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Sirius XM Doubles Up on Sports to Sack More Revenue

by: Tyler Savery August 14, 2008 | about stocks: SIRI    

Tyler Savery

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You love baseball, but your car came with Sirius. You love football, but have always been an XM subscriber. These are problems of the past as Sirius and XM have now merged to form Sirius XM Radio.

When people think of merger synergies, they tend to think of cost savings that are derived from items such as the elimination of duplicate functions, savings on advertising, or savings in customer service and billing. Some synergies have potential to add revenue, and for investors, the fact that these types of added revenues seem to be getting overlooked could be a positive on the equity.

We covered one obvious revenue stream in Howard Stern, who as the King of All Media, suddenly finds himself with an expanded audience by the addition of XM subscribers that will soon be able to get Stern's program. The next obvious crossover programming would be sports.

Major League Baseball is right now in the midst of a pennant race, and the National Football League is just now ramping up. The timing of the merger from a sports perspective could not be better. XM has every MLB game, Sirius has every NFL game… SIRIUS XM Radio will be able to offer crossover programming in the form of “Best Of”. Best Of will allow existing subscribers to get some of the best from what used to be the other service. The fee for accessing the crossover programming… only $4.04 per month.

Don’t look for a full crossover on sports, but rather selected games. There simply is not enough bandwidth to deliver all of the games to each respective subscriber base on a crossover basis, but there should be a good selection of popular games that give Sirius subscribers access to baseball, and XM subscribers access to football.

So, will the baseball playoffs and the World Series be available to Sirius subscribers? I would venture to say that Mel Karmazin has that as a goal. Will opening kick-offs from the NFL be on XM? Again, I think that popular games are in Mel’s game-plan.

Baseball and Football are the obvious sports crossovers, but potential exists for NASCAR (The Sprint Races), college sports, the NBA, Soccer, and perhaps even the NHL, although the NHL rights were paid for in part by XM Canada, which is a separate entity from Sirius Canada.

What kind of revenues will crossover sports bring? If 1,000,000 subscribers decide to add the crossover programming, SIRIUS XM Radio can realize a bit over $4,000,000 per month in new found revenue. Ad dollars would likely increase as well, as the audience is expanding, and the reach is that much greater. While $4,000,000 may not seem like much, it is “found money”, and will help deliver better cash flow for the company as it moves forward.

Look for new details to be rolled out over the coming weeks on Best Of programming. Karmazin has indicated that news will begin to roll in after Labor Day (September 1st).

Position - Long SIRI, Red Sox, and Patriots

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This article has 71 comments:

  •  
    Aug 14 07:58 AM
    Tyler, I'm very puzzled on the comment that the interoperable radios won't be installed in new vehicles for 3 years. I find it hard to believe that this time frame can't be shortened. You have GM working feverishly to get the Volt to market for 2010, but can't get a new radio device in cars till 2011. This still puts the consumer on hold for 3 years. You can fight the buracracy of Washington DC but can't overcome this so important timing issue. It's saying to the consumer that the merger (in the auto industry) is still 3 years from completion. What's your insight to overcoming this problem. I know a lot of readers are wondering the same thing. This passing comment by Mel was a punch in the gut!!! Please try to respond, Thanks!
    Reply
  •  
    Aug 14 08:08 AM
    Tyler, I'm very puzzled on the comment that the interoperable radios won't be installed in new vehicles for 3 years.
    You heard wrong Neal. 1 year not 3.
    Reply
  •  
    Aug 14 08:24 AM
    Tylers outlines why I have been holding off purchasing Sat Radio over the past year. Once the plan is rolled out and I understand my options I will purchase a SIRI radio. Where I live radio reception is poor at best for AM/FM, I am looking forward to signing up and catching both baseball and football. Not interested in HS or a majority of the talk radio stuff... mostly music and sports...
    Long Sox... Long Pats...
    Reply
  •  
    Aug 14 08:42 AM
    Did you enjoy watching the superbowl tyler?

