Digital Radio Central - Sponsored by TSS Radio
  DRC Home Page DRC Forums Contact Us  
 
SIRIUS Backstage Forum
 
 
 
  Sirius Satellite Radio XM Satellite Radio iTunes/iPod Slacker Pandora  
 
 
FAQ Members List Calendar Search Today's Posts Mark Forums Read  
Go Back   SIRIUS Backstage Forum > >
Visit Digital Radio Central

Notices

The Street Converse with other investors about finance, economic and investment strategies. This is also the place to discuss SIRIUS XM company news and your favorite stocks.

 
 
Thread Tools Display Modes
 
 
Old 01-13-2007, 07:39 AM   #1
Whiskerbiscuit
Banned
 
Join Date: Sep 08, 2006
Posts: 234
Whiskerbiscuit is on a distinguished road
Default With No merger.... is XM mortally wounded ?

This isn't meant to be divisive or a slam against XM.

What if a merger doesn't happen or isn't approved at this point ?

I read a wire piece last night that speculated that Gary Parson's is concerned about announcing a merger attempt due to the fact that it will kill XM at retail if it's perceived that XM is being acquired or bought. If this is true, it explains why he has gone on record stating that if a merger occurred, it would be a merger of " equals " .

I never underestimate Mel, and wonder even if he doesn't or didn't want a merger, wouldn't this be a " no loss " strategy if his intent was to either merge with XM or knock the stuffing out of their market credibility with profuse merger talks ?

As of today, I have to think that XM is seriously wounded by this talk if it doesn't happen. I can't imagine ( per Parson's point ) that anyone could walk into any Best Buy in the next 18 months and NOT hear from some uninformed sales person ( who is already "owned " by Sirius ) that XM might get bought by Sirius " any day now " .

Yikes.

Speculating further, doesn't the same story play out in future Auto talks ? If I'm at GM, Toyota or Honda I'd be wondering who's the tail, and who's the dog in this scenario.
Whiskerbiscuit is offline  
 
 
Old 01-13-2007, 08:16 AM   #2
Satradioman
Sirius Star
 
Join Date: Aug 26, 2003
Posts: 1,616
Satradioman is on a distinguished road
Default

You make good points, and in the case of a take over XM is the cheaper buy. BUT the reality is Sirius financially is in worse shape then XM, plus XM's technology is superior to Sirius. So a point can easliy be made that a merger benefits both companies. And no merger may doom both companies.
Satradioman is offline  
 
 
Old 01-13-2007, 08:40 AM   #3
topchoice101
Just Tuned In
 
Join Date: Jan 02, 2007
Posts: 4
topchoice101 is on a distinguished road
Default Neither is Mortally Wounded

Why do people think the health of the industry is to be found short term soley in a merger. That is a nice structural enhancement but not the only fundamental success formula. In reality, both companies have ignored real innovation and growth opportunities since Sirius did the Howard deal (regardless as to the issue of overpaying him or not).

With the music market becoming so competitive with alternative formats and technologies, the future must also lie with the other forms of programming. NASCAR might be the only big push this year aimed at capturing new markets. There are so many markets left untapped it makes you think everyone has fallen asleep at both companies.

Why not capture the soap opera market...how about the spanish soap market. Old and new drama would get drive time listeners. Repeat the shows just like HBO.

If I who have nothing to do with the industry have 10 more ideas which are cheap and viable, what is going on at headquarters. Based on product offerings of the last 18 months, I wonder if either company is really being managed well and at optimum levels??? Merger talk is fine but what about rapid fundamental growth from creative tinking which is freely open to either company.
topchoice101 is offline  
 
 
Old 01-13-2007, 09:19 AM   #4
hieian
Banned
 
Join Date: Sep 06, 2006
Posts: 103
hieian is on a distinguished road
Default

Here are the bigger questions from the merger:

1. Is the merger between the two companies going to have an effect on the 290M people who are already listening to terrestrial radio for them to switch over to satellite radio?

