Sirius XM and next year's $1 billion debt - Orbitcast

Sirius XM and next year's $1 billion debt

| 46 Comments
Mel Karmazin"There's hardly a day goes by when I don't ask myself [whether Sirius will survive]."

That's what analyst Tuna Amobi of Standard & Poor's Equity Research said to BusinessWeek in a recent article about Sirius XM Radio Inc. and its mounting debt - which will add up to more than $1 billion next year, according to the report.

Amobi, of course, rates SIRI a "buy" because it's such a cheap way to profit from any upside.

But that doesn't dispute the fact that there's a lot weighing on Mel Karmazin's shoulders right now, particularly the  $620 million in debt payments due in February and May.

"We are very confident of taking care of the [$270] million in February, and we are confident the banks will extend the maturity in May," says Sirius XM Radio Inc. CFO David Frear. The company forecasts it will be able to generate $300 million in earnings before interest, taxes, depreciation, and amortization - effectively easing its cash needs next year.

Analyst James Ratcliffe of Barclays Capital estimates that Sirius XM needs to raise $750 million to $800 million to cover its debt repayments, programming costs, and capital spending for next year.

Which brings us to the company's plan to ask shareholders to allow it to nearly double its total shares.

"I don't think they want to issue more equity," said Ratcliffe. "But given the conditions of the credit market, they may have to."

[BusinessWeek]
Thanks Karl!

46 Comments

When will they be delisted. They've been below 1.00 for over 30 days!

XM and Sirius should use the picture of Mel on this post as the graphic logo for their Halloween channels. That picture is far scarier than anything their art and marketing departments could come up with. That is providing Mel didn't let everyone form the art and marketing departments go yet.

Mel = Boo!

"There's hardly a day goes by when I don't ask myself [whether Sirius will survive]."

Yet, "Amobi, of course, rates SIRI a 'buy' because it's such a cheap way to profit from any upside."


This guy has lost his freaking mind.

Where are all those analysts who were telling us how good this merger would be for the sat radio business? Now, the best we can do is, "I don't know if the company will survive but I think you ought to buy shares 'cause it might go up"?

Tuna has lost it.

Truly unfortunate. I was a true believer when they came out in 2003, but mismanagement will kill anything.

It just reinforces the reverse split followed by eventual reorganization. I doubt the service will go out of existance, rather they have to get out of these expensive and unprofitable contracts with MLB, NFL, and others. The only one that has paid for itself was Stern, and I really dont know if they have brought in 500 million dollars in revenue from him. He did save SIRI however.

If these companies hadnt spent money like drunken sailors, had obeyed the FCC on their modulators, and hadnt had the unfortunate arrival of the IPOD they would probably be doing fine. But shoulda, coulda, woulda dont make a company strong in the real world, so down the tubes they will go.

After the reverse split its a great shorting opportunity as I think they will go to zero, and probably a good investment after they come out of reorg with new shares and a whole lot less expense.

Gee.. let me think.. is Howard Stern really worth that much money?? how about Opra?? or MLB?? maybe they should Clear the slate or Channel some other way of making money.. get it?? Clear Channel...

Thanks Mel for effectively killing the Sat Rad business. You guys wanted the merger, you got it. This merger reminds me of a a drowning man grabbing onto the lifeguard and pulling him down with him. It really turns my stomach.

Good luck bro.

Your mom's box.


'nuff said.

XM came out on 2001.

Your Mom's Box Indeed.

Seven More Days Till Halloween
Halloween
Halloween

Seven More Days Till Halloween
De-list Siri Stock

A-BOO!

I have to agree that Howard and the rest of the high-dollar content has not panned out. Did Howard "save Sirius"? Maybe, but in so doing he might have killed satellite radio. Howard buoyed Sirius up enough that they were able to take over their larger and more successful competitor so they could, it now seems, ruin both companies by implementing terrestrial-style garbage programming that people won't be willing to pay for, and which ratings numbers prove is less desirable to satellite radio listeners than what XM offers.

Howard can't carry both companies because the people who for some inexplicable reason want to hear him already can on Sirius.

Amoebi in Tuna is just not healthy no matter how it's consumed.


Nasdaq suspends dollar delisting threshold
Release No. 34-58809
In Release No. 34-58809, Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Temporarily Suspend, through January 16, 2009, the Continued Listing Requirements Related to Bid Price and Market Value of Publicly Held Shares, the SEC is seeking comments on the Nasdaq Stock Market LLC's temporary suspension of a listing requirement that normally results in shares being delisted if they trade below $1 for 30 straight days.

Comments on the proposal, which was released on October 17, 2008, are due 21 days after publication in the Federal Register, which usually occurs a few days after publication on the SEC's website.

The SEC waived its normal 30-day window on rule proposals submitted by securities exchanges and other self-regulatory organizations because of the market crisis, making the rule effective upon issuance.

