With XM Satellite Radio announcing a long term factory install relationship for factory installed satellite radios in Honda and Toyota one would think that the news would have set a spark underneath the equity. Especially considering the big jump that came to the market after the fed made his announcement.
Clearly the shine of satellite radio has dimmed, and only major news or several quarters of outstanding financial performance will seem to lift either Sirius or XM.
New content like Jamie Foxx. Great for SDARS, but nary an impact on the equity.
Honda through 2016. Great news for SDARS, but no impact on the equity
Toyota through 2017. Again, great news and no umph to move the price of the stock.
THE ONLY NEWS THAT HAS MOVED THESE EQUITIES IS MERGER NEWS.
It seems that the street has accepted that great talent will come to SDARS, and that OEM installs will become more common. This news carries no impact anymore. The Street is looking for something bigger and better, and only a track record of good financial performance as "stand alones", or a merger announcement will do the trick. At least that is how things look now.
If investors have to wait for the financial performance of these equities to bear out, it could be a very neutral year for satellite radio stock prices. It will take an established track record of lower losses, and a crystal clear path to profits, and that only comes by stacking three or four quarters in a row were the bottom line looks good.
So, what is happening on the merger front? As of now things remain the same. Analysts and investors alike share opinions on whether it will happen, and given the number of reports, investors see a pile of gold at the end of the merger rainbow. It is little wonder that other news seems to take a virtual back seat.
In my opinion, if a merger is being considered, the deal should be announced sooner rather than later. Merger news could breathe fresh life into these equities. Synergies would start to be considered, and the dollars expended on competing with each other could instead be used in promoting the concept of SDARS on a much broader scale.
Investor sentiment seems to be quite clear, and investors should make efforts to stay on top of the news. The risk here is that there is an anticipation that news on a merger may be forthcoming. So far that has been enough to limit the down side of the stock price. Should definitive information for a merger be announced, we would see instant appreciation in stock price in my opinion. The danger here is that if definitive information against a merger is delivered, I can picture some very tough trading days. With a merger sitting in the balance, it makes it a bit tough to go long or short these equites.
It is a shame that positive news is no longer enough stabilize the SDARSequities, but that is the environment that Sirius and XM are in these days.
The Bridge Ratings Consumer Trend Report: Satellite Radio Q4 Subscriber Trending Updated Wednesday January 31, 2007
Satellite Retail Off Pace with Q3 2006 - The Year's Softest Quarter
This Week's Update: 2006 ended with the satellite radio sector delivering an additional 4.5 million new subscribers for a composite total of 13.6 million for both companies. Though this was down from their original sector estimates of 15 million, the number marks a quite respectable 48% increase year over year. With Sirius off 200,000 and XM off an additional 1.4 million the year of growth for the satellite radio sector belonged to Sirius - at least from a numbers perspective. The kick-start for Sirius was Howard Stern who officially joined the company on January 1, 2006, but nevertheless promoted Sirius for a full 12 months once Stern announced his deal on his terrestrial radio show in October 2004. Bridge Ratings' tracking of Sirius subscriptions from that moment on clearly reflected a turbo-injection of interest and awareness that was helped by Stern...read more: here
Orbitcast reports today that A popular comedy segment on XM's channel 150 will be offering a podcast. This is an exciting feature for fans of the program, and enables fans to access the show any time they desire.
XM Satellite Radio's comedy channel XM Comedy (ch 150) is now airing the popular Brian Scolaro's "A Complete Waste of Time," podcast. Launched only four months ago, "A Complete Waste of Time," is a short-form program that trys to take on serious issues of the day... but never gets it done........MORE HERE VIA ORBITCAST
While the explosion such as yesterdays loss of the NSS-8 satellite and Sea Launch Zenit-3SL vehicle are rare, they do happen. Sea Launch had the following statement:
Sea Launch Experiences Anomaly during NSS-8 Launch Long Beach, Calif., January 30, 2007 –A Sea Launch Zenit-3SL vehicle, carrying the NSS-8 satellite, experienced an anomaly today during launch operations. Sea Launch will establish a Failure Review Oversight Board to determine the root cause of this anomaly. Please call the Sea Launch Hot Line for further information, as it becomes available. We will also post updates on the Sea Launch website at http://www.sea-launch.com/.
Again, this type of event is rare, but is something satellite radio investors should be aware of. To be clear, this event had nothing to do with Sirius or XM satellites.
Sea Launch most recently launched XM4, which was an overwhelming success. Sirius contracts launches with ILS. The video above is located on YouTube
While this article speaks to SDARS in relation to Toyota, it is also applicable to other OEM's, as well as retail.
There are two methods in satellite radio installs as far as Toyota is concerned. There is the "PUSH" model and there is the "PULL" model. Simply stated, a factory install program is a "PUSH" and Port Installs are a "PULL"
Push is where an OEM such as Toyota makes a decision to integrate satellite radio into their cars at the factory level. Installations happen, and the cars are shipped with ready to operate satellite radio receivers complete with three months of service. The concept of satellite radio, and XM specifically, is "PUSHED" out into the market place. The upside of this practice is that XM Satellite Radio gains an opportunity to get their service in front of the ears of many consumers. The downside is that there is a percentage of those consumers who will not have an interest in the product, yet the subsidy expense for XM has already happened. The key to a “PUSH” system is that the benefit obtained by those that keep the service outweighs the expense of the program. Typically OEM take rates seem to hover between 50% and 55%. For the purposes of this article, and simplicity we are assuming 50% as a take rate.