    Position long: Giants/ yankees
    Reply
  •  
    Aug 14 08:44 AM
    Im going to protend that i didnt read your long position with the patriots and the redsox becasue i like you tyler
    Reply
  •  
    Aug 14 09:07 AM
    I have already noticed a better grade of advertiser appearing in the past two weeks on Stern and NFL. Sony as appeared and I forget the other. I hope the booring, repetitive debt consolidator ads, etcf. go away soon, replaced by something less unseamly. Sounds like a merger synergy to me.
    Reply
  •  
    Aug 14 09:08 AM
    Valuestock, Please fill me in on your info. I hope I'm wrong on what Mel stated.
    Reply
  •  
    Aug 14 10:00 AM
    Go Sox! I might actually buy the product now that siri will have Baseball...that was a sticking point for me and I live just outside the Red Sox region so to be able to listen to games on long rides would be great!
    Long-Siri
    Reply
  •  
    Aug 14 10:11 AM
    Used to work in the auto industry...programming software for car electronics. 3 years is a standard answer for any "new" product to be developed, integrated, & introduced on a car line. I would bet the radio manufacturers can currently produce both XM and Sirius seperately. I would guess 1 year would be a more adequate timeline. The 3 years comment seems to fall in line with the Under-promise, Over Deliver philosophy that I hope Sirius XM continues to take....

    You also have to realize the auto industry is just as much of a bureacracy as the folks in washington...
    Reply
  •  
    Aug 14 10:12 AM
    Sports + Radio = Stupid waste of shareholder equity. Who would listen to lots of sports vs. DTV, Comcast, Dish HD in the living room? Please, SIRI stop flushing precious capital down the toilet and focus on your strengths of music, news, weather, traffic and MAKING MONEY!!!
    Reply
  •  
    Aug 14 10:35 AM
    Usearch...........don'... underestimate the potential subscribers that are total sports nuts. Wyatte74 commented on just such listeners. For them sports in the vehicle are everything as well as at home. I'm sure Mel and his team have done their homework.
    Reply
  •  
    Aug 14 10:52 AM
    chicago gary................It won't be long and we will be realizing gains once again like you experienced a short time ago, in your comments above.
    Reply
  •  
    Aug 14 10:54 AM
    i am glad killerkaul cos1000 163888 tyler are the voice of reason. lets stick together in this thing
    Reply
  •  
    Aug 14 11:18 AM
    whiner alert.................... directly above.
    Reply
  •  
    Aug 14 11:39 AM
    Tyler I look forward to your excellent reporting regarding Sirius/XM. My compliments is very sincere.
    Reply
  •  
    Aug 14 11:46 AM
    Why do you guys spend your time bickering with Mr. CAPS guy. Just ignore him and he will move along. Who really cares if he holds a position. Anyone that would but a speculative stock based on a blog, and blame said blog for incurring a loss is a moron. Ignore him and he will get bored.
    Reply
  •  
    Aug 14 12:00 PM
    Hey all you guys - have any of you checked on what the street thinks is the outstanding number of shares? I've read as high as 3.2 B - and for the life of me can't figure out where these higher numbers came from. Anyone doing their homework would read the SEC filings and see that SIRI has never filed for an increase in stock issue - so what is it? Anyone really know? Number of shares is the measure of what SIRI will trade at. At 1.5 B (the only number I could verify) and revenues at 2.4 B the stock should be valued at 3.20 per. But if you use this 3.2 B then you are really looking at a value of about 1.45 per. So what is the street really seeing and what is fact - anyone out there that knows?

