In a recent Wall Street Confidential, Jim Cramer suggested that in order to get things moving in the Sirius-XM merger, the companies need to "go nuclear."What he's referring to by going "nuclear" is that either Sirius or XM (or both?) need to resort to a failing-company argument - something that they have not done thus far.
"I think that it's time," said Cramer. "It's time for these two companies to go nuclear, and just say 'Look, one of us is going to go out of business, and you'll have no choice, whatsoever.'"
The FCC mandate was to maintain that there was at least two satellite radio companies, but if either Sirius or XM (and Cramer is suggesting it be XM) use the failing-company argument, then the Commission will be forced to finally act.
"If I wanted to make this so that one of them went out business and the deal failed - I would just keep postponing the decision," added Cramer. "They don't have much longer to go."
Watch the video below...
Bullshit! Cramer is nothing more than a showman, and in Melvin's back pocket.
Have you seen either of the companies finances? It is not to far fetched, to see either of these companies going bankrupt. That's the truth plan and simple. Even with the merger, it maybe difficult to prove that Satellite Radio works as a business. The only thing that is clear, to me anyway, Satelite radio fans need this merger to survive or their will be no choice but to listen to terrestrial Radio.
FCC is still dragging its feet. XM is in trouble which ultimately may beneft SIRI. After June 30th things will really get interesting.
Cramer is correct on this. I have already spoken to Gary about it and he said that they are going to announce that XM is failing soon.
The first thing is both company's could easily go under, and would the government really care? Business fold every day in the U.S. These CEO's have ran these companies right into the ground with no chance in hell of ever making a profit let alone just paying for their operating expenses of maintaining satellites. I love the idea of satellite radio, but I think the business model is flawed. I hate to say it but not even a merger will save these companies as they will still ultimately go out of business anyway.
I have a feeling there are 3 people writing 100% of the posts on this sites. It's the same crap over and and over again!
SHUT THE F*CK UP!!!
Cramer is full of sh*t, get the right management in either staradio company and watch the fortunes turn around. Gary Parsons, Nate Davis, President and Lee Abrams should "go nuclear" and call off the "merge" and save xm from being taken over and stop Melvin Alan "Mel" Karmazin from making xm a footnote of history of failed media corporations. There is NO reason for xm to continue to be Melvin Alan "Mel" Karmazin bitch and there is NO reason Melvin Alan "Mel" Karmazin should cash in on xm's demise. IF xm were to finally do something with a backbone it would more than turn around the corporation and lead to churn from Sirius. xm forgot the golden rule of satradio There is am there is fm and there is XM. XM has always had the ability and the opportunity to do great things, but sadly xm's lame management made them more like am/fm and for over a year now have belittled xm into becomes the king of am and fm's Melvin Alan "Mel" Karmazin bitch. I for one think the prior and current french like actions are appalling. Xm should be leading the satradio industry instead of rolling over for Melvin Alan "Mel" Karmazin. Current XM management show that you guys have a backbone "go nuclear" and tell Melvin Alan "Mel" Karmazin where he can put his "merge"!
If one company does go bankrupt and only one survives, resulting in a monoply...would the FCC then break that remaining company down into peices and sell it off. (I think tahts what they did with a phone company ATT perhaps). If so how would that affect the stock price?
Anyone know the answer to this?
@1:40PM Coward: Are you American? If it wasn't for the Marquis de Lafayette and the French, you'd be speaking with a British accent right now.
As for XM, in the words of Eazy-E: "A bitch is a bitch."
I do like the way you think LAPTOP GAMER. Which is why there should be no "merge" XM and Sirius because it won't help. They both need to stay on their own and need to innovate the satradio market. I too agree the business plan is severely flawed, using sat's to provide audio is too costly when you figure in you can only charge so much AND you have to spend more than terrestrial radio (which has bigger pockets, more listeners, and more revenue) to continue to have the best content and talent and it's easy to know a "merge" will not solve the severely flawed business plan.
The only "go nuclear" plan should be to cancel the "merge" and show consumers both xm and Sirius are there to serve their customers through innovation while providing the best radio on radio. Direct competition is needed between xm and sirius.
Gaston LeClerque,
Are you French? If it wasn't for the American's, you'd be speaking with a German accent right now.
The big danger is that is one company fails then somebody will get to pick up the pieces for next to nothing and be on the air in no time. Sirius would be prevented from buying it. The special interest groups figure that dirt cheap is almost as good as free. That might be their thinking all along. It's not too big of a stretch to see this scenario playing out.
If XM and SIRIUS want to GO "NUKE," then there needs to be "ALL OUT WAREFARE" in a publicity campaign against the FCC, NAB, CONGRESS, and all others that have caused a delay in the decision.
If the merger is delayed or denied, then XM and SIRIUS should do an 'END AROUND(business partnership)' on the FCC(Federalized Criminal Cartel).
KEVIN MARTIN NEEDS TO BE PROSECUTED.
