Sirrius-XM is in deep trouble - much debt and the stock is trading at about a dime. But, IMHO they have a superior product over broadcast radio, and I can’t imagine owning a car without it.
I don’t follow the business - how exactly did they get themselves in such a mess, and what is the path out?
Sirrius-XM is in deep trouble - much debt and the stock is trading at about a dime. But, IMHO they have a superior product over broadcast radio, and I can’t imagine owning a car without it.
I don’t follow the business - how exactly did they get themselves in such a mess, and what is the path out?
Path out is simple, and you’ll be able to thank the dems. When the Fairness Doctrine is reinstituted, the big talk show guys will all move there…Now’s the time to buy the stock!
Sirrius-XM is in deep trouble - much debt and the stock is trading at about a dime. But, IMHO they have a superior product over broadcast radio, and I can’t imagine owning a car without it.
I don’t follow the business - how exactly did they get themselves in such a mess, and what is the path out?
Paid too much for content given the elasticity of the demand for the service.
I have a lot of friends that love it. I hated it, it would continually drop out and I never found a music station that was as good as a few of our local ones.
Its a business with huge fixed costs and virtually no variable cost. IIRC when the two merged they needed to borrow a ton of cash, so the only way out is more subscribers or higher access fees…
Oh so many reasons…too much debt, too high subscriber acquisition costs, paid too much for FCC licenses, pays too much for programming costs, problematic consumer = slowing sub growth rate, credit crunch limited access to capital as it ate up cash. Asset value is there but company may need to restructure and equitize debtholders…that is why Ergen of Echostar has been buying debt to gain control.
I got XM with my last car and really enjoy it, although I only listen to about 6 stations.
I hate commercials, and the idiot ‘radio personalities’ on broadcast.
I hope they survive.
XM came with my new car, and I just re-upped for a year. I love the service, hope it doesn’t go away. They have almost 20 million subscribers, so you’d think they could find a way to run a profitable company.
I’ve bought about 10,000 shares of SIRI the last couple months, paying aroun $.10-$.12/share. The price spiked last week to $.19 with rumors that Echostar was buying up their debt, I could have sold off and made a nice 40-50% profit…
I see this as a total gamble, but if the company survives, I see no reason the stock couldn’t be $3/share in a few years.
Now’s the time to buy the stock!
not according to these guys:
http://seekingalpha.com/article/119133-15-companies-that-might-not-survive-2009
.
The mess is caused by the fact that a) satellites are expensive and b) aquiring and keeping customers via programming and discounted equipment is expensive. They paid 100’s of millions to build and launch the satellites and 100’s of millions more to Howard Stern, NASCAR, MLB, NFL, Martha Stewart, etc to attract and hold customers plus they discount radios and front everyone who buys a car months of free service. It adds up . . . .
I think its a great idea but the market can’t support Sirrius-XM with its current debt level so they (it) is probably doomed. But, the satelites are not going anywhere and assuming they can’t be reprogrammed from earth for other uses, whoever ends up owning them is not going to just turn them off. So after the company goes bankrupt some version of satelite radio will probably still be around.
I have to say though that I have noticed a move toward a more “commercial” sound which is very disappointing. XM 5 years ago was much more of a real alternative to regular radio than Sirrius-XM is now. There were stations I really liked which never played anything I heard on regular radio. Now, the stations seem to be becoming more generic gendre statitions. There was a time where I would have given up food to pay my subscription but I could live without it now (although I still listen). You want rock/pop or country you get it 24/7 without commercials but you get the same songs you hear on regular radio. Its starting to just become Clear Channel but via satelite.
Charlie Ergen, of Dish Network fame, is quietly buying Sirius-XM bank debt. This unsubordinated debt puts him in the front of the line when (not if) Sirius XM goes bankrupt. Sirius continues to service the debt, which is becoming onerous. The only way out is bankruptcy and Charlie gets the valuable assets (satellites, repeaters, and most importantly, the spectrum). Look for Dish to own Sirius XM by 2010.
Gee Joe Clayton is running a company (another company) that is going to hell. Well i’ll be…
This time he’s only helping.
Gee, if only I could get paid that much to do such a wonderful job.
I don’t know beans about corporate finance - but isn’t waiting for bankruptcy a little risky? Could Siri do something tricky like sell off valuable assets before going belly up? I see he has made buyout offers, isn’t that the safer route if he really wants control of the whole company?
No. In fact it is better for him (assuming he can purchase enough of the unsubordinated debt) if they do declare bankruptcy. That debt has to be secured by something – in this case it is the aforementioned assets. Who will get stuck are all the stockholders. They can sell off some assets, but that only gives them short-term cash. Their debt right now is crippling.
It’s kinda like when the sporting goods store guy owed Tony Soprano a lot of money. Tony used the debt as an instrument to financially wreck the store and suck anything of value out of it…only this is legal.
In Reply To
In Reply To
Now’s the time to buy the stock!
not according to these guys:
http://seekingalpha.com/...ght-not-survive-2009 "
Now may be the time to sell.
News as of an hour ago.
Sirius XM Prepping for Bankruptcy: Report
Dave
Makes sense in an economy like this. It’s luxury that is easily replacable with free medium.
Some one will gobble it up for 10 cents on the buck.
I hope whoever takes it over keeps it going. My car is at the shot ant the rental has a normal radio. I just turned if off on my way home because I couldn’t stand the commercials and other crap. I had no idea how hooked I was until today.
Dave
Audio books man. I hate normal radio, but hit a big city library and you get one hell of a selection of audio books.
Good stuff.
Sirius XM Prepping for Bankruptcy: Report
http://www.thestreet.com/...html?cm_ven=GOOGLEFI
Dave
I picked the wrong day to quit sniffling glue… 
Sorry man, today had to be a rough day for you. If it makes you feel better I took a much larger hit on Sirius stock a few years ago.
Dave
Looks like the Fat Lady is cinching up her voluminous panties and taking a deep breath …