So, if we assume a factory install level of 350,000 units by Toyota in 2008, then realistically speaking, the takers will number 175,000, and those that do not keep the service will number 175,000.
If we assume costs of $75 per radio (marketing, subsidy, etc.), those 350,000 installations will cost $26,250,000. At the end of 3 months 175,000 will keep the service. Using an ARPU (Average Revenue Per User) of $11 per month, it would take 13.64 months of continued service to break even on the investment.
Factory installation also offers some synergies with other vehicle options and capabilities. Pull installations will typically lag behind before those synergies can be incorporated.
Pull is where the consumer asks for a service to be installed on their vehicle. Regarding Toyota, there is actually a combination of PUSH and PULL. From the standpoint of PUSH, dealers such as Penske have deals with Sirius, and they install Sirius in their vehicles. This type of installation is PUSH, because it still is not the end user that makes the decision as to whether or not the installation happens. Likely, the take rate on these Sirius installs is similar in nature to the XM factory installs. The difference between a port install and a factory install is transparent to the consumer.
The Pull aspect of the port install deal Sirius has is that consumers can request that Sirius be installed in their vehicle. If consumers request it enough, dealer always have the option of ordering cars with the radio already installed so as to have an inventory of Sirius equipped cars on their lots.
The disadvantage of PULL is that it relies on the consumer to be aware that Sirius is an option, and the likelihood of some consumers to “give it a try” may not be as strong. In other words, Sirius loses the ability to make an attempt to market their service unless the consumer is a willing participant. By nature, PULL radios begin to represent what the demand for satellite radio is. The advantage of the PULL method is that you are better able to control expenditures, and the take rate should be substantially higher than 50% (because the consumer is making the request). Thus, each radio you install pays for itself faster. If 100,000 radios were requested by consumers, and Sirius the cost to Sirius was $75 each, then the investment into these consumers would be $7,500,000. If we can assume an 85% take rate (remember, these are consumers that made the request to have Sirius), then there would be 85,000 radios at a cost of $7,500,000. At an ARPU of $11, it would take Sirius 8 months to recoup their investment.
A big factor in PULL is that Sirius needs to ensure that consumers are aware of the option. If Sirius can create a large enough PULL, then the PUSH factor of the dealer ordering equipped cars can increase.
The point of this article is not to say that one method is better than the other. It is to highlight out the advantages and disadvantages of each type of install. Where PUSH generates volume, PULL generates cost efficiencies, etc.
From an investors standpoint, the PUSH strategy at least gives people a reasonable understanding of what kind of numbers to expect. The PULL numbers seem to be shrouded in mystery, and thus it is hard to contemplate how “valuable” the port install deal between Sirius and Toyota is.
In a perfect world, the subsidy would be inexpensive, and a consumer could simply get either or both services to try. SDARS is not there yet.
Just as the buzz around a merger between Sirius and XM seemed to have calmed down a bit, a new report has been issued. This report from James Dix of Deutsche Bank, was quite extensive (40 pages), and details various aspects of a merger including the possibility of it happening and the regulatory hurdles that may be faced.
Cloudy crystal ball on regulators at this time hurts the risk/reward
Based on our review of the legal landscape and current developments in mobile audio, we conclude that there is a reasonable risk that the regulators would not approve a merger between Sirius and XM, or would approve one only with substantial conditions including potential spectrum divestiture. We continue to recommend investors substantially discount the prospect of a merger, but maintain our Buy ratings based on longer-term fundamentals.
Be quick, but don't hurry
We believe investors may underestimate the practical difficulties the satellite radio companies would face in winning timely regulatory approval. In its order in DirecTV-EchoStar, the FCC repeatedly noted that the merging companies had not met the burden of making their case. If Sirius and XM have to rush to file a merger proposal due to potential changes to the FCC in the 2008 election cycle, they may have less ability to make their own case. We have reviewed the satellite radio license grants, the 2002 FCC ruling in the DirecTV-EchoStar proceeding, and 1997 and 2006 DOJ/FTC guidance on horizontal mergers. We base much of our assessment of the competitive landscape, central to determining the relevant market and competitive impact of a merger, on takeaways from our four days at CES earlier this month and discussions with DB's wireless equipment team.
Keys: defining relevant market and gauging timing/impact of new entrants
While satellite radio faces substantial competition for the consumer's attention and entertainment dollar from a host of products and services that did not exist 10 years ago, such competition by itself might not justify allowing Sirius and XM to merge. Rather, we believe that regulators would focus on the incremental impact on competition in the relevant market from a potential satellite radio merger, and would have to handicap the timing and impact of the rollout of potential new products like HD radio, smart phones, auto consumer electronics, 3G and WiMax.
Will there be a 2007 rate increase?
Sirius' prior public statements on the potential for a rate increase suggest that it does not currently feel substantially constrained even by competition with XM from being able to raise rates. However, we wonder whether the potential for a merger makes it less likely that either company raises rates this year. The ability to increase prices without substantial churn might suggest to the FCC that the relevant market for assessing a merger is satellite radio, not something broader.