Uh oh said,
>>>FCC is still dragging its feet. XM is in trouble which ultimately may beneft SIRI. After June 30th things will really get interesting.
Unfortunately, by your statement - you obviously do not understand reading financials. To say that "XM is in trouble" and not say anything about Sirius, is pure naiveté. XM is not any more closer to going bankrupt, than Sirius is. A simple look at the liquidity positions of both companies -- and future cashflow needs will very quickly demonstrate this.
Too many people have been sucked in to this belief that "XM is in trouble" and that Sirius is just fine mentality. Unfortunately, none of them have taken the time to study the financials to see if what they believe is true.
As for Cramer -- he is admittedly friends with Karmazin (and Stern). His comments are clearly biased. With retail gross adds split 55/45 last quarter and with XM taking in the majority of OEM gross adds now -- plus with Sirius' total sub count getting closer to XM's -- the perceived growth of Sirius in relation to XM will continue to slow. This became evident finally in the last quarter and will continue here in Q2. It is obvious that Cramer didn't look beyond sub growth -- because had he looked more closely at the liquidity, financing needs and projected CaoEx outlays needed of each company, then he most certainly wouldn't be touting one over the other.
--
Cramer really is a complete idiot. Sirius basically did a out of court Bankruptcy 6 years ago. Did Sirius Go Away? As a matter of fact.. Did the music ever miss a beat. Of course not.
Globlastar waited 2 years in default waiting for the FCC to make a decision on a NPRM that would have brought new financing. In the end. Globalstar ran out of money waiting for the FCC to act, and filed Bankrutpcy themselves.
Did Globalstar go out of Business? Of course not. Service was never interrupted. The only thing that go effected was the shareholders who got wiped out. After the Bankruptcy, the new owner got Billions of dollars in assets for a dime on the dollar. And New Globalstar provided new pricing plans with much lower price points. You see, The Bankruptcy was actually good for the "public interests". Maybe not for the shareholders interest. But, the FCC doesn't really care about that.
Truth being know.. The FCC sees a good Bankruptcy as a good thing for consumers.
If either of these companies filed a petition, either company would have DIP financing standing at the door. Cramer should understand these basic concepts.
The music wouldn't skip a beat.. Only Shareholder value would be destroyed.
And so it goes,
PCSTEL
A-Coward, if you are right about the 3 people scenario, there are only two + me. This is my 2nd post, ever. But I am sure there are some pofessionals on these blogs being paid for by you know who. They ignore facts and spout the same BULL. It's shameful that the DOJ makes a wise, non-political decision and then gets shot down by the politicos. There are a lot of things wrong with this country that are caused by big money. And who speaks for SIRIUS and XM, just the consumer and the little guy. Long live Cramer and the DOJ.
PCSTEL, good post... with every comment made by Cramer on this merger, he demonstrates an obvious bias. Why? What are his intentions and what is he getting out of this, that is what want to know?
It's bankruptcy PROTECTION... not, they'rs going "out of business"... he knows better than that. CBS would be sitting there salivating for one of the companies to file for bankruptcy.
That aside, these two companies were in worse condition in 2002, than they are now. Yet both were able to refinance.
Cramer is right and XM needs to say no merger and we are gone.
That makes Mrtin the cause of the failure of XM. Martin is the reason bumper stickers .
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Cramer is wrong and seeks the improbable.
Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives.
I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling.
NAB is swift boating Sirius and XM .. who sit idle. Enough!
Multiple posting was intentional.
KenB-Ohio,
Your posts in not based in fact. While the DOJ rubber stamped it's decision it was not at all wise, non-political, nor pro-consumer. The DOJ:
" the Division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition, and that the transaction therefore is not likely to harm consumers. The Division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers.."
Maybe the evidence sucked but everyone here knows XM and Sirius do in fact compete with each other directly, and that direct competition is pro-consumer.
"“The Division’s investigation indicated that the parties are not likely to compete with respect to many segments of the satellite radio business even in the absence of the merger. Because customers must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider’s signal, there has never been significant competition for customers who have already subscribed to one or the other service. For potential new subscribers, past competition has resulted in XM and Sirius entering long-term, sole-source contracts that provide incentives to all of the major auto manufacturers to install their radios in new vehicles. The car manufacturer channel accounts for a large and growing share of all satellite radio sales; yet, as a result of these contracts, there is not likely to be significant further competition between the parties for satellite radio equipment and service sold through this channel for many years. In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger, the Division found that the evidence did not support defining a market limited to the two satellite radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite radio consumers. Substantial cost savings likely to flow from the transaction also undermined any inference of competitive harm. Finally, the likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term. Accordingly, the Division has closed its investigation of the proposed merger.”