2. Are the current subscribers from both companies going to pay some extra money for new equipment when trasmission signal from the merged company is not compatible with their current equipment?

3. Are there going to be any price increases in subscription and services from the merged company?

4. Is the deficit going to be bigger or remain the same with the merger?

There would be other questions, but those would be the main ones.
hieian is offline  
 
 
Old 01-13-2007, 10:33 AM   #5
Crashed
Banned
 
Join Date: Jan 07, 2007
Posts: 77
Crashed is on a distinguished road
Default

It isn't XM losing 1.2-1.3 Billion in '06, it is Sirius.

The question to be asked is whether Sirius is mortally wounded. Hell, XM is actually self-sustaining at this point (so-called CFBE). Sirius is well short of having enough cash to get to breakeven and they certainly are NOT at true CFBE (one which lasts more than a quarter).

It isn't XM pushing the merger drivel. It is Mel.

And the principal reason is Howard Stern IMO. Stern is a billion dollar asset that simply is not going to pay his way. Mel isn't stupid and can see this just as clearly as I can.

You cannot make a billion dollar investment and have it bring a couple million subscribers. If that happens (as it has), you had better be looking for a way to leverage that asset.

Beyond that, Mel is faced with having to replace an inferior satellite infrastructure sooner than expected, and would just LOVE to get his hands on XM's.

Without a merger, XM's future looks pretty secure. Sirius continues to be in a very deep hole (one dug by Joe Clayton) and even Mel, probably the best man on the planet for the job, is having a tough time digging them out.

When Mel Karmazin says, "We need a merger to survive" (which is, effectively, what he's doing) then you best believe him.
Crashed is offline  
 
 
Old 01-13-2007, 11:37 AM   #6
Satradioman
Sirius Star
 
Join Date: Aug 26, 2003
Posts: 1,616
Satradioman is on a distinguished road
Default

As I stated I believe Sirius needs/wants a merger more than XM. But don't give XM a pass, they have their share of problems also. Their retail sales have dropped faster than their stock price. I've always said auto OEM installs is sat radio's future, but even there sat radio is seeing increased competition.

And XM still has some big contracts on their hands. I think these merger talks are going to heat up a lot in the next month or 2, I'm not saying it's an automatic, both companies have a long road before an agreement, and then there's what the government will do, but I think boh companies are going to try hard over the next 30-90 days.
Satradioman is offline  
 
 
Old 01-13-2007, 12:53 PM   #7
hieian
Banned
 
Join Date: Sep 06, 2006
Posts: 103
hieian is on a distinguished road
Default

Quote:
Originally Posted by Crashed
It isn't XM losing 1.2-1.3 Billion in '06, it is Sirius.

The question to be asked is whether Sirius is mortally wounded. Hell, XM is actually self-sustaining at this point (so-called CFBE). Sirius is well short of having enough cash to get to breakeven and they certainly are NOT at true CFBE (one which lasts more than a quarter).

It isn't XM pushing the merger drivel. It is Mel.

And the principal reason is Howard Stern IMO. Stern is a billion dollar asset that simply is not going to pay his way. Mel isn't stupid and can see this just as clearly as I can.

You cannot make a billion dollar investment and have it bring a couple million subscribers. If that happens (as it has), you had better be looking for a way to leverage that asset.

Beyond that, Mel is faced with having to replace an inferior satellite infrastructure sooner than expected, and would just LOVE to get his hands on XM's.

Without a merger, XM's future looks pretty secure. Sirius continues to be in a very deep hole (one dug by Joe Clayton) and even Mel, probably the best man on the planet for the job, is having a tough time digging them out.