Maintain Buy ratings, with 12-month TPs of $20 on XM and $5.75 on Sirius
There are obviously other legal analyses and facts that could determine a regulatory decision in this case than the ones we present here, and we are not offering a legal opinion on what any regulator might decide. We use a DCF through 2020, WACC of 13-14%, and TVG of 4% to support our target prices. Risks to our investment theses and TPs include changing market risk tolerance for tech-driven businesses, subscriber growth volatility, competing technologies, rising costs, deal risk and adverse regulatory developments.
As we here at SSG have expressed before, the definition of the market is a key element for these companies should they decide to attempt a merger. With the advent of new competition from the MP3 market, cell phones with audio capability, HD Radio, and internet radio, it becomes important for Sirius and XM to demonstrate that the marketplace is substantially broader than it was only 6 or 7 years ago.
XM Announces Extension of Agreement With Toyota as Factory-Installed Satellite Radio Provider, With More Than One Million XM-Equipped Vehicles Expected Annually by 2010
New Agreement Extends Current Partnership through 2017
WASHINGTON, Jan. 31 /PRNewswire-FirstCall/ -- XM Satellite Radio, the nation's leading provider of satellite radio with more than 7.6 million subscribers, announced today that Toyota Motor Sales, U.S.A., Inc. has extended its agreement with XM as its factory-installed satellite radio provider for Toyota and Lexus vehicle models. The new agreement extends the current partnership between the two companies through 2017. Toyota's annual factory production of XM-equipped vehicles is expected to exceed one million by 2010.
"We're pleased to extend our agreement with Toyota through 2017, making XM available as the sole provider of factory-installed satellite radio for one of the world's largest and most successful auto manufacturers," said Nate Davis, president, XM Satellite Radio. "XM looks forward to broadening our reach to millions of loyal Toyota and Lexus customers."
"XM provides exceptional entertainment programming and innovative data services like real-time traffic, recently launched on the all-new Lexus LS. Our agreement with XM will help us continue to provide these services and develop additional in-vehicle applications for future products," said Dave Danzer, group vice president of strategy and product planning for Toyota Motor Sales, U.S.A., Inc. "XM will be available as a factory-installed service on Toyota and Lexus vehicles."
In 2006, Lexus introduced factory-installed XM as a standard feature on the new 2007 Lexus LS 460 L. XM Radio is also available in the 2007 LS 460, which includes the service in its navigation packages. Later this year, Lexus will provide factory-installed XM as standard equipment on the upcoming luxury hybrid, LS 600h L.
Every Toyota and Lexus vehicle equipped with factory-installed XM comes standard with a 90-day trial subscription.
Form SC 13D/A XM SATELLITE RADIO HOLDINGS INC - XMSR Filed: January 30, 2007 (period: ) An amendment to a SC 13D filing
This Amendment No. 11 to Schedule 13D amends or amends and restates, where indicated, the statement on Schedule 13D relating to the Class A Common Stock of the Issuer filed by American Honda with the Securities and Exchange Commission on August 22, 2000, as amended prior hereto (as so amended, the “ Initial Schedule 13D ”). Capitalized terms used in this Amendment No. 11 but not otherwise defined herein have the meanings given to them in the Initial Schedule 13D.
As of January 26, 2007, pursuant to the obligation of American Honda under a forward sale agreement (the “Forward Sale Agreement”) dated May 2005 with Bank of America, N.A. (“ Bank of America ”), American Honda sold $33,249,084 in principal amount as of December 31, 2005 and through maturity of the 10% Convertible Notes (the “ Hedged Notes ”). The Hedged Notes were convertible into 10,455,687 shares of the Issuer’s Class A Common Stock. Under the terms of the Forward Sale Agreement, American Honda received from Bank of America, as payment for the Hedged Notes, a purchase price equal to $27 per share for each of the 10,455,687 shares of the Issuer’s Class A Common Stock underlying the Hedged Notes, or $282,303,549 in aggregate.
American Honda continues to hold approximately 20.4 million shares of the Issuer’s Class A Common Stock, approximately 6.7% of the outstanding Class A Common Stock of Issuer. Under long-term agreements, recently extended to 2016, American Honda factories install XM radios in numerous Honda and Acura models and integrates data services delivered over the XM Satellite Radio system.
Except as otherwise set forth herein, this Amendment No. 11 does not modify any of the information previously reported by American Honda in the Initial Schedule 13D...read more: here
New York City is a centerpiece to many things and many people, and it is little wonder that there is "Star Power" at Sirius. On my own tour of the facility, there were numerous stars doing their shows, and I remember thinking that having this much fame in such close proximity is not a normal thing for radio.
Today the Associated Press published a piece on all of the stars that can be found at Sirius.
Sirius Satellite Radio Draws Stars
Tuesday January 30, 1:34 pm ET By Larry Mcshane, Associated Press Writer
Sirius Stars Turn Out at Satellite Radio Headquarters
NEW YORK (AP) -- Shortly after making his entrance, Oscar winner Jamie Foxx found model Janice Dickinson and her ample cleavage pressed tightly against him. Foxx posed for a photo-op with hip-hop legend Grandmaster Flash, and later traded handshakes and hugs with New York Giants linebacker LaVar Arrington.
The VIP lounge at Lotus? The red carpet at the Grammys?
Try the star-studded offices of Sirius Satellite Radio Inc., a haven for bold-faced names found 36 floors above Manhattan in a Rockefeller Center skyscraper.