This is where Melvin Alan "Mel" Karmazin and his xm counterparts have been misleading congress and it's own consumers. The FCC mandated interoperable satellite radios, Melvin Alan "Mel" Karmazin claims of one on his desk does not at all mean compliance and now the lack of these radio's in the market place are being used against the consumer.
http://contracts.onecle.com/sirius/xmradio.dev.2000.02.16.shtml
wake up to the truth KenB-Ohio, you as a fan of satradio are cheering for the wrong team.
firefox249, Kevin and the FCC are doing their JOBS. If anyone needs to do some time perhaps it's Melvin Alan "Mel" Karmazin for taking down another industry while lying and misleading congress and the ignorant with his BS.
Wake up folks. Just look at whats happening to xm, being Melvin Alan "Mel" Karmazin bitch is not at all healthy.
Plowboy,
"Xm and Sirius needs to start an on air campaign (yesterday) communicating to their listeners the value of the merger and asking customers to contract their Senators and Representatives. I have no idea why this strategy has not been used. It is overdue. Why have they not solicited the support of their base..... it's mind boggling. NAB is swift boating Sirius and XM .. who sit idle. Enough!" Posted by: Plowboy | June 13, 2008 2:53 PM
The NAB nor anyone else is "swift boating" anything. BUT Melvin Alan "Mel" Karmazin is misleading and lying to consumers and congress.
xm and sirius better continue to have enough sense not to ask their own customers to f**k themselves by pushing for Melvin Alan "Mel" Karmazin's "merge" scheme. For one there are not enough ignorant satradio sub's who would fall for xm and sirius's phony baloney plea's and it would piss everyone off hearing that s**t.
"Enough" is right "enough" of xm being Melvin Alan "Mel" Karmazin bitch, "enough" ignorant satradio fanboys thinking a "merge" is pro-consumer. "Enough" of satradio's true fans letting Melvin Alan "Mel" Karmazin destroy yet another industry.
Screw the French...Thta's what we did in WWII.....ooh lah lah...:) Spineless bastards!
I will be in gay Paris in August to spit off the Eiffel Tower. Can't wait...
Sirius and XM blah blah blah blah "merge" monopoly blah blah blah blah blah "Mel" Karmazin's blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah ignorant sat rad fan foys blah blah blah blah PRAISE THE NAB blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah
blah blah "merge" monopoly
*PAID FOR BY THE NATIONAL ASSOCIATION OF BROADCASTERS!
Sirius and XM blah blah blah blah "merge" monopoly blah blah blah blah blah "Mel" Karmazin's blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah ignorant sat rad fan foys blah blah blah blah PRAISE THE NAB blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah blah
blah blah "merge" monopoly
*PAID FOR BY THE NATIONAL ASSOCIATION OF BROADCASTERS!
Taking Plowboy's idea just that tiny step further to something which could work and make change:
What if us the satradio subs put a end to Melvin Alan "Mel" Karmazin's scheme of "merge" with our voices and wallets, helping the satradio industry save itself? Perhaps we should contact Nate Davis, n.davis@xmradio.com / Gary Parsons, g.parsons@xmradio.com and Joe Zarella j.zarella@xmradio.com letting them know their customers want them to put a stop to this "merge" scheme immediately. XM taking the lead on this and taking back the lead in satradio would go a long way with consumers and share holders. Stop xm being from Melvin Alan "Mel" Karmazin bitch
Come on Mr. Davis don't let us down
Corporate Mailing Address:
XM Programming Center and Corporate Headquarters
1500 Eckington Place, NE
Washington, DC 20002
Corporate Phone Numbers:
Phone: 202-380-4000
Fax: 202-380-4500
Listener Care: 800-XM-RADIO (800-967-2346)
If the DOJ just Rubberstamped this merger(What? 14 months) I hate to think what taking there timing and doing it the right way would be in your mind? Maybe your kids could get the outcome at there retirement, if the Chinease government lets them you retard! Go get your paycheck from the NAB, what are you getting for posting blogs on here. 10.00Hr for your college education. Selling your blood gets you more money and is more ethical!
Merger or not. If Satellite goes under I for one will never listen to Testicular again except for traffic or weather and that is for 3 minutes tops. The NAB and the companies they stood for killed themselves with their actions instead of embracing some of XM and Sirius's concepts. HD radio is just shitty programming with improved sound.
NO2FM.com
The NAB - National Association of Broadcasters - has been protecting their monopoly and the game is over! We support competition, they do not! Internet Radio is here to stay and you have spent millions trying to stop the merger between XM and Sirius. The game is over and we are sick and tired of it! I am calling for a boycott against FM radio in response to your ongoing campaign to protect FM radio from the competition.
"Multiple posting was intentional. "
YOU ARE AN ASS!
I can't believe Cramer thinks XM should be the provider to go under. Yes the Inno may be a few years old. But I tried Sirius. Even bought the Stiletto. Sirius CANNOT compete with XM's geo stationary Satellite system. Sirius has DROP OUTS all the time. XM rarely. I'd rather see the dog go bye bye.