When Mel Karmazin says, "We need a merger to survive" (which is, effectively, what he's doing) then you best believe him.
Thanks for posting that fact because when I accessed the XMFan site, the majority of the posters over there have a more realistic grasp of the situation. Compared to here, there are 3 or 4 people talking about the merger, but the rest of them instantly responded and knew what the real situation is and that is XM is in a better position than Sirius when it comes to the true CFBE.
hieian is offline  
 
 
Old 01-13-2007, 01:13 PM   #8
Crashed
Banned
 
Join Date: Jan 07, 2007
Posts: 77
Crashed is on a distinguished road
Default

Quote:
But don't give XM a pass, they have their share of problems also. Their retail sales have dropped faster than their stock price.
Don't misunderstand me -- I totally agree that XM has some issues.

But XM can make it to profitability from where it stands, unless some unforeseen event occurs. Sirius is not there yet and due to its reliance on retail and overpriced content deals they are on much more shakey ground IMO.
Crashed is offline  
 
 
Old 01-13-2007, 02:48 PM   #9
Whiskerbiscuit
Banned
 
Join Date: Sep 08, 2006
Posts: 234
Whiskerbiscuit is on a distinguished road
Default

I might be missing something, but I see no correlation between where these companies are today ( what is being argued ) as opposed to where they will be in the very, very near future. If I had to pick a "winning " team, it would most certainly be Sirius. There is no doubt in my mind that XM is a stronger company financially or of greater value with less shares. They should be in better " shape " . They started 12 months earlier. In fact, if you overlay the companies financial, they are almost exactly aligned with each other ( until this last quarter ) from time line to time line.

There is tremendous doubt in my mind that they ( XM ) can or will sustain those positions.

Sirius is packing a heck of a punch !

Sirius's winning Mo-Jo. ( What XM wish they had )

Howard
Nascar
Video
Mel and Joe
Retail 3:1
NBA
NFL
Sub lead in Canada
Much better CS.


--------------
Both are basically tied in total OEM potential as we have discussed
--------------

XM's Winning Mo Jo ( What Sirius wish they had )

Baseball
Oprah
Slightly more bird life
GM Honda relationship.
Slightly better music ratings.
Whiskerbiscuit is offline  
 
 
Old 01-13-2007, 06:59 PM   #10
Satradioman
Sirius Star
 
Join Date: Aug 26, 2003
Posts: 1,616
Satradioman is on a distinguished road
Default

This content argument is almost as pointless as the SQ argument. It's according to the customer/listener who has better content or SQ. So IMHO basing a company's future on something as fickle as content isn't realistic. There's too many other factors, AND competition involved. Except for Stern I can get anything else Sirius or XM offer for free.

As for your other points about CS and technology, thats just fodder for a more merger talk. If they merge Sirius CS will take over, XM's superior technology will become standard for sat radio, etc. Again, it benefits both companies.
Satradioman is offline  
 
 
Old 01-13-2007, 07:12 PM   #11
Crashed
Banned
 
Join Date: Jan 07, 2007
Posts: 77
Crashed is on a distinguished road
Default

Quote:
I might be missing something, but I see no correlation between where these companies are today ( what is being argued ) as opposed to where they will be in the very, very near future. If I had to pick a "winning " team, it would most certainly be Sirius.
Everyone is, of course, entitled to an opinion. However, yours doesn't comport with the facts.

Presumably, you base your remarks on SIRI's current retail position, which I admit is better than I thought it would be one year after Stern's coming on board.

The mistake you and others are continuing to make is the assumption that getting subscribers at insane costs is going to, somehow, make Sirius the "winner".

When it is over, there may not BE a winner. But it makes no sense to roll the dice on a company that has obviously spewed money at "content" well beyond any reason at all. There is no way in hell the five year Stern contract comes in at under $800 Million, and I would not be at all surprised if it ends up being close to a billion dollars. Add to that $300M for NFL, $100M for NASCAR, $30M for Martha, and who knows what for other high-profile, low payoff content items (NBA, cherry-picked NCAA teams at several millions apiece, Eminem and other premium names) and you start to get a picture of a couple billion dollars for content over a five year period.