The company headquarters draws an eclectic collection of celebrities, sports stars, musicians and Martha Stewart, often simultaneously, with many wandering casually through the halls on their way to or from a studio.
The diversity of talent is best summed up this way: Howard Stern and Cardinal Edward Egan do their shows a few hundred feet apart. Only here could "The King of All Media" and a prince of the church cross paths -- uncensored, of course.
"You walk through the halls here, and it's absolutely mind-blowing," Stern said. "There's energy, and there's synergy. You walk out after a show and wind up hanging out. ... It's like a big old kibbutz."
A somewhat typical morning found Foxx announcing his new Sirius channel as singer Evan Dando performed live in a nearby studio. National Football League All-Pro Tiki Barber fielded questions for the NFL Network, and author/Sirius host Candace Bushnell of "Sex and the City" fame quizzed Dickinson.
At the end of a hallway, Stewart's daughter Alexis sat on the floor, kicking around ideas for her upcoming program. And Sean Avery of the Los Angeles Kings took advantage of the National Hockey League All-Star break to do an interview in yet another studio.
"It's neat -- it's a mosh pit, a melting pot, and we're all here doing the same thing," said Barber, the recently retired Giants star who co-hosts a Sirius show with twin brother Ronde......MORE HERE
DJ's on music channels have fans as well as critics. More often than not, I enjoy a little interjection by a person with a quick anecdote or story between songs. To me DJ's help to tell a story and draw people deeper into the music.....but that is simply my opinion.
Columnist Frank Barnaco of Internet Daily is reporting that the removal; of DJ's is a cost cutting move to facilitate other non-music talent such as Jamie Foxx. Whether that is right or wrong is unknown, but likely the first channels a genres to suffer when it comes to cost cutting or making room for new talent are the least popular.
In the end the thing that holds true is that you can not please all of the people all of the time.
The cost cutting continues at Sirius Satellite Radio, according to messages posted on a New York radio broadcasting Web forum. Sirius has eliminated live disc jockeys from its '50s channel and two other feeds, said a posting by Fred Richards. A consensus of comments was that Sirius has given up on listeners over the age of 50.
The Sirius Web site lists only one disc jockey on the '50s channel now, Norm N. Nite, who broadcasts weekend afternoons. A Canadian Web page for the channel list, but the US version has only Nite.
Richards said saving money by eliminating live talent on the channel was "making the grievous error of chasing people like me back to our FM sets."
"If this is how Sirius is managing the cost of doing business, they essentially become a satellite-based iPod/MP3 player," commented Phil Seely. "It's such a pitifully small drop in the change bucket (cutting disc jockey staff) that even bean counters must wonder 'why bother' when the dog (Sirius' mascot) continues to give away large bounties to non-radio talent like Jamie Foxx," who was just hired to help produce an urban comedy/entertainment channel......MORE HERE
Musicians Rally for Digital Freedom Artists and Record Labels Embrace Digital Freedom Campaign Bill of Rights WASHINGTON, Jan 30, 2007 /PRNewswire-USNewswire via COMTEX
The Digital Freedom Campaign today announced that more than 50 new bands have joined the nationwide movement to protect the rights of artists, consumers and innovators in the digital age. The Digital Freedom Campaign's mission is to ensure that all Americans can enjoy new digital technologies free of unnecessary government restrictions and costly lawsuits that restrict consumers' ability to use lawfully acquired content on digital devices. The Internet and new digital technologies like satellite radio have enabled individual artists, musicians and groups both big and small to be heard, enabling them to find, cultivate and grow new audiences and an interested fan base. No longer solely dependent on big recording conglomerates for the promotion and distribution of their music, musicians can use cutting edge technology to reach those audiences themselves...read more: here
RadioShack shares hit 1-yr. high, Goldman ups rating, target By Tomi Kilgore, Jan 30, 2007, MarketWatch
Shares of RadioShack (RSH) rallied nearly 5%, and reached a one-year high in intraday trading, after Goldman Sachs upgraded the consumer electronics retailer. Analyst Matthew Fassler lifted his rating to buy from neutral and his price target from $25 from $19. "RadioShack shares are only beginning to discount the earnings potential we see from a powerful turnaround, driven by improved retail processes and, in particular, aggressive cost control," Fassler said in a research note. The stock was last up 94 cents, or 4.5%, at $21.76. It reached a high of $22.20 earlier in the session, the highest price seen since Jan. 31...read more: here
American Honda and XM Expand Relationship Through 2016
WASHINGTON, Jan. 30 /PRNewswire-FirstCall/ -- XM (Nasdaq: XMSR - News), the nation's leading provider of satellite radio, today announced that it has extended its relationship with American Honda Motor Co., Inc. under a 10-year agreement through 2016.
XM is the exclusive satellite radio provider for American Honda, which markets both Honda and Acura vehicles. An original strategic partner in the launch of XM, American Honda introduced its first factory-installed XM vehicles in 2003 and is projecting production of 650,000 factory-installed XM units for 2007 model vehicles. American Honda has produced more than 1.5 million cars with XM factory-installed to date.
"XM is the leader in providing satellite radio to the new car market and Honda is one of the world's most successful automobile manufacturers, which has exposed millions of consumers to XM through its dealerships and XM- equipped vehicle sales," said Steve Cook, executive vice president, Automotive, XM. "We are pleased to continue this relationship with American Honda through 2016, broadening our reach to their loyal customers."