"The NAB - National Association of Broadcasters - has been protecting their monopoly and the game is over! We support competition, they do not!"
¿¿¿¿¿¿¿ Let me see if i get this straight. A merged XM/Sirius WOULD NOT be a monopoly because they compete with AM/FM/HD Radio, IPODS, Internet Radio, Cell Phone radios, etc.
But AM/FM/HD Radio IS A monopoly because they compete with two SDARS, IPODS, Internet Radio, Cell Phone Radio, etc.???? And.... Allowing SIRI/XM to merge from two to one would therefore no longer classify them as a Monopoly??????
You know... Maybe.. Just Maybe you need to send your logic back to the "drawing board" again.
And so it goes,
PCSTEL
Where is Kevin this weekend,OH I don't know ,maybe on a plane heading over seas,see ya in July.When he gets back there better be only one company left..
j.dumanator,
Again labeling those who are speaking the TRUTH against this "merge" is whats makes YOU the "retard!"
take a step back, learn and listen before proving the "retard!" you are. Being Melvin Alan "Mel" Karmazin bitch is not at all healthy.
Greyfurgang,
The whole point of being a educated consumer and speaking out against the "merge" (and being a true fan of satradio is knowing satradio doesn't have to go under) Xm doesn't have to bow to Melvin Alan "Mel" Karmazin's ego and desire to kill them. Educated consumers know the "merge" is not about saving the satradio industry, it has been doing just the opposite and if allowed to go forward will the death of the satradio industry. The "merge" sure is not being done for consumers benefit, and if the industry is suffering even with the idea of "merge" then it's not being done for the satradio industry either. Melvin Alan "Mel" Karmazin had a big hand in killing terrestrial radio and now he's trying his best to kill off satradio and wants to cash out with his scheme. Most of know satradio is better than that, most of know the staradio industry deserves more, xm sure deserves more than to continue being Melvin Alan "Mel" Karmazin bitch till he kills them off with his "merge" scheme.
The only thing consumers can do now is tell XM to stop this "merge" and tell Melvin Alan "Mel" Karmazin to take a hike.... For the good of consumers, for the good of the satradio industry.
Corporate Mailing Address:
XM Programming Center and Corporate Headquarters
1500 Eckington Place, NE
Washington, DC 20002
Corporate Phone Numbers:
Phone: 202-380-4000
Fax: 202-380-4500
Listener Care: 800-XM-RADIO (800-967-2346)
Simpsonic,
Your boycott is laughable, your blame of the NAB for satradio's current problems is IDIOTIC.
"We support competition, they do not!" Really? YOU (by the way who's this "we" you speak of) are desperate to see a "merge" taking away vital direct competition in the satradio industry, taking away consumer choice in the satradio industry.
"you have spent millions trying to stop the merger between XM and Sirius" Really? (by the way by "you" you mistakenly accuse the NAB?) Do you know XM and Sirius have also spent millions on trying for this "merger"?
"The game is over and we are sick and tired of it!" There is that "we" again, who do you think YOU speaking for?
You are completely confused and desperate to blame someone. Your anger should rest with one person; Melvin Alan "Mel" Karmazin. Melvin Alan "Mel" Karmazin cooked up this scheme for a quick cash grab. The "merge" is not being done for consumers. The "merge" is not being done for the satradio industry. Better to listen and learn before also proving ignorance.
I really get a kick out of seeing the NAB boys squirm here. The merger will happen, satellite will dominate, and these low-life's will start paying royalties.
I've been writing letters on the NAB royalty idea... why should only satrad pay.... LMAO... I'm glad I'm not a NAB boy!
Dear Plow This,
I might be an ass, but I'm a smart one!
:) Bite me.
ENOUGH WITH THE MERGER!
Let Sirius die a very slow high contract death. Nobody needs to listen to those sports, shallow playlists, and those old hacks. ENOUGH I SAID! Im so sick of it all. Leave me and my Inno alone. MOTHER FUCKERS!
Homer sez: With retail gross adds split 55/45 last quarter and with XM taking in the majority of OEM gross adds now -- plus with Sirius' total sub count getting closer to XM's -- the perceived growth of Sirius in relation to XM will continue to slow. This became evident finally in the last quarter and will continue
Plowboy sez: Homer, why do you quote gross when not only doesn't "gross" pay the bills, and, in fact, XM's net retail was unbelievably negative.
Sirius has more net growth for 11 quarters and better (more lucrative) OEM contracts, and higher APRU's, and lesser quality content. That's why 90% of the market thinks XM is done for....and I agree with the market. No merger = no XMSR.