Sounds bad. But forget it for a minute. Because there are bigger problems (that's right, BIGGER problems). Right now, Sirius is still outspending XM more than 2:1 to add a subscriber. This is NOT where XM was a year ago, or even 3. Sirius has NOT been able to control CPGA. Even without the content expense, subscribers added at these prices are difficult to break even on. Throw in the content expenses, and you simply don't have a chance.

It gets worse. Like XM/GM, SIRI has to pay DCX for factory installs. Plus a revenue share. In addition, they are giving a significant piece of the action to Radio Shack for carrying their receivers. And they are paying Penske to order Sirius receivers where possible in cars for their dealerships.

The point you seem to consistently miss is that earnings are determined by revenue AS WELL AS expense. Just getting revenue in the door is not helpful if you spend that and plus some to get it.

Fixed costs structures have the advantage of becoming cash cows once you get to breakeven (NOT "cash flow" breakeven which is all but meaningless, but NET INCOME breakeven).

But highly fixed cost structures have a huge downside when you are operating below breakeven volume -- and that is, if the volume doesn't materialize to sustain the business at profitability, it will sink the ship. There is no "laying off" Howard Stern, NASCAR, NBA, NFL, or Martha. These people get their money, period, end of story.

Retail is NOT 3:1 as you posted. But one thing is certain -- if XM wanted to spew money, they could have increased their retail presence in Q4. But they made the prudent decision to grow more slowly, more controlled, and more cost effectively, taking their time until their OEM dominance takes hold. That is what creates winners. Not throwing billions of dollars at high profiles in an effort to get people to subscribe at retail.

Quote:
Both are basically tied in total OEM potential as we have discussed
You may have discussed it, but apparently, you don't understand the OEM relationships. Save me the link to Doberman's blog -- I've been trying for 3 years to explain it to him and he doesn't get it, either.

XM owns the OEM space 60/40 -- and if you have to make a choice, OEM is where you want to be.

The first year Sirius reports a loss less than or equal to XM's, let me know. Until then, I think I'll take my chances with XM.

Last edited by Crashed; 01-13-2007 at 07:15 PM..
Crashed is offline  
 
 
Old 01-13-2007, 08:14 PM   #12
Whiskerbiscuit
Banned
 
Join Date: Sep 08, 2006
Posts: 234
Whiskerbiscuit is on a distinguished road
Default

Quote:
Originally Posted by Satradioman
This content argument is almost as pointless as the SQ argument. It's according to the customer/listener who has better content or SQ. So IMHO basing a company's future on something as fickle as content isn't realistic. There's too many other factors, AND competition involved. Except for Stern I can get anything else Sirius or XM offer for free.

As for your other points about CS and technology, thats just fodder for a more merger talk. If they merge Sirius CS will take over, XM's superior technology will become standard for sat radio, etc. Again, it benefits both companies.
Not so respectfully.

Until it was ken down a few weeks ago, Bridge ran weekly rating of programing via interviewing 4000 people weekly. The categories were wide ranging from music, to sports, to personalities.

Sirius won or tied 90% of the 8-10 divisions.
Whiskerbiscuit is offline  
 
 
Old 01-13-2007, 08:19 PM   #13
Whiskerbiscuit
Banned
 
Join Date: Sep 08, 2006
Posts: 234
Whiskerbiscuit is on a distinguished road
Default

Quote:
Originally Posted by Crashed
Everyone is, of course, entitled to an opinion. However, yours doesn't comport with the facts.

Presumably, you base your remarks on SIRI's current retail position, which I admit is better than I thought it would be one year after Stern's coming on board.

The mistake you and others are continuing to make is the assumption that getting subscribers at insane costs is going to, somehow, make Sirius the "winner".

When it is over, there may not BE a winner. But it makes no sense to roll the dice on a company that has obviously spewed money at "content" well beyond any reason at all. There is no way in hell the five year Stern contract comes in at under $800 Million, and I would not be at all surprised if it ends up being close to a billion dollars. Add to that $300M for NFL, $100M for NASCAR, $30M for Martha, and who knows what for other high-profile, low payoff content items (NBA, cherry-picked NCAA teams at several millions apiece, Eminem and other premium names) and you start to get a picture of a couple billion dollars for content over a five year period.