"The roll-out of XM in our vehicles has been one of the fastest in the car industry and over the years XM has become an increasingly important entertainment service to our customers. We look forward to providing XM's great content for many years to come," said John Mendel, senior vice president, automobile operations of American Honda Motor Co., Inc.
XM Satellite Radio is available as a factory-installed feature on 2007 Honda models including the Civic, Civic Hybrid, CR-V, Ridgeline, Accord, Accord Hybrid, Pilot, Odyssey and Element.
XM is also a standard factory-installed feature on every 2007 Acura model including the RL, TL and TSX performance luxury sedans as well as the MDX and RDX luxury SUVs. XM NavTraffic, XM's real-time traffic information service, is standard on all 2007 Acura vehicles equipped with the AcuraLink(TM) satellite communication system.
Every American Honda vehicle with factory-installed XM also comes standard with a three-month complimentary subscription.
American Honda and XM also recently launched satellite radio trial programs for Honda Certified Used Cars and for Acura Certified Pre-Owned Vehicles equipped with XM Satellite Radio.
In their most recent report dated January 27, www.BridgeRatings.com proclaims: "Listening to internet radio streams will continue to have explosive growth. We are now projecting almost 150 million overall weekly listeners to this medium by 2010. As terrestrial radio continues to develop custom internet channels and successfully markets its main channel streams, our forecast is for these terrestrial radio simulcasts to become a larger part of all internet listening growing from about 20% of all internet listening in 2006 to 40% by 2020"
XM Radio Online Available With Windows Vista WASHINGTON, Jan. 29 /PRNewswire-FirstCall/ --
XM, the nation's leading satellite radio company, today announced that XM Radio Online will be included in Microsoft's new operating system, Windows Vista.
Windows Vista, which will be broadly available on January 30, will offer XM Radio Online as part of its digital music hub. XM Radio Online delivers more than 80 radio channels, including commercial-free music, the Oprah & Friends talk and lifestyle channel, "The Bob Edwards Show," "Opie & Anthony," stand-up comedy, and children's programming...read more: here
Verizon Said No Thanks To Apple's iPhone January 29, 2007, www.fmqb.com
After it was reported that Apple teamed with Cingular Wireless to distribute its new iPhone, the news has surfaced that Verizon actually passed on the deal two years ago. Verizon squashed the deal because of Apple's rich financial terms and other demands, according to USA Today. Apple reportedly wanted a percentage of the monthly cell phone fees, decision making power over how and where iPhones could be sold, and control of the relationship with iPhone customers. "We said no. We have nothing bad to say about the Apple iPhone. We just couldn't reach a deal that was mutually beneficial," said Jim Gerace, a Verizon VP, according to USA Today. Gerace also said that customer service was another bone of contention, because if an iPhone malfunctioned, Apple wanted sole discretion over whether to replace or repair the phone. "They would have been stepping in between us and our customers to the point where we would have almost had to take a back seat… on hardware and service support," said Gerace. Cingular has not revealed the financial terms of the deal or how long it is allowed to exclusively distribute the iPhone, but sources told USA Today that it's a five-year contract. The device will ship in the U.S. in June and will arrive in Europe later in 2007 and in Asia in 2008...read more: here
If you have XM Satellite Radio and love Air America, there is news that will be of interest to you.
1 - Air America looks to be avoiding bankruptcy.
2. Al Frankens last day is February 14, 2007.
Air America Radio Reaches Deal for Sale
Air America Radio Reaches Tentative Agreement to Be Sold to Stephen Green; Al Franken to Exit
NEW YORK (AP) -- Air America Radio, a liberal talk radio network, said Monday that it had reached a tentative agreement to be sold to the founder of a New York area real estate company. The network also said that Al Franken, its longtime headline personality, would depart next month.
The agreement with Stephen Green, the founder and chairman of SL Green Realty Corp., appears to rescue the struggling network, which has been seeking a buyer since last fall when it filed for bankruptcy reorganization after reaching an impasse with one of its creditors. No terms of the sale agreement were disclosed. Any sale would have to be approved by the bankruptcy court. ..... More HERE
NASCAR Driver Juan Pablo Montoya to Speak Weekly to SIRIUS Listeners
Montoya will be heard every Monday on 'SIRIUS Speedway' exclusively on SIRIUS NASCAR Radio
SIRIUS Satellite Radio, the Official Satellite Radio Partner of NASCAR, announced today that Juan Pablo Montoya, the former Formula One star who will drive the No. 42 Texaco/Havoline Dodge in the NASCAR NEXTEL Cup and NASCAR Busch Series in 2007 for Chip Ganassi Racing with Felix Sabates, will participate weekly in an exclusive interview spot heard only on SIRIUS NASCAR Radio, the new 24/7 year-round radio channel dedicated to NASCAR.
Starting January 29, Montoya will be heard every Monday on SIRIUS Speedway, the exclusive talk show hosted by Dave Moody that airs weekdays (3- 7pm ET) on SIRIUS NASCAR Radio / ch. 128. Montoya, the first F1 driver ever to jump full time into the NASCAR NEXTEL Cup Series, will provide updates on the No. 42 team and comment weekly on his experiences in NASCAR as he transitions from open-wheel racing to stock car racing.
"I'm really excited to be on SIRIUS every week talking to the fans about all my experiences in NASCAR," said Montoya. "I'm going to have a lot of fun this year, on the racetrack and on the radio."