XM started one year before Siri and can't hold their lead.
hey dumbass. look around. how many cars have am/fm in their car? how many have fm or Sirius? yes, they (NAB) are protecting their monopoly.
and for the we. ask the cs3c (or whatever they call themselves) how many WE is!
evolve or die. The merger will help competition.
homer985...I never spoke about financials. XM is losing the subscriber battle and has already started to tap their emergency lines of credit. Surely if XM goes out of business then SIRI benefits. You don't need to check a debt to equity ratio to see that. Both companies are in trouble but one is in greater peril than than the other.
homer985 said,
"It's bankruptcy PROTECTION... not, they'rs going "out of business"... "
huh?
XM's model from day one is what got them here. The XM plan was predicated on them having about 7 million retail subs, generating, net of revshare, royalties, and billing (IOW direct variable costs) around $7 per subscriber-month (based on the $9.99 original subscription rate). That sub-level would throw around $600 million a year in cash available for fixed costs. Toss in around 4-5 million OEM subs at a net revenue of around $4/month and that's another $200 million a year. At that level you can fund expensive OEM deals that guarantee you a majority of subscriber gross and net adds.
And those deals are expensive. The typical OEM install costs XM around $70 in subsidies (based on SAC and that this SAC hasn't really changed even as the OEM has become dominant; and it's not because of the lag in Hyundai/Nissan/Toyota adds... SAC would be coming down faster from Q207 (which is when that item started ramping up) through Q108 (when those gross adds started being recorded in substantial numbers)). From GM and Honda, XM gets around $20-$25 up front per install. From Toyota, Hyundai, and Nissan, XM gets zilch upfront. On average, XM gets somewhere around $10 repaid upfront per install. That means that for an OEM install XM is not cash-positive on the install until, net of those cost-of-revenue items enumerated above, the OEM unit has generated $60 or so in self-paid revenue. In effect, the OEM program requires XM to burn $60 worth of cash per install.
Assuming 30% average OEM revshare on a $12.95 subscription, billing/customer service expenses of $1/month, and content revshare/royalties of around $1 month, and an effective conversion rate of 80% (60% GM/Honda (which is higher than the real conversion rate) and 100% Toyota/Hyundai/Nissan... the failed conversions from THN get baked into the $60 per install figure not into the revenue side), the net self-pay ARPU of an OEM install is between $5.50 and $6, so around 10 months of self-paying are required for the OEM install to pay for itself. Considering that you've got 3 months of promo status, and at least 3 months of on-the-lot status (before XM records the gross add, but after the subsidies have been incurred), you're looking at at least 16 months from install to repayment. A month or two more can safely be tacked on to discount future cash to present value. XM's cash requirement to keep the OEM program ticking over is thus something like $60 per gross add times a million gross adds per quarter times six quarters to repayment or, IOW, $360 million, on top of whatever fixed cost cash draws are there. Otherwise XM finds itself in a bit of a liquidity crunch. $360 million is high, but owing to the front-load payment vs. back-load repayment, the haircut for interim payments might cut it down to something like $240 million. The point is that with XM's other operations not quite positive and XM's liquidity situation not being much above $400 million last time I checked, XM as a going concern is a bit white-knuckle at the moment.
If XM had a million or two more retail subs, the cash flow generated from those subs should be sufficient to cover the costs of the OEM program until YoY growth in installs slows to a point where that program is self-sufficient. Retail was envisioned as a Mack truck pulling a few car carriers up a mountain road. Once the truck reaches the top, it can roll down the other side in a very efficient way (throwing off, eventually, a few billion a year in free cash flow like manna from heaven). Unfortunately the truck's engine gave out a few hundred feet from the pass. The cargo had to start helping the load over the pass.
Sirius to some extent has the same model, but the numbers are dramatically different. Sirius' OEM deals are designed for minimal cost. The average Sirius OEM install now costs around $90 in subsidies (that the relative disparity in hardware cost has narrowed like it has is one of the biggest unsung stories about this rivalry). However, Sirius' OEMs pay for promo periods at an average of around $10/month. With DCX (as they're still governed by the same basic OEM agreement) promoing for 12 months, Ford for 6, and most of the rest going for 3, the long-term average promo term is around 8 months. Figure that the average Sirius OEM install pays Sirius back about $75 upfront. That means that Sirius only has to recover $15-$20 from an install to break even.
Assuming $12.95 a month, 30% revshare and a conversion rate of 40%, with similar royalty/customer service/billing requirements. Sirius hypothetically nets about $3 a month per install in self-paying revenue. 5 months after the end of the normal promo period (13 months after the beginning of the promo period and around 16 months after the gross add was recorded), an OEM sub has paid for itself. Overall the time to repayment is basically level with XM.
If Sirius does 900k gross adds per quarter at $15 per gross add in net subsidy for six quarters, that's only $81 million in cash required to keep things ticking over on that program. With discounting, that's maybe $65-70 million in actual cash requirement for that program to sustain itself without starving the other aspects of operations.
Sirius does have around three-quarters of a billion dollars staring them in the face in required capex (the new satellites), while XM has no real capex needs on the horizon. Adding the OEM cash requirements to the capex and Sirius needs far more cash in the next few years than XM does.
