By Relmor Demitrius

Mel and Howard

There are many ways to identify and define success.  The same can be said about worth and value.  It is especially true when trying to apply these concepts to something intangible, as an artist or performer.  Take a talent like Howard Stern.  He’s not a hard asset that you can simply attach a known value to, or state exactly what he would mean to your company.  What is his actual value to Sirius XM Radio (NASDAQ:SIRI)?  When Greg Maffei (CEO of Liberty Media and Liberty Capital (NASDAQ:LCAPA) and 40% owners of Sirius XM, ask Mel Karmazin (CEO of Sirius XM) how much is Howard Stern worth to the company, what does he tell him?  This is the debate among bloggers to professional financial analysis that has been going on for years.  How do you evaluate Howard Stern’s actual value to the company?  He makes 100 million dollars a year, minus the cost to run his show.  Is he worth it?  Is he overpaid?  Is he underpaid?  Is he fairly paid?  How much of Sirius XM’s revenue can be attributed to him.  In this article I will go over the effect of signing Howard Stern to Sirius Satellite Radio and any effect overall he had on the satellite radio industry altogether.  First, let’s get some opinions out of the way.

Howard Stern is an amazing talent and still the best radio on radio.  No offense to Michael Savage fans, Rush Limbaugh, Opie and Anthony, or Larry King.  Whatever.  There is still no bigger celebrity in radio.  Rush is close, but I don’t think he even can match Howard still to this day.  Howard’s popularity may be waning but he is still the best.  That being said, let us leave the personal opinions and feelings at the door.

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By Steve Garcia

In the weeks since the final bankruptcy sale and approval of Worldspace assets to Noah Samara; this time through Yazmi LLC, one thing is abundantly clear.  The plight of all the assets of Worldspace and SATCO is as yet unknown and still awaiting a final outcome.  Court documents prior to final sale stated that the consideration to be received from Yazmi in the sale purchase agreement would not be sufficient to pay Liberty Satellite Radio and Liberty Satellite Radio Holdings in full.  The Debtors estimated that Liberty’s aggregate secured claims were in excess of $116 million dollars.  Under the settlement agreement, the Debtors were released from such claims and the corresponding liens, allowing the Debtors to distribute the proceeds of the sale to other creditors.  In exchange for that, the Debtors and the other Parties to the settlement agreement provided releases to Liberty, and Liberty received other consideration.  That “other consideration” was Liberty obtaining a return of $370,000 in funds which the debtors transferred to Liberty; that Liberty had loaned to support the WorldSpace Italia subsidiary.  When Liberty decided not to pursue a Liberty purchase agreement, the need for those funds evaporated. Liberty also received $250,000 of the Yazmi sale proceeds, which was 5% of the total and significantly less than Liberty would have gotten if its senior secured claims were still in effect.  The Debtors believe that the note from WorldSpace Italia that Liberty received is of little value; the Debtors also believe WorldSpace Italia cannot repay that note, and the Debtors themselves have limited resources with which to possibly pursue collection.  The Debtors were willing to relinquish their right to abandon their responsibilities and their assets to Liberty in exchange for Liberty’s relinquishment of much (more…)

By Relmor Demitrius

Greg Maffei

Sirius XM Radio (NASDAQ:SIRI) is offered many opinions of what their shares are actually worth.  It just depends on who you listen too.  There seems to be a vastly different view of just how much one should pay for this equity and ultimately what is their appropriate market cap.  If readers know my style, they know I do not work with subjectives or opinions.  I like cold hard facts when I tackle a problem.  The pulse of the investor community seems to be right now on trying to understand how an equity so obviously undervalued is still priced at $1 a share.  What is Sirius XM’s real fair value?  Well why waste a second longer, let us begin.

Without boring anyone on just how dangerous it is to attempt to use the stock market current price at any one time to try to determine actual retail sale value of a company and hence what one share is actually worth in reality (meaning if every share were to be purchased at one time, at what price could they buy the company) might offer a little insight.  Here is a good example of this from 2008. (more…)

By Relmor Demitrius

One June 25th, this Friday, the Russell family of indexes will have its yearly reconstitution event.  This event adds and deletes companies on their Russell index’s and tracking funds. Sirius XM Radio (NASDAQ:SIRI) will be one such addition.  It is not 100% official, as the official list doesn’t come out until next Monday, but its about as sure a lock as you can get in this type of situation.  Sirius XM was listed as an addition on the first two lists released, one on June 11th and the other on June 18th.  This is good timing for a stock that has been in an uptrend now since 6/9/10.  The equity has been moving up into this planned buy. 

Russell reconstitution is usually a high volume event that can result in massive volatility of price movement on that day.  On Friday, over 200 million shares, maybe much more, must be purchased.  Last year the market dumped these Russell shares, now the company enjoys the benefit of the reverse of that scenario.  One of the best advantages of being added is these shares will now not trade anymore.  They are used for exposure, not to be traded around.  This is great news for Sirius XM investors as any reduction in the tradable float can help sustain price levels and reduce downside volatility.  I believe Sirius XM will be added to the Russell 1000, which is a list of the top 1000 companies, based mostly on market cap but not entirely, which would require even more stock to be purchased.  The more lists they are on, i.e. Russell 1000, Russell 3000, Global funds, mid cap funds, etc.. the more shares will need to become available.  It has been speculated as many as 500 million shares may be required.  But who’s going to sell them the shares? (more…)

By Steve Garcia

Today Sirius XM (NASDAQ:SIRI) CEO Mel Karmazin gave the company’s Q1 2010 results.  Among the metrics was a 1 cent positive earnings per share (EPS).  Karmazin also let it be known that as of last week’s numbers, Sirius XM had over 19 million subscribers already this year, with just a third of the 2^nd quarter complete.  The company is also among the top 8% of NASDAQ stocks based on Market Cap.  Mel also let shareholders know that delisting fears and the specter of a reverse split to satisfy those fears was over.  Sirius XM has also been able to pay off some debt; and reduce interest expense to a less than 9 % unsecured rate on the most recent debt re finance. The company, which struggled after the merger approval in 2008; and nearly went bankrupt in early 2009, continues to report an astounding turnaround quarter after quarter since obtaining a short term, though costly loan from Liberty Media and John Malone. The short term financing was costly in that it resulted in Liberty Media obtaining 40% of the company through the loan agreement. Sirius XM repaid all outstanding balances from that short term loan in a very timely fashion. (more…)