    (and the combined sports programming is the future of satelite radio - the regular radio stations are already feeling the hurt from ipods, CD's and MP3's and now internet radio - sorry, music and regular news will not make satelite a winner. It will be sports first, news/traffic-for integration with gps, and special interest talk last that will make this a winner)
    Reply
  •  
    Aug 14 12:13 PM
    cos1000 may have given a hint on whats happening - the street maybe treating the convertible debt incurred for this merger as shares that must be issued by 2014 ( the current 1.5 will not cover the amount needed to cover stock swap amount) Am I reading this right?
    Reply
  •  
    Aug 14 12:27 PM
    hey ya'll i stepped on manure, its all up on my boots and it reeks of shit like TYLER AVERY
    now im angry because my old navy boots are worth more than my sirius investment and ma' is gona pull me by the ear
    tyler help me! like youve helped ALL your investors on this board (heeheehee)
    i aint no white trash, its just that my purpose in life is meaningless as is my sirius investment but ya'll dont ya dare blame TYLER cuz youre down SO MUCH, he didnt tell you to buy even though he wrote 100 articles pumping it to us daily over and over go blue dog run like my mama!
    Reply
  •  
    Aug 14 12:28 PM
    by the way cos1000 - were you calling me the nut? I'm just trying to figure out why the street is treating SIRI so badly - that merger debt is 5+ years out and with profitability projected for 2009, it shouldn't be that big an issue in play. IF it is, I would like to understand the reasoning.
    Reply
  •  
    Aug 14 12:33 PM
    heeee hawwwww, run blue dog run. who cares its down about 90% cuz tyler has a SECRET PLAN to help us!
    hes gona write more articles, pull 'research' off the internet and repost big-time price targets, so dont you worry ya'll down so much and down almost evrything cuz TYLER IS NOT TO BLAME EVEN THOUGH YA'LL DOWN 90%
    back on the farm, the sun dont shine cuz lota horse manure i step on and thats worse than being down biggggggggg timeeeeeeeee on sirius! run blue dog run before i stick my carrot in your hole like the sheep i b' a chilling wiff at night =)
    Reply
  •  
    Aug 14 12:38 PM
    You know KILAkaul, just maybe you don't belong in the market - if you bought SIRI so that you're down 90% - you gave alot of money away. Even with the positive spin given to SIRI, if you don't research the stock you are giving it to people like me! ........OH, maybe you should stay in the market!
    Reply
  •  
    Aug 14 12:40 PM
    miljans you be new to the market so dats cool GO SIRIUS! but evryone b on diss board so long that ya'll be bichin you down so much and 90% and blaming TYLER when he is not to blame (blame it on ummmm i dunno but hes not to blame!) =)
    run blue dog run like my mama!
    Reply
  •  
    Aug 14 12:46 PM
    I maybe new to the market, but my average cost for my SIRI is only 1.68, cause I looked at the cap and figgered ain't worth 4 bucks - so didn't buy - even when the talk was a pop to 5 on the merger approval.
    Reply
  •  
    Aug 14 12:48 PM
    p.s. like your name KILAkaul
    Reply
  •  
    Aug 14 12:49 PM
    even though me boy TYLER pumped it at $4, dont be a blaming him ya'll! its everyone else fault on this board! tyler NOT to blame
    go blue dog mama!
    Reply
  •  
    Aug 14 12:55 PM
    milanjs, First, Sirius XM Radio currently reports 3.2 Billion shares outstanding with a Float of 3.1 Billion. That represents very roughly 100 Million shares restricted.

    Secondly, all shares related to the XM notes have been lent to JP Morgan, Morgan Stanley and UBS who are the institutions handling the offering for XM, a owned subsidiary of Sirius XM radio. The shares lent were priced at $1.50 / share to the institutions for resale concurrently when the notes are sold for what is referred to as "convertible arbitrage". Essentially this represents the buyers of the notes having the "option" to "Short" the underlying security, stock. This being a Private transaction available only to qualified institutions, the stock is not part of the company's "Float" or "EPS" metric. according to GAAP standards. The note converts at a rate of 1.87 per share if the note's owners wish to convert at maturity. The value of these shares will be the difference between the open market value and the 1.87 price paid. This is what makes them attractive along with the % rate paid to owners while they wait. The $1.87 represents roughly 534 shares of SIRI for every $1,000 invested in the notes. This also has nothing to do with the "Lent" Shares. The interest rate on the notes is paid twice per year, representing income to the note's owners during the period of maturity, and shows up as a part of interest expense on the company's 10Q and annual reports. These shares "Lent" are come back to Sirius XM on or about the same time the Notes mature, which is another reason they are not part of the "Float". Sirius XM Radio does not receive any monies from the transaction, $.001 / share from the institutions being lent the shares, a nominal one time fee.
    Reply
  •  
    Aug 14 12:58 PM
    nasdaq up big again today and blue dog mama up a peny run blue mama run!!
    Reply
  •  
    Aug 14 01:01 PM
    TYLER LOOK HOW HE IS TRYING TO DISS YOU MY BOY! WHAT DOES HE KNOW AFTER ALL NOT PICKING SIRIS AT $4 WHEN YOU DID;
    DO YOU HAVE HOT GOATEE LIKE TYLER HUH MILJANJS!? RUN BLUE MAMA RUN!
    miljanjs:
    I maybe new to the market, but my average cost for my SIRI is only 1.68, cause I looked at the cap and figgered ain't worth 4 bucks - so didn't buy - even when the talk was a pop to 5 on the merger approval.
    Reply
  •  
    Aug 14 01:21 PM
    I gotta go this guy posting as everyone else is annoying me to much to waste any more time here. Seeking Alpha needs to get its act together and stop these folks from misrepresenting themselves.
    Reply
  •  
    Aug 14 01:23 PM
    i love the disinfermation posted by cos1000 to confuse this board, dont worry ya'll stocks down huge, it much worse down on the farm run bluemama run!
    Reply
  •  
    Aug 14 01:32 PM
    Why don't all you guys just buy subscriptions to Sirius? The more numbers of subscribers the better. Im staring to put bumper stickers on my car and advertising for them for free! I own shares and obviously not doing well :(
    Reply
  •  
    Aug 14 02:09 PM
    How is Tyler Savery responsible when it was you that did no homework? Let me guess....You got in at $3 thinking there would be a pop at the merger and you would turn a buck or two a share. So you went on eTrade and bought some stock, you tracked your petty shares in your Yahoo portfolio, turned to this blog daily for merger news, then the merger came and nothing. Now, not knowing were to go since your down a ton, if you havent sold at a lost already, you decided to kick and scream around here.