However, there's a difference between borrowing to purchase a capital asset vs. borrowing to fund ongoing operations. It's somewhat easier to borrow to pay for the latter (read: rather difficult until the credit crunch works itself out) than it is for the former (read: damn fucking near impossible until the credit crunch works out).
"Sirius does have around three-quarters of a billion dollars staring them in the face in required capex (the new satellites), while XM has no real capex needs on the horizon. Adding the OEM cash requirements to the capex and Sirius needs far more cash in the next few years than XM does.
However, there's a difference between borrowing to purchase a capital asset vs. borrowing to fund ongoing operations."
XM financed their last GSO after it was in orbit with a capacity lease back. They leased the capacity of 1 of 4 in orbit XM GSO's.
Don't really see any reason why SIRI won't be able to do the same with a couple of NGSO and a GSO.
Frontmed has been whining about this uniformed dogma for a year now.
XM did it.. No reason why SIRI won't be able to do the same. Frontmed is just TOO BITTER to comprehend.
PCSTEL
The FCC has only accelerated the demise of both companies. Cramer mentioned how both companies are like a call option. For those of you who actually know what a call option is, I'm guessing the NAB-iots that post here may not, time decay accelerates toward expiration. While we don't know when Sirius or XM will essentially "expire", we continue to see extraordinary weakness in the trading of their common stock.
Furthermore, I believe these stocks are trading at bankruptcy levels right now. While each company having piles of debt, and XM having large payments coming due, these companies both have something tremendous. They have the 25 mhz. spectrum. And this is, in my opinion, where the residual value is both companies exist.
The markets are essentially pricing these companies as having failed already, and there are companies on the sidelines who are licking their chops and salivating at the prospect of the FCC rendering them with two slaughtered lambs.
simpsonic, "hey dumbass",
Your proving your ignorance with each additional post. How many cars have xm or Sirius? Most every new car does now... hence your NAB "monopoly" idea is DEBUNKED!
"As of 2005, Sirius receivers are available for various new Audi, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep, Land Rover, Lexus, Lincoln, Mazda, Mercedes-Benz, Mercury, MINI, Mitsubishi, Nissan, Scion, Toyota (except Corolla), Porsche, Volkswagen, and Volvo vehicles, and the service plans on adding availability for portable use. Subaru offers Sirius on the Forester and Impreza. Starting in 2006, all Rolls-Royce vehicles sold in the United States come with a Sirius radio and lifetime subscription as standard equipment. Sirius has an exclusive contract for VW and Audi vehicles from 2007 through 2012, and with Kia from 2008 through 2014, with an optional extension to 2017. Beginning in the 2007 model year, Bentley vehicles will have Sirius as an option, and it will be standard equipment in several models beginning in 2008. Porsche switched to XM Satellite Radio on their vehicles beginning with the 2007 model year."
XM is OEM in:
Acura, Buick, Cadillac, Chevy Trucks, GMC, Honda, Hyundai, Pontiac, Porsche, Saturn, Isuzu, Subaru, Suzuki, Toyota/Lexus/Scion, Lotus and Nissan/Infiniti.
GM is a key strategic XM investor and automotive partner and became the first auto manufacturer offering XM as a factory-installed option on 2002 Cadillac Deville and Seville models.
Current and Upcoming Models Featuring XM:
General Motors:
Buick: LaCrosse, Lucerne, Rainier, Rendezvous, Terraza
Cadillac: CTS / CTS-V, DTS, SRX, STS / STS-V, XLR, Escalade
Chevrolet: Avalanche, Cobalt, Colorado, Corvette, Equinox, HHR, Impala, Malibu / Maxx, Monte Carlo, Silverado, Suburban, Tahoe, TrailBlazer, Uplander
GMC: Canyon, Envoy, Envoy Denali, Sierra / Denali, Yukon / Denali, Yukon XL / Denali
Pontiac: G5, G6, Grand Prix, Montana SV6, Solstice, Torrent, Vibe
Saturn: ION, RELAY, SKY, VUE, AURA, OUTLOOK
Honda: Accord, Accord Hybrid, Civic, Civic Hybrid, CR-V, Element, Odyssey, Pilot, Ridgeline, Odyssey
Acura: RL, TL, TSX, MDX, RDX
Toyota: 4Runner, Avalon, Camry, Camry Hybrid, FJ Cruiser, LandCruiser, Prius, Solara Coupe / Convertible
Nissan: 350Z Coupe, Altima, Armada, Frontier, Maxima, Murano, Pathfinder, Quest, Sentra, Titan, Xterra
Infiniti: G35, FX, Q45, QX56, M35 / 45
Isuzu: Ascender
Harley Davidson: Screaming Eagle Ultra Classic Electra Glide®, Ultra Classic Electra Glide®, Electra Glide® Standard, Electric Glide® Classic, Street Glide™, Road Glide®, Road King®, Road King® Classic, Heritage Softail®, Fat Boy®, Heritage Softail® Classic, Street Bob™, 35th Anniversary Super Glide®
Hummer: H2, H2 SUT, H3
Hyundai: Accent, Elantra, Tiburon, Tuscon
Lexus: ES, GS, GS450h, IS, LS, LS600h, LX, RX
Lotus: Elise
Porsche: Cayenne
Saab: 9-3, 9-5, 9-7X
Scion: xA, xB, tC
Subaru: B9 Tribeca, Outback, Legacy
Suzuki: Grand Vitara, XL-7, SX-4
A "merge" will not be good for the satradio industry, a "merge" will not be good for consumers. Direct competition between xm and sirius has more than proven it's worth in many ways for consumers. hence your "merge will help competition" idea is DEBUNKED too!