Sounds bad. But forget it for a minute. Because there are bigger problems (that's right, BIGGER problems). Right now, Sirius is still outspending XM more than 2:1 to add a subscriber. This is NOT where XM was a year ago, or even 3. Sirius has NOT been able to control CPGA. Even without the content expense, subscribers added at these prices are difficult to break even on. Throw in the content expenses, and you simply don't have a chance.

It gets worse. Like XM/GM, SIRI has to pay DCX for factory installs. Plus a revenue share. In addition, they are giving a significant piece of the action to Radio Shack for carrying their receivers. And they are paying Penske to order Sirius receivers where possible in cars for their dealerships.

The point you seem to consistently miss is that earnings are determined by revenue AS WELL AS expense. Just getting revenue in the door is not helpful if you spend that and plus some to get it.

Fixed costs structures have the advantage of becoming cash cows once you get to breakeven (NOT "cash flow" breakeven which is all but meaningless, but NET INCOME breakeven).

But highly fixed cost structures have a huge downside when you are operating below breakeven volume -- and that is, if the volume doesn't materialize to sustain the business at profitability, it will sink the ship. There is no "laying off" Howard Stern, NASCAR, NBA, NFL, or Martha. These people get their money, period, end of story.

Retail is NOT 3:1 as you posted. But one thing is certain -- if XM wanted to spew money, they could have increased their retail presence in Q4. But they made the prudent decision to grow more slowly, more controlled, and more cost effectively, taking their time until their OEM dominance takes hold. That is what creates winners. Not throwing billions of dollars at high profiles in an effort to get people to subscribe at retail.



You may have discussed it, but apparently, you don't understand the OEM relationships. Save me the link to Doberman's blog -- I've been trying for 3 years to explain it to him and he doesn't get it, either.

XM owns the OEM space 60/40 -- and if you have to make a choice, OEM is where you want to be.

The first year Sirius reports a loss less than or equal to XM's, let me know. Until then, I think I'll take my chances with XM.
$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ $$$$

Yep... we fully disagree on most issues.

If there were two Titanic life boats, I'd hop in Sirius's.

If there is a merger ( that everyone said I was crazy for believing in 2 years ago ) Siri will be the Whale and XM will be the Jonas. If there isn't a Merger, Sirius will slowly encroach on XM's share until their done IMHO.
Whiskerbiscuit is offline  
 
 
Old 01-13-2007, 10:21 PM   #14
Whiskerbiscuit
Banned
 
Join Date: Sep 08, 2006
Posts: 234
Whiskerbiscuit is on a distinguished road
Default

Quote:
Originally Posted by Whiskerbiscuit
I might be missing something, but I see no correlation between where these companies are today ( what is being argued ) as opposed to where they will be in the very, very near future. If I had to pick a "winning " team, it would most certainly be Sirius. There is no doubt in my mind that XM is a stronger company financially or of greater value with less shares. They should be in better " shape " . They started 12 months earlier. In fact, if you overlay the companies financial, they are almost exactly aligned with each other ( until this last quarter ) from time line to time line.

There is tremendous doubt in my mind that they ( XM ) can or will sustain those positions.

Sirius is packing a heck of a punch !

Sirius's winning Mo-Jo. ( What XM wish they had )

Howard
Nascar
Video
Mel and Joe
Retail 3:1
NBA
NFL
Sub lead in Canada
Much better CS.


--------------
Both are basically tied in total OEM potential as we have discussed
--------------

XM's Winning Mo Jo ( What Sirius wish they had )

Baseball
Oprah
Slightly more bird life
GM Honda relationship.
Slightly better music ratings.
To belabor the conversation, I found this while rooting into Bridge ratings 2007 projections ( they have satrad down 500K over 2006 which is probably close and why Mel nor Gary are giving projections )

Anyhow.... from Bridge...