    Tyler is a writer with an opinion. Thats it. He has no effect on the market, on the stock, or the management of the company. More importantly, he is not the owner of your portfoliio, you are. The only loser is the one who has nothing better to do than sit around here and type with the CAPS LOCK on. I know a few guys just like you. They are all lonely useless individuals.
    Reply
  •  
    Aug 14 02:29 PM
    Actually people can turn the audio off on the TV and listen
    to a good radio sportscaster on radio during the game.
    Besides who carrys a dish satelitte TV around with them
    when they are on the move. Receiving content while
    mobile just about anywhere and anytime is part of the idea here.
    Reply
  •  
    Aug 14 03:17 PM
    Tyler pumping a stick doesnt mean you should just go out and buy it. If you spent nearly as much time researching what you buy instead of kicking in screaming around here you wouldn't own SIRI.

    I didnt get F'd on anything. I bought a on more in the past 2 weeks. Im already making money on it.
    Reply
  •  
    Aug 14 03:18 PM
    This blog is turning into Invasion of the Morons and Whiners who proclaim they are speaking for everyone who's ever lost a buck in the market. Where have I ever posted anything but my opinion about what I see as being a good investment in this company, over time. Not one of you whiners has said anything about what YOUR research found. Not one of you have warned those you claim to represent in so much pain of your suspicions of this Stock's Price. As I said your a bunch of Morons and Whiners. SeriousPAIN, don't hide behind being a father to try and make you look smarter or more responsible. I just doesn't work that way.

    tylenol_sirius, your the fabricator of facts, you only true belief is in revisionist history.
    Reply
  •  
    Aug 14 03:33 PM
    i am not posting on this board anymore because anything associated with TYLER is bound to lose me fcking MONEY!!!! no intelligent or reputable guru strickens us with incredulous losses to the tune of almost 90 % so go anf fcuck yourselves and your rushing to his defense because we investors all see what a sham he really is!!!
    Reply
  •  
    Aug 14 03:41 PM
    Come on whiners, I got some time, where are you now? Have you ever read a company's 10-Q, 10-K, Prospectus? Or are are you too busy blaming everyone else for your own inept abilities to invest for your self? Go find a money manager who you can pay to think for you, whether he makes you money or not. Then you can whine an cry to him/her. I am not now nor have I ever been nor do I plan to be servant of or for Tyler Savery, Sirius Buzz, Seeking Alpha or anyone else. I stand here objectively on my own with a Heavy investment in Sirius Satellite Radio. There are those who certainly know more about this company but I am quite satisfied that the information that I provide is a true representation of what I believe and have researched about this company.

    That is not to say that I don't appreciated Tyler's work on keeping me informed about the latest news and goings on at Sirius. Because I do appreciate the information and detail provided. In doing MY OWN research I know how accurate it helpful it is.
    Reply
  •  
    Aug 14 03:47 PM
    tylenol_sirius, Good buy!!! Don't let the door hit you in the ass on the way out, but do pick up your mess, you left a pile for everyone else to clean up here. Buy the way do you know how stupid you sound when you write, "We Investors"
    Reply
  •  
    Aug 14 03:47 PM
    yea you APRRECIATE TYLERS WORK to the tune of a roughly 90 PERCENT LOSS you fcking MORON!!!! i am off this board, TYLER keeps changing his name to foment dissidents to we true investors who lost SO MUCH ON THIS INVESTMENT BECAUSE OF HIM!
    Reply
  •  
    Aug 14 04:09 PM
    First I want to correct by spelling of the word Buy to by above. Now I would just like to wish you, tylenol_sirius, Good Bye!!! I'm so glad that you decided to leave. Again, for you I will repeat, I AM NOT TYLER SAVERY. So please take you dilusional, parrenoid, thinking with you and have the very best of days in your newly padded cell. But wait, before you go, there's still this pile of .....dung that you left here to clean up.
    Reply
  •  
    Aug 14 04:17 PM
    Tylenol - If I were you, I would sell my trailer, sell the 386 you're typing this on, take the resulting $200 in proceeds and get back in the game.
    Reply
  •  
    Aug 14 04:23 PM
    tylenol_siri, I re