satellite Company Limited (SATCO) a non debtor affiliate of Worldspace, the contingency relief sought by Worldspace in the petition filed on March 16th was accepted, in the event they are unable to sell the satellites off.

One way or another, this issue will come to final resolution soon. The long dragged out Bankruptcy has not done any justice to anyone. Especially not all the former listeners of Worldspace, some of whom were stuck when the service went bottoms up with pre paid services they can no longer use to listen to Worldspace and its content which they once enjoyed. Final decisions yet to be made, let’s hope the final chapter and closure to this situation is quickly upon us and not dragged along even more.

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17

Liberty Washes Hands of Cooperative Agreement with Worldspace in its Bankruptcy

By
Andrew Montero
– March 17, 2010
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Liberty Media(NSDQ:LCAPA,LINTA) has decided to wash its hands of any collaboration with Worldspace (OTC BB: WRSPQ) in helping them re organize and come out of Bankruptcy. Court filings from yesterday;

http://www.kccllc.net/Docket/SearchResults.asp

show that once Worldspace submitted their rebuttal to Liberty Media’s plan with some obvious changes to their benefit, Liberty cooled very quickly on the deal, remaining silent and avoiding any sign of agreement to the revised deal. Apparently, the Worldspace staff and attorneys handling the deal didn’t understand that when you deal from a critical position, and are basically on life support, it’s best not to annoy those who are keeping you alive and giving you your last best shot at survival.

Liberty Media still owns over 100 million in claims regarding Worldspace, so there is still the possibility they get what they really wanted out of the Bankruptcy proceedings. Worldspace now faces total liquidation and either sale or de orbiting of their satellites. No further details are available at this time

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17

Liberty Media (NASDAQ: LCAPA, LINTA) and Sirius XM (NASDAQ: SIRI); Partnership or Content Agreement?

By
Andrew Montero
– March 15, 2010
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With the filed petition through the International Bureau of the FCC by Liberty Satellite Radio to take possession of Worldspace’s Afristar 1 and 2 satellites, it appears the end to the bankruptcy proceedings regarding Worldspace will be upon us fairly soon. Liberty Satellite Radio is the actual filer with agreement from Worldspace of the petition. As discussed previously in earlier articles, Liberty Satellite Radio is a holding company for Liberty Media.

The next big question is will Sirius XM be a partner or a content provider to Liberty? If it were all about fair and equal, one would expect Sirius XM to become a 40% partner in any new venture from Liberty, since they received 40% of Sirius XM for essentially a short term bridge loan. That loan was paid back to Liberty in very short order, and had many shareholders up in arms, for some pretty fair reasons. However that is ancient history, and we know that business can sometimes be ruthless in its conduct.

It is more than reasonable to speculate that Liberty is planning on starting up a satellite radio service with global implications and exclusive content. Part of that content will be native language programming for any countries that grant permission for Liberty to broadcast. Undoubtedly another large part of the situation will involve music, which certainly Sirius XM could provide. But Sirius XM can provide much more, like OEM relationships, and other exclusive content. Additionally, there is the technology and licensing on the XM side, which was granted by Worldspace several years ago to XM, and whatever improvements have been made upon it. Looking at it from the outside as an investor, I would hope that Liberty would enter into a partnership with Sirius XM. This would enable both companies to realize even greater leverage and cost reductions across their respective infrastructures with regard to satellite radio.

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