Release No. 34-58809 temporarily suspends, through January 16, 2009, the minimum price requirement that protects listed companies from becoming penny stocks. After the suspension is lifted, the Nasdaq will assess a company's satisfaction of the market-price listing requirements based on trading after January 19.

In the release, Nasdaq said the past several weeks of “almost unprecedented turmoil” led to a dramatic increase in the number of securities trading below $1. According to Nasdaq records, 344 companies traded below $1 on October 9, 2008, up from 64 on September 30, 2007. More than 300 additional stocks were trading between $1 and $2

Someone with cash will step in and buy it.

Sirius XM is now Apple XM radio!

We all know whoever buys it will drop the Sirius name. XM is sooooo much better of a name.

Sat rad will live on, but the shareholders are smoked.

Blue Horseshoe LOVES Sirius XM radio....

xcountry - don't excuse the DOJ and the FCC. That CORRUPT tandem executed the first potentially fatal blow to satellite radio, and the company has been on life support since. It never had to happen, it shouldn't have happened, and I have had total contempt for the Bush administration ever since (actually way before the merger delay). I agree, their spending has been completely irresponsible, and now they are starting to sound like terrestrial; there will be cancellations galore if they keep it up! It is all very, very sad.

Mel = LIVER SPOTS.

Tonight, on an all new House! House has to kill 10 babies to save Sirius XM due to Mel's LIVER spots.

/ Anthony announcer voice off...

What a joke this site and this stock have become...I told you nimwhits this would happen a long long time ago...I made my cash boyz...meanwhile you numbskulls hung on ...what a bunch of losers. see ya boyz!

I didn't hang on to SHEE-ITE.

I never owned share one of either company.

I just come here to poke the bear!

IF THIS STOCK WAS TRADING AT $4-$5 TODAY WOULD YOU ALL BE COMPLAINING? I DON'T THINK SO.

>>> IF THIS STOCK WAS TRADING AT $4-$5 TODAY WOULD YOU ALL BE COMPLAINING? I DON'T THINK SO.

I wouldn't. I would be saying, "Hey, maybe I was wrong all along and the merger was a good thing after all. An XM share would be worth $20, which wouldn't be bad under the circumstances".

Unfortunately, as it turned out, XM's management sold shareholders, AND listeners, down the river.

Hey matthewinaz how is your post relevant to anything?

If the stock was at $5 (without a reverse split and the latest dilution) that would be 20 times higher than its trading now and would give them a few more options for dealing with the debt.

"There's hardly a day goes by when I don't ask myself [whether Sirius will survive]."

I can answer that, HELL NO! The idiots that run siriusxm have weakened the company to the point that it has no chance of surviving a recession.
I predict that within 3 to 5 years this whole thing will go belly up and we will all see the big NO SIGNAL and we will hve nice paper weights.

Bring Hugh Panero back .

sat radio will be gone within a year tops

Stack pointer: It's because they probably all were shorting the stock in the first place, expecting this to happen.

I'm so disillusioned that I got a new truck, and have had my receiver sitting in a cupholder for over a month now. With all the bad things that have happened, and the stories about the horrors to come in mid-November, I'm not spending a cent on anything until all this settles down and I see how bad the product is. If they screw up the rock channels much, I'm out. I'm not buying a new receiver to spend less (a la carte) on programming I'm not enjoying. Slacker, here I come. They should send Mel a Slacker for free, for all the business he's going to be giving them over the next few months. You thought the last couple Q4's looked bad for retail.

It won't survive under the current ownership. Mel K will get voted out on his ass by shareholders, or will resign himself after selling to any number of companies (Apple, AOL, CBS).

It won't and can't survive with the incompetent boob in charge of it now.

Since I have Sirius, my signal will say Acquiring Signal, which happens to be the most popular channel on Sirius.

Anyway, Mel and Gary and the rest of the board of directors completely mismanaged Sirius and XM as standalone companies and as a combined entity. I wonder all the time how a merger worth some 12B to 14 is now worth less than 1B. I also wonder how Gary Parsons continues to allow his son to be employed at he company while actual productive people were let go.

I dont think its going to take 3-5 years. I think they reverse split within 1 quarter and declare a reorg by end of 2009.

But I disagree that there will be no signal, they will simply wipe out existing shareholders, refinance, renegotiate those expensive contracts, and start over.

I think its a great short upon reverse split.

A

Did ANY of you (whether Sirius or XM subscribers) get a survey/questionnaire asking YOU what should stay and what should go? We're PAYING CUSTOMERS and don'tcha think maybe WE should be making those decisions?

Read this article: "Sirius and XM Satellite Radio Offer Dual Programming - Most of It Bad" at http://www.edmunds.com/insideline/do/News/articleId=134326

MondoPD,

Suggest you do what 1000's of other CUSTOMERS are doing, drop each and every subscription you have with SiriusXM many others before you have learned this turd is no longer worthy of consumers money.

Good article - thanks for the link. I'm glad to see some negative reviews coming out in a variety of media outlets. Trying to be optimistic here, maybe the delay in implementing the new channel lineup is due to rethinking some of this. I can hope.