your batting 100% simpsonic, do you too enjoy being one of Melvin Alan "Mel" Karmazin's blind, ignorant, bitches?
Concerned American?,
Glad to see you too are still insisting on proving your still confused. The FCC is doing nothing to "accelerated the demise of both companies" Melvin Alan "Mel" Karmazin through his "merge" scheme has "accelerated the demise of both companies".
Both Sirius and xm have "large payments coming due", not just xm.
Yet again "your opinion" is confused since that 25 mhz. spectrum is the public's radio spectrum the FCC just lets Sirius and xm us it. There is no residual value, since Sirius and xm can't sell off parts of "their spectrum". DEBUNKED!
Again if your dreaming about the demise of the satradio industry you should be thinking who is the true ring leader Melvin Alan "Mel" Karmazin and his cash grab scheme.
Concerned American?, sit back and learn the truth, instead of trying desperately to blame the FCC for doing their JOB. The situation Melvin Alan "Mel" Karmazin has driven the satradio industry into is not the FCC's fault.
The only thing consumers can do now is tell XM to stop this "merge" and tell Melvin Alan "Mel" Karmazin to take a hike.... For the good of consumers, for the good of the satradio industry.
Corporate Mailing Address:
XM Programming Center and Corporate Headquarters
1500 Eckington Place, NE
Washington, DC 20002
Corporate Phone Numbers:
Phone: 202-380-4000
Fax: 202-380-4500
Listener Care: 800-XM-RADIO (800-967-2346)
Debunked my ass! Go out on the street and ask every car you see if they have an fm radio or sirius / xm in their car.
Thanks for pointing out the obvious. You be big loser again!
Funny that you spent the time to list new cars. By the time people start buying cars again. You think Sirius / FM will be the only option!!
Go to bed "Anonymous Coward". You must be old... like AM old.
evolve or die. Think internet DUMBASS!!!!
nighty night ignorance! Don't forget to set your victrola alarm clock.
say no2fm!
say NO to the NAB.
say YES to internet radio and radio competition (on any device).
say YES to the merger! Let them compete with all the other devices and competition out there. (near future and present)
It's about content - Bye Bye FM! Move over if you don't want to compete!!!!
play fair! Stop the NAB's monopoly.
"Furthermore, I believe these stocks are trading at bankruptcy levels right now. While each company having piles of debt, and XM having large payments coming due, these companies both have something tremendous. They have the 25 mhz. spectrum. And this is, in my opinion, where the residual value is both companies exist."
All of which becomes the sole property of the debt holders when/if these companies file a petition.
I believe you are mistaken in you believe there is some 6 Billion dollars in combined equity available to the common shareholders in these two companies.
The Bankruptcy level of both of these companies is ZERO DOLLARS, ZERO CENTS.
But hey.. They might throw you some warrants to buy the stock at the next IPO. At market price that is.
And so it goes,
PCSTEL
Debra Borchardt doesn't know shit from apple butter.
simpsonic,
Nice that you prove your class matches your ignorance. OEM in cars since the 2002 model year (available for purchase in 2001) are "new cars"?
The NAB is not a "monopoly" however IF Melvin Alan "Mel" Karmazin's scheme is allowed to progress the satradio industry WILL be a "monopoly" at least for a short time till the entire satradio industry then implodes.
It's your option however listening and learning the TRUTH is much better than continuing blaming the wrong parties in this "merge" issue which it the total fault of Melvin Alan "Mel" Karmazin and you simpsonic though your ignorance are one of Melvin Alan "Mel" Karmazin bitches.
Blind ignorance Dispatched and DEBUNKED
All you negative NAB folks out there. All the negative posts!! Now i have a high school GED education, but basic math tells me these guys in the satellite radio business are doing alright. Feel free to correct me, slam me whatever you like , i've lost respect for you clowns along time ago anyway. SIRIUS shares outstanding, 1,500,000,000 x 2.54 approx. = 3,810,000,000. XM shares outstanding, 319,000,000 x 10.87 approx = 3,369,700,000. For a total of 7,179,700,000 shares outstanding. Now, 12.95 a month , with roughly 17,000,000 subs (and growing) comes to 220,150,000 a month x 12, comes to annually approx 2,641,800,000 thats not including internet, product sales etc etc. I know i'm leaving myself wide open for alot of criticism, remember high school GED. Have at me negative losing NAB, also some of you more intelligent folks tell me if i'm far off. This is in a bad economy and with all the corruption we have in this government. Mel don't quit!!!!! Charles M Scott
Speaking of class and ignorance ANONYMOUS DUMBASS, when the F*&% did I say anything about new cars??