"We're thrilled to welcome an international racing star like Juan Pablo to the SIRIUS NASCAR Radio family and we look forward to his first full season in NASCAR," said Steve Cohen, SIRIUS' Vice President of Sports Programming. "Each week our listeners will get first-hand updates on his progress, hear his insights into the differences between open-wheel and stock car racing and get his feedback on all the races."
Montoya, who is originally from Colombia, raced in Formula One, the pinnacle of open-wheel racing, from 2001 to 2006, compiling seven Grand Prix wins including the sport's blue ribbon event -- the Monaco Grand Prix. Prior to that he drove for Chip Ganassi Racing in the CART series from 1999 to 2000 where he won the CART Championship Series in 1999 as a rookie, and in his first attempt, won the Indianapolis 500 in dominating fashion in 2000. Montoya, 31, decided last year to jump full-time into NASCAR, competing in two ARCA events, four NASCAR Busch Series races and the NASCAR NEXTEL Cup finale at Homestead-Miami Speedway in preparation for a full assault on the Nextel Cup Series in 2007.
SIRIUS is the satellite radio home of every NASCAR NEXTEL Cup Series, NASCAR Busch Series and NASCAR Craftsman Truck Series race. SIRIUS NASCAR Radio, channel 128, which launched January 1, features the races plus exclusive original talk shows with up-to-the-minute news, expert analysis and exclusive interviews with NASCAR insiders.
All NASCAR content is provided to SIRIUS customers at no additional cost over SIRIUS' monthly subscription fee. For more information visit www.sirius.com.
While Sirius is not specifically mentioned, the image of Homer Simpson's plug an play satellite radio looks strikingly similar to the Sirius Sportster.
Sam Simon, creator of the cartoon classic known as the Simpson's happens to be a Howard Stern fan, and even created a radio sitcom featuring the "better half" of Stern Show staffers. The title of the radio sitcom was "The Bitter Half".
Satellite radio has garnered a presence on several television shows and video games, but to this point, it seems to be the first time the digital medium has been included in a cartoon.
So, how long before we see Homer Simpson's presets on the Sirius web page?
SIRIUS is the Satellite Radio Home of Super Bowl XLIMonday
January 29, 8:00 am ET
SIRIUS to air ten game broadcasts in seven languages SIRIUS NFL Radio ch. 124 to broadcast live from Miami Beach Chicago Bears and Indianapolis Colts home radio feeds to air nationally
SIRIUS Satellite Radio, the Official Satellite Radio Partner of the NFL, will provide the most comprehensive radio coverage of Super Bowl XLI, with multiple live game broadcasts, live day-long news and analysis every day of Super Bowl Week.
On Super Bowl Sunday, February 4, SIRIUS will air an expanded lineup of live play-by-play broadcasts of Super Bowl XLI to its growing subscriber base. SIRIUS will offer ten different game calls in seven languages, including both teams' local radio broadcasts and the national Westwood One/CBS Radio Sports broadcast. SIRIUS subscribers can choose from:
* Indianapolis Colts team broadcast - channel 125 * Chicago Bears team broadcast - channel 123 * Westwood One/CBS Radio Sports broadcast - channel 124 * Westwood One Spanish broadcast (Spanish-Latin America) - channel 181 * Canal + Spain broadcast (Spanish-Spain) - channel 147 * NTV + Russia broadcast (Russian) - channel 143 * France 2 broadcast (French) - channel 110 * NHK Japan broadcast (Japanese) - channel 107 * SMG broadcast (Mandarin Chinese) - channel 119 * ARD broadcast (German) - channel 130
From Monday, January 29 through Super Bowl Sunday, SIRIUS NFL Radio ch. 124, SIRIUS' 24/7 year-round NFL talk radio channel, will broadcast live every day from Radio Row at the Miami Beach Convention Center and will be streamed live and free of charge on the NFL's official game site www.superbowl.com.
Source: SIRIUS Satellite Radio
SIRIUS NFL Radio will provide up-to-the-minute news and analysis from a panel of expert hosts that includes Jerry Rice, Cris Carter, Tim Ryan, Pat Kirwan, Gil Brandt, Jim Miller, Carl Banks, Bob Papa and Adam Schein. SIRIUS NFL Radio will broadcast live from Dolphin Stadium on Media Day, Tuesday, January 30, from 10am to 3pm ET. Media Day shows will feature one-on-one interviews with players and coaches from the Indianapolis Colts and Chicago Bears. On Saturday, Feb. 3 from 2pm to 6pm ET, SIRIUS will have live coverage as the Pro Football Hall of Fame's Class of 2007 is announced at the Miami Beach Convention Center. Coverage will be hosted by Gil Brandt and Bryan McGovern and will feature the live announcement and one-on-one interviews with newly elected Hall of Famers.
SIRIUS NFL Radio Daily Schedule:
Monday - Friday * 8 am - 10 am ET: The Opening Drive with Bob Papa, Cris Carter, Carl Banks, Daryl Johnston and Gil Brandt.
* 10 am - 1 pm ET: Movin' The Chains with Tim Ryan and Pat Kirwan.
* 1 pm - 3 pm ET: The Red Zone with Bruce Murray, Cris Carter and Gil Brandt.
* 3 pm - 7 pm ET: The Afternoon Blitz with Jerry Rice, Adam Schein and Jim Miller.