"Talk of a merger of the two satellite radio services will continue to heat up. With all the good intentions of such a merger, it is our belief that this would not be in the best interest of the consumer. Why? most notably because the cultures of the two services are light-years apart. While Sirius, under Mel, has certainly made amazing strides and will be focused on commercial revenue which is Mr. Karmazin's strength, XM is more of a cultural phenomenon. Ever take the tour of these two businesses? You get off the elevator at XM and it's like an amusement park for music lovers. The feeling at Sirius is pure business. These two cultures could mix and it is likely that Mel would inevitably end up as CEO of this newly formed entity. But then what would happen to the XM culture which for many passionate XM subscribers is the reason to sign up at all. "

This made my butt tighten. IF I owned XM stock, I could take little solace in the fact that visiting XM is like going to an amusement park. For chrissakes Lucy. Something about investing in a business, that's run like a business, gives me great comfort and certainly explains why Mel is kicking asses and taking names for 5 quarters.

Wanna be esoteric. Wanna sip wine and get into your Volvo. Wanna pick lint from each other's belly buttons as we muse about the nature of music ? Wanna grow a 60's goatee and dwaddle incessantly and in the end fail to make a decision ( Hello Logan and Panero ) when one of the most popular radio personalities to ever live wants to negotiate with you ?

Go right ahead. Get don't be surprised when you get your panties pulled down in a very competitive market, by one of the more capable people who has ever graced broadcasting.

Last edited by Whiskerbiscuit; 01-13-2007 at 10:25 PM..
Whiskerbiscuit is offline  
 
 
Old 01-14-2007, 12:11 AM   #15
Crashed
Banned
 
Join Date: Jan 07, 2007
Posts: 77
Crashed is on a distinguished road
Default

Quote:
Siri will be the Whale and XM will be the Jonas.
By definition, in a merger, two or more entities combine into a third entity. Neither of the original entities survives the merger.

You seem to be talking about an acquisition, in which one of the companies survives and the other doesn't.

Sirius can't pay its light bill on its own right now, and nobody in their right mind would lend them any money to buy XM.

For several reasons it is more reasonable to expect that XM would be the survivor of any acquisition. Most importantly, XM's technology is lightyears ahead of SIRI's, SIRI has major issues with the satellite configuration as well as their codec, so it is much more likely Sirius customers would simply be migrated to the XM technology platform.

If they decided to try to deliver more channels (perhaps some ala carte, or whatever), one could envision a scenario in which they go ahead and launch the new GEO bird for Sirius in '08, and use XM1/XM2 to provide signal for the additional channels, basically dumping the Sirius birds as well as codec.

This, of course, would mean dealing with millions of legacy receivers which have no value, whatsoever. One of the reasons it is not likely to ever happen.
Crashed is offline  
 
 
 

Go Back   SIRIUS Backstage Forum > >


Digitalradiocentral.com




Similar Threads
Thread Thread Starter Forum Replies Last Post
Newswire... Merger. Whiskerbiscuit The Street 17 01-06-2007 09:04 AM
Sirius/XM Merger? metrofan SIRIUS Dogstar Cafe 0 12-07-2006 01:22 PM
Sirius and XM Merger - Rumor Sirius_Rich The Street 102 01-28-2005 10:29 AM
Merger XM & Sirius?? Mikey The Street 3 01-26-2005 12:02 PM

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 01:14 PM.
Powered by vBulletin® Version 3.8.11
Copyright ©2000 - 2020, vBulletin Solutions Inc.
Search Engine Optimisation provided by DragonByte SEO v2.0.39 (Pro) - vBulletin Mods & Addons Copyright © 2020 DragonByte Technologies Ltd.
All Content Copyright SIRIUS Backstage. All Rights Reserved. SIRIUS and registered trademarks are the property of SIRIUS Satellite Radio, Inc. The opinions posted on SIRIUS Backstage website and forums are those of the individual posters and/or this website and are not necessarily the opinions or positions of SIRIUS Satellite Radio, Inc.