I hope your nurse gets your meds!
The Merge will happen. Long live competition!
Melvin Alan "Mel" Karmazin needs to go! He is well into the process of killing another form of radio.
Nate, come on what do you say Monday morning call a press conference and call the whole "merge" aka Melvin Alan "Mel" Karmazin's killing off of xm off. You could easily take back major market share just being the satradio that is pro-consumer, instead of Melvin Alan "Mel" Karmazin's of screw the customer band of radio.
"Satellite radio seemed so cool a few years ago, but where are we now? XM and Sirius are still growing subscriber counts through carmaker installations but faltering on the retail front. Things are even worse overseas, where WORLDSPACE (Nasdaq: WRSP) recently got its creditors to agree to the deferral of debt payments. That rarely ends well."
The only thing consumers can do now is tell XM to stop this "merge" and tell Melvin Alan "Mel" Karmazin to take a hike.... For the good of consumers, for the good of the satradio industry.
Corporate Mailing Address:
XM Programming Center and Corporate Headquarters
1500 Eckington Place, NE
Washington, DC 20002
Corporate Phone Numbers:
Phone: 202-380-4000
Fax: 202-380-4500
Listener Care: 800-XM-RADIO (800-967-2346)
Theres the intelligence i've been talking about!! SIRIUS rules. They will win!! FM Radio dead, HD real bad, doesn't make any sense. Thanks Guys, SIRIUS, XM are really in your heads. Charles M Scott
More blind ignorance and lack of class from simpsonic.....
Typical of being one of Melvin Alan "Mel" Karmazin bitches. Failure to understand and see the positives with the current freedom to choose a satardio company is so typical of a blind ignorant satradio fanboy who is one of Melvin Alan "Mel" Karmazin bitches.
It's your option, however listening and learning the TRUTH is much better than continuing to prove your rude, crude and ignorant.
simpsonic's blind ignorance Dispatched and DEBUNKED yet again.
Nice way to start a conversation, your a real people person aren't you charles scott?
"Feel free to correct me, slam me whatever you like , i've lost respect for you clowns along time ago anyway. "
WHOA your misled AND your GED is failing you.
"This is in a bad economy and with all the corruption we have in this government. "
So blame the economy for Sirius and xm never making a dime since 2001/2002 when they started doing business? It is not "corruption" in the gov which is more than proving poor management and a poor business plan has doomed satradio from the start. Now you add the greed and arrogance of Melvin Alan "Mel" Karmazin and his scheme of "merge" and you get the current sad state of the satradio business.
Neither company has ever posted a profit and each has over $1 billion in debt
" but basic math tells me these guys in the satellite radio business are doing alright." ahhhh NO! they are not doing alright..... back to class
Hey coward show your real name, there in your head, thank you SIRIUS Rules
,
Hey coward the numbers baffled you didn't they?? There in your head, SIRIUS rules charles scott
Does anyone else want to ban the use of the phrase "sat rad fan boys" and similar terms? It just sounds gay.
Bill Cooke,
Ban the use of a descriptive word? Na not unless we can also ban you for being homophobic.
charles scott,
how old are you? not only are you confused but you seem to be playing games by posting "SIRIUS rules" Are you trying to point out you think xm doesn't? childish... and NO your GED mentality is the one thats getting "numbers baffled"
Take some time to listen and learn the facts.
"Better to remain silent and be thought a fool than to speak out and remove all doubt"
-Mark Twain
More blind ignorance and lack of class from the NAB coalition
Typical of being one of Ronald McDonald Fehr's bitches. Failure to understand and see the positives without the NAB and its heathens is so typical of a blind ignorant NAB fanboy who is one of Ronald McDonald Fehr's bitches.
It's your option, however listening and learning the TRUTH is much better than continuing to prove your rude, crude and ignorant.
The only thing consumers can do now is tell Ronald McDonald Fehr to eat a dick.... For the good of consumers, for the good of the satradio industry. and for worse for our friend NAB fanboy!
NAB fan boy's blind ignorance Dispatched and DEBUNKED yet again.
right back at ya! - - ANONYMOUS DUMBASS! so typical - is your stupid remarks.
...and more blind ignorance and lack of class from "ANONYMOUS COWARD" - COWARD!
Typical NAB bitch!
Success in understand is understanding that we do not have current freedom to choose a satradio company. They are broke! ...and need to merge - so we CAN have a choice! (only you would go buy a XM and Siri device in the past 18 months).
LON