* 8 am - 11 am ET: The Weekend Kickoff with Paul Allen and Jeff Dubay.
* 11 am - 2 pm ET: Press Coverage with Vic Carucci and Dan Leberfeld.
* 2 pm - 6 pm ET: Live Hall of Fame Election Coverage hosted by Gil Brandt and Bryan McGovern and featuring interviews with newly elected Hall of Famers.
* 6 pm - 8 pm ET: Chalk Talk. Highlights from Super Bowl Week on SIRIUS NFL Radio.
Super Bowl Sunday
* 9 am - noon ET: The SIRIUS Tailgate Show with Adam Schein, John Madden, Gil Brandt and Steve Cohen.
* Noon - 4 pm ET: The End Zone with Bryan McGovern.
* 4 pm ET: Westwood One/CBS Radio Sports Super Bowl XLI coverage * Postgame coverage live from Dolphin Stadium with Pat Kirwan and Jack Arute.
SIRIUS listeners in the Miami area during Super Bowl Week can also monitor traffic and weather conditions by tuning in to SIRIUS First Traffic and Weather for Miami on channel 153. As the Official Satellite Radio Partner of the NFL, SIRIUS broadcasts live nationwide every pre-, regular, and post-season game of the NFL season, plus the Super Bowl and Pro Bowl. Listeners can hear Westwood One/CBS Radio Sports' broadcasts and Spanish-language broadcasts for select games. Fans can also tune into SIRIUS NFL Radio, channel 124, for the only 24/7/365 radio channel dedicated entirely to pro football talk.
In addition to being the Official Satellite Radio Partner of the NFL, NASCAR, NBA, NHL, CFL, Wimbledon Championships and Barclays English Premier League soccer, SIRIUS broadcasts play-by-play for more than 150 colleges, including the entire NCAA® Division I Men's Basketball Championship (March 13 - April 2, 2007), plus several of the year's top thoroughbred horse races.
Noble Roman Inc. of Indianapolis, IN, the national franchisor of Noble Roman's Pizza and Tuscano's Italian Style Subs locations, has chosen SIRIUSBusiness as its preferred supplier of background music. Applied Media Technologies Corporation will provide SIRIUSBusiness for $24.95 per month, with no contract, along with all necessary sound equipment.
"The SIRIUS equipment will be programmed to the channels that fit our customer base," said Libby Springer, Marketing Coordinator for Noble Roman's Inc. "Quality control is very important at Noble Roman's, whether it's our pizza, subs or music. SIRIUSBusiness offers that control."
"Everyone loves great pizza and great subs, from kids to grandparents. Noble Roman's has a wide range of customers, so they needed a music service with a wide variety of channels. SIRIUS is the perfect solution," said Jason Nash, Account Executive for AMTC. Noble Roman's Inc. has a proud history of over 30 years in the foodservice industry, providing the experience and know-how to achieve the goal of a successful business. Noble Roman's offers two exciting franchise opportunities: Noble Roman’s Pizza and Tuscano’s Italian Style Subs. For additional information, visit www.nobleromans.com.
Privately-held AMTC is headquartered in Clearwater, FL. AMTC is the exclusive provider of SIRIUS Satellite Radio (NASDAQ: SIRI) for business use, under the brand name SIRIUSBusiness. SIRIUSBusiness includes 69 channels of 24-hour, commercial-free music, with all music royalties paid, and presents the first meaningful competition for Muzak in the business music arena. AMTC also manufactures a full line of professional sound equipment and provides TelAdvantage, the world’s most recognized brand of telephone "on hold" messaging products and services. Since 1991, AMTC has served over 20,000 customers around the globe, including names like Bally Total Fitness, Bridgestone-Firestone, Continental Airlines, DaimlerChrysler, Ford Motor Company, Morgan Stanley, Wendy's and Yum! Brands. For further information on SIRIUSBusiness or TelAdvantage, visit http://www.amtc.com/.
Restaurants, a fast-growing chicken wing franchise famous for cooked-to-order wings, has selected SIRIUSBusiness as the background music for its more than 500 restaurants open or under development throughout the United States. SIRIUSBusiness, provided by Applied Media Technologies Corporation (AMTC), consists of 69 channels of 24-hour, commercial-free music from SIRIUS Satellite Radio (NASDAQ: SIRI). Under the agreement, AMTC will also provide sound equipment to the company’s locations.
Wingstop was chosen as the best overall wing company at the fifth annual National Buffalo Wing Festival in Buffalo, N.Y. “It makes sense that the best wing company in the country would choose to partner with the best background music service,” remarked Dan Hecht, Director of Special Programs for AMTC. “With a $24.95 monthly price, and no contract required, this service represents both high quality and great value.”
“Just as Wingstop has stuck to what we know best—wings, SIRIUSBusinessis a background music provider that keeps excelling at what it knows—music,” commented Bill Knight, Wingstop’s Chief Operating Officer. “We are so pleased to offer commercial-free music on our menu, making Wingstop even more attractive to our customers.”
Mike Sutter, Director of Training for Wingstop, agrees, “When a brand partner opens a new Wingstop, they have a lot to do. AMTC makes the process easy for our partners by providing timely professional installation and technical support post-installation.”
