Thursday, October 12, 2006

Forbes On Satellite Radio, Etc

Capital Markets & Investing
Radio Days
Marilyn Cohen 10.30.06, www.forbes.com

Old media are dead; bring in the new ones. You've heard this again and again in the debate over the future of newspapers, broadcast television and landline telephone companies. The argument is that these are all doomed by the Internet, YouTube and wireless connections. I'd like to make the case for betting the other way: investing in a century-old communications medium that still has a lot of life left in it. You should consider owning the bonds of radio broadcasters.
Despite the arrival of the wireless Internet and iPods, radio still has a huge audience of addicts. People listen for the weather and news as they shave, clean house or drive to work. And that guarantees big bucks to radio providers. Bond buyers will find several opportunities worthy of their investment dollars....

...The newest frontier is satellite radio, available by subscription. Wall Street's skeptics say that Sirius Satellite Radio and XM Satellite Radio Holdings are going to run out of listeners willing to pay $13 a month. But I see plenty of big spenders out there, the same people who pay $70 for cable television and spend $3.55 a day for a Starbucks cappuccino. This new technology for radio listeners has expanded our choices and changed audio entertainment just as thoroughly as cable changed television. It took a few years for cable and satellite television to catch on. Just give this concept time.
Of the two I prefer Sirius because of my high regard for its chief executive, dealmeister and salesman, Mel Karmazin. XM has 7.2 million subscribers while Sirius has 5.1 million. Analysts wonder whether there's enough room for two independent services. Maybe, maybe not. But my money is on the canny Karmazin. Don't be surprised if he engineers a merger of the two and figures out how to overcome regulatory hurdles. If not, then Karmazin, who expects to have 6.3 million subscribers by year-end to XM's estimated 7.7 million, sooner or later may nose out XM because they are growing at a faster rate....read more: here

10/12/2006 11:46:00 PM

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