Orbitcast is live blogging the Sirius Satellite Radio Inc. 4Q07/FY 2007 conference call. Just keep refreshing the page to catch all the updates..- Listening to the "forward looking statements" disclosure...
- Karmazin: I wish I was here to talk about the merger approval
- Despite the merger, "we've executed almost flawlessly"
- Solidified out position as one of the fastest growing media companies in the world.
- Sirius produced positive cash flow for the 2nd half of 2007 - a first in the company's history
- Last year, Sirius provided guidance, and they met or beat their numbers. Mel is going through the numbers right now.
- January was the 28th consecutive month that Sirius had the majority of retail marketshare
- Total subscribers increased 38% for the year
- While retail net additions are clearly down from Q4 of last year, Sirius still has the highest NPD share
- Inventory is in "excellent shape"
- We continue to believe that the aftermarket channel will continue to contribute to growth
- It's clear that there's increasing competition in the audio entertainment sector
- Sirius will combat this by continuing to innovate
- Ford continued agreement to 2016, with 70% penetration rate
- Lincoln will continue to offer Sirius as standard
- In the '09 model year, Ford will offer Sirius Travel Link - their new suite of data services
- Ford has decided to make Sirius Travel Link standard in EVERY next-gen navigation system
- Later this year, Kia will offer Sirius as standard equipment (beginning with 2010 model year)
- Penetration rates exceeded Sirius' own projections
- Sirius is very focused on the used-car channel
- In 2008, Sirius will launch a used-car program with <em>every</em> OEM partner
- Now Scott Greenstein is talking about programming
- Talking about launch of Grateful Dead Radio, Siriusly Sinatra, and E-Street Radio
- The History of Howard Stern - Act 2 of the 5 part series will debut soon
- Gearing up for the launch of Doctor Radio
- Talking about the press that Sirius' content brings in: the Today show, David Letterman, etc.
- Now on to David Frear to talk about financials
- Other than revenue share and royality expenses, every operating expense declined for the year
- The improvement in Sirius' operating expenses is "measurable and substantial"
- All of this was achieved despite the CRB's decision
- For the first time ever, Sirius achieved a positive free cash flow for the 2nd half of 2007
- Back to Mel... let's talk about the merger
- During the Q4, shareholders of SIRI/XMSR approved the merger
- "We believe we've made the case"
- Sirius will offer more choice, better prices - and that is why it is in the public interest
- The merger has also received broad support
- "We look forward to a fast positive ruling from the government"
- Sirius is well positioned - whether we combine with XM or as a stand alone company
- Their goal is for positive free cash flow, EBITDA - whether they merge or not
- Now on to Q&A...
- (Ben Swinburn - Morgan Stanley)
Q: Would be willing to give a 2-3 year outlook for the retail channel? How much does that have to do with the pending merger? And how much of that has to do with the increase in the OEM channel?
A: We think that the merger has certainly contributed to the confusion in the market. Their own secret shoppers have received misleading information from sales people. Fundamentally, we see no reason why aftermarket should have a significant role in the growth for our company. OEM owners should want to have Sirius everywhere. Also, in terms of aftermarket, take into account used-cars. - (Bob Peck - Bear Stearns)
Q: Are you able to comment at all about any recent news with the DOJ? Have you met with them? Can you quantify want the synergies.
A: No, we cannot comment on the DOJ. "We wait by the telephone... it's been more 'radio silence' than anything else." As the market cap have dropped, the synergies have a bigger and bigger percentage.
Q: There's a termination date on the merger, will that be extended?
A: You should assume that both companies will have a board meeting, and you'll find out the decision from there. - (David Bank - RBC Capitol Markets)
Q: Both Ford/Chrysler is 70% penetration - is that the option being available? or is that 70% of actual cars will have Sirius?
A: Chrysler is already at 70%, and Ford is ramping up to 70%. And those percentages are of the production, not the option. They are physically in the car. - (Eileen Furukawa - Citigroup)
Q: Should the merger NOT go through, would you trim the production costs? Impact on ARPU?