Sirius XM is now Apple XM radio!
More like "Sirius XM is now Clear Channel Satellite Radio!", I'm afraid.

My first inclination is to say that Stern is both a blessing and a curse. But I think it's really 2 things: the infrastructure is too expensive (satellites, etc) and the monthly subs are too cheap. Plus they have too many channnels. 10 music channels and 10 talk channels, and 1 channel for Howard, may be do-able. Just get rid of all those extra channels, and no big name stars, except for Howard. And simplify the billing. Hire me and we can work out the details.

SELL NASDAQ!!..SELL NASDAQ!!..@000.2 a share

ohhhhh jimmy....

"But I think it's really 2 things: the infrastructure is too expensive (satellites, etc) and the monthly subs are too cheap. Plus they have too many channnels. 10 music channels and 10 talk channels, and 1 channel for Howard, may be do-able. Just get rid of all those extra channels, and no big name stars, except for Howard. And simplify the billing. Hire me and we can work out the details."

I can remember when XM's fixed operating costs were under $150M. Only when they started responding to SIRI's overpriced content in-kind did XM run into problems.

As to 20 channels, they wouldn't have any subscribers if they only had 20 channels.

Howard adds more to SIRI's annual operating loss than any other talent item. And you think they should KEEP him?

I think that Howard should announce that his salary of $100 million a year was excessive, and also unwarranted burden on a new startup company like Sirius. Then he could renew his contract early and take a 75% pay cut for two years to help bring Sirius-XM into the black sooner. Dreaming?? It would be a goodwill public relations move that could help both himself, and Sirius-XM in the long run.

this tech. Is awsome I'm at the pool in California and I live in Philly ,listening to the eagles on my stiletto2 if only best of had my phillys world series I'd be in paradise!!!

Funny you should write that. I decided this morning to cancel my five XM subscriptions on Monday.

And Sirius didn't put the screws to its shareholders?

It was a pretty picture that both sides painted and the government drug out the process. That is where mis-management of both companies shined. The merger proposal should have been withdrawn.

It was a fantasy to think there would be a "merger of equals" considering the debt ratio of Sirius. If XM could not survive on its own, then it became do or die time. XM should have found a parent company to adopt you, instead they married their indigent, retarded cousin and expected a functional family!

mel needs to go.. he is a scam artist and con man. I know very well. He projected $100 million dollars in ad revenue and boy have they come up short.... it was a number that came out of his butt hole.... then made everyone in sales miserable miserable to try and hit that number.... it didn't happen and people got fired. howard was a nightmare to sell.. no mainstream advertiser wanted him.. he was NOT worth the money they paid him.. but they will never ever admit that...
mel needs to go! he sucks.. he is all spin and the worst manager possible.
lets see i can buy a u.s. postage stamp for 42 cents or sirius stock... i think i'll get the stamp!!!
see u sirius... i give you another year.... bleeding money for years already.. don't believe the con man anymore!!! he needs to get kicked out and retire ...
what pisses me off is its not even his money.. he lost all his stock investorrs money.. and yet continues to rake in millions a year while the hard working person gets fired... go blow mel!

What I would do personally is make Howard 101 a classic Stern show channel 24/7. This could easily be done and they obviously have the tapes to do it.

....be the same fate for Sirius/XM?

Everyday, the Sirius/XM merger reminds me of how the Sprint-Nextel merger went down. First, everyone was told that it was a "merger of equals". Meanwhile all the Big Dogs, (Forsee, Donahue, et. al) already had one hand on the rip cords of their golden parachutes. Then, in a "cost cutting" move, Sprint gutted the talent pool of Nextel (nevermind their own redunancies). Finally, they let the more superior (and profitable) of the PTT systems "die on the vine". The end result was that the customer got crappier service as well as technology. Today, Sprint is about as useless as a football bat...JMO.

LOL, a football bat. Good one Shocap.

Funny, I didn't see the similarities to the Sprint/Nextel merger until you pointed them out.

Sprint really did let Nextel go in the shitter. I used to be a Nextel customer, along with a lot of my friends/co workers. Now, I know very few people who still have Nextel. We use them for car to car communcation at my part time job, and well, they SUCK. Half the time the radios don't work, and we end up carrying our personal cell phones instead.

Pity, it was a good service back in the day...

Mel will do what he's done at every media company he's been with:

1. Make a big deal, and project millions and millions of dollars in revenue.

2. See the company spends money like drunken sailors (making sure he gets his cut).

3. When it fails, blame everyone else.

4. Take the his golden parachute and splash down at his next victim.

XM Radio management is absolutely horrible. I have talked to 8 people trying to get a bill straighten out and they are all STUPID. Two hung up on me. Tried a manager and she was even worse. I will never pay another cent to this company and we have 3 vehicle with XM. I would never invest anything in a stock with this kind of management. It would be a losing propostion.