A: We believe that we are fully funded, and that we will become a profitable company. We think that what drives our success is our content. You should look at our costs as something that will probably will go up. Programming is not something we want to cut. "If Howard is listening... we would love to renew his contract at less of a cost." ARPU was impacted by instant rebates, more so than mail-in rebates, and there's a trend in retailers to go with instant rebates now. Advertising grew 15% in Q4, but our subs outpaced that, so that impacted our ARPU. - (Kit Spring - Stifel Nicholas)
Q: Satellite launches as a standalone company?
A: Satellite launch was deferred from Q408 to Q409 - we don't need it until mid-2010. So we elected to defer the launch by a few months. - (April Horace - Janco)
Q: With respect to advertising - how should we view advertising on a long term basis?
A: Mel - it's a source of frustration for me. I can give you the spin story about how good we have done, but we ought to be doing a better job in selling Howard. We ought to be doing a better job than what we're doing now. - And that concludes the call.
You must type really fast. :-) This is why I LOVE ORBITCAST!
Great job SIRI!!!!
the DOJ needs to just move on this....the war which is costing the country billions of dollars was decided in less time than this..
>>> "If Howard is listening... we would love to renew his contract at less of a cost."
Uh-oh. What happened to, "Oh, yeah, we would extend Howard's contract on the same terms..."
"we ought to be doing a better job in selling Howard"
How about nobody wants to spend money on a tired hack
Great job transcripting the call this fast and extensively!
BTW: It can still be heard (recorded) on:
http://investor.sirius.com/Visitors/event/build2/MediaPresentation.cfm?MediaID=29859&MediaUserID=2767228&Player=1&default=1&rand=1204033914497
I think the comment about loving to sign Howard for less money is a fantasy. You shouldn't expect him to take a decrease in pay, His heads to big ( not a jewish crack) he is just greedy.
It shows that SIRIUS is still kicking XM's ROYAL A$$!
The retail side will again be bright once they buy XM and get rid of all that mismatched XM hardware nonsense.
Howard is doing well and so is NASCAR. Like Ryan, it did suprise me that XM's golf channel is so popular.
Anyway, good job SIRIUS.
Funny, Mel seems to be angry that the advertising revenue is not coming in. You can take the greedy business man out of terrestrial but you cant take the terrestrial out of the greedy business man.
Makes me kind of worried about a merged company with no "commercial-free" competition. If you can make $1000 a day average from every channel by playing 10 commercials a day for $100 each on select channels (i.e. 75 music stations), that could turn into a good $75k a day or $27M a year. Im worried that our friend Mel has other ideas for a post-merger company.
I find it interesting that they deferred the launch (and associated expenses) related to the launch of Sirius FM-5 this Fall. That defers $100 million of CAPEX from this year into next year -- that is one way to achieve positive FCF for 2007, maybe.
However, the remaining payments on FM-5 and launch/insurance expenses are being delayed to next year... they also have payments on FM-6 that are to paid in 2009. Did they delay that into 2010? Or will they try to foot the bill for both in 2009?
Regardless, the delay in launch (and payments) is a bit telling to me of the state of their cashflow and capitalization. No, I'm not saying that I think they're having problems or going bankrupt -- so don't assume that that is what I'm saying, because it's not. But when you see a major CAPEX project being pushed off into a different year -- that is moving it from one set of books to another. You do that for a reason... typically a cash flow reason.
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Homer, I don't follow the books of these companies like you do, but I thought the EXACT same thing as you when I heard the delay of the sat. launch. When there is "no particular reason" for the delay, it sounds like accounting to me...
When I saw that, I thought of them possibly modifying the satellite because of the merger and all. I'm a tech guy, so I didn't think of the accounting issue. Don't you think they could modify the satellite for merger related reasons?
Doesn't XM count FCF minus capex? Doesn't Sirius include capex in its FCF calculations?
"The History of Howard Stern - Act 2 of the 5 part series will debut soon"
Must be another vacation coming up.
You people are retarded, he specifically stated that he was talking about all the channels that aren't commercial free. The music channels would be left alone, get over the fact that they might be trying to push commercials on you, because they aren't stupid. One of the biggest reasons to subscribe to satellite radio is no commercials with the music.
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of its growing, it must be laid under water, the effects of a sufficient one. The capital of all the individuals of a nation has its