Wingstop Restaurants, founded in 1994, are designed featuring a nostalgic, aviation-themed atmosphere. All of our stores are outfitted with 1930's - 1940's, pre-jet engine aviation décor and artifacts. The entire family will feel welcome in our comfortable and inviting surroundings. Wingstop features nine proprietary wing flavors, including Original Hot, Cajun, Atomic, Mild, Teriyaki, Lemon Pepper, Hawaiian Barbeque, Garlic Parmesan, and Hickory Smoked BBQ. The wings are always made fresh-to-order and served steaming-hot. Wingstop also offers a variety of delicious sides including fresh-cut fries, soft drinks, beers and wine.
Privately-held AMTC is headquartered in Clearwater, FL. AMTC is the exclusive provider of SIRIUS Satellite Radio (NASDAQ: SIRI) for business use, under the brand name SIRIUSBusiness. SIRIUSBusiness includes 69 channels of 24-hour, commercial-free music, with all music royalties paid, and presents the first meaningful competition for Muzak in the business music arena. AMTC also manufactures a full line of professional sound equipment and provides TelAdvantage, the world’s most recognized brand of telephone "on hold" messaging products and services. Since 1991, AMTC has served over 20,000 customers around the globe, including names like Bally Total Fitness, Bridgestone-Firestone, Continental Airlines, DaimlerChrysler, Ford Motor Company, Morgan Stanley, Wendy's and Yum! Brands. For further information on SIRIUSBusiness or TelAdvantage, visit www.amtc.com
Well, not really, but take a vacation anyway. We have a three bedroom lock-off unit at the luxurious 5 Star Westgate Lakes Resort in Orlando Florida, and this year will only be using the two bedroom side of our unit. This leaves a 1 bedroom "studio" unit with kitchenette, jacuzzi tub and spacious private patio available for use by someone else.
The week available is Sunday June 24, 2007 through Sunday July 1, 2007. The unit has a king size bed and is perfect for a couple, but can sleep up to 4 (via a leather sofa bed). Westgate Lakes resort is conveniently located between Disney, Universal, and Sea World. If you want you can simply relax at scenic lakefront setting, use one of the numerous swimming pools, enjoy water sports, fishing, basketball and volleyball courts or participate in a full schedule of family activities. You can even relax on the lake shore and catch some of Disney's Fireworks.
This year is "The Year of A Million Dreams" at Disney. Why not kick back and come to Florida to participate in the magical event.
This vacation studio villa is being made available for less than the cost of most hotel rooms, and there are no catches whatsoever. We are simply making the independent studio side of our unit available. Check in is Sunday, June 24, 2007, and checkout is Sunday July 1, 2007. The cost for this stay..........$500 (less than $75 per night). If you are interested in this vacation getaway, and even want to chat a bit about satellite radio (I would be happy to chat, but remember that this is a vacation), send an e-mail email@example.comWe will answer e-mails on a first come first served basis.
Resort amenities include: - 1 Hour Photo - 18 Hole Miniature Golf Course - 24 Hour Business Center - Activities Program - Arcade - Basketball - Bicycle rentals - Disney Planning Center - Fine Gifts Outlet - Heated Swimming Pools - Kids Club - Marina - Marketplace and Deli - Papillion Full Service Spa - Pizza Hut Express with room delivery - Tennis Courts - Volleyball Courts - Smokehouse Grill Restaurant
In an earlier article I spoke about content, choices and freedom that satellite radio offers. As part of that article I outlined a theoretical concept of the creation of "cards" to act as the mechanism for subscriptions. The article garnered some comments, and I felt it would be a good topic for an article.
The term "card" I am referring is not a credit card type device, but rather a device along the lines of the XM passport that is used with their Nexus units. Picture if you will a standardized “card”, such as an SD memory card, that had the subscribers subscription attached to it.
For the purposes of this segment, we will assume two separate satellite radio entities with no merger.
The "SiriusCard" and the "XMCard"
The SiriusCard and the XMCard would be small devices that carry with them a subscription for satellite radio. Devices such as plug and play units, and OEM receivers would be "dumb" and inoperable unless a card is inserted into a slot in the device. The insertion of the card makes the device a "smart device" that can then receive a satellite radio signal, provided that the card is activated and the device is capable of delivering the service requested. In this scenario, some devices may be Sirius only or XM only, but the OEM head units would be capable of receiving either card. Cards would retail for $30 and would require activation by the subscriber.
The "SatChoice" Card
The "SatChoice" card would be similar in nature to the individual cards, but would be capable of delivering either or both services to the consumer. "SatChoice" cards would work in "SatChoice" capable receivers and all OEM receivers would be "SatChoice" capable. A "SatChoice" card will also work in segregated receivers, but an "XMCard" receiver for example would only deliver XM content. Sirius and XM could develop a line of "SatChoice" receivers for both the OEM and the retail markets, and "SatChoice" as a standard would phase out the individual Sirius Cards and XMCards over time. A "SatChoice" card would retail for $45 and would require a subscription to one or both companies in order to operate.
All receivers going forward would be based on the "card" technology, and thus upgrades by consumers will happen naturally over time.
The Benefits for Consumers:
- Consumers would be able to take their subscription with them from the car to other devices such as a wearable device or home receiver.
- The technology could be adapted to other devices such as cell phones, PDA’s, etc. A "SatChoice" card becomes more valuable to a consumer that has a wide variety of applications.
- The need for multiple subscriptions simply for convenience goes away.
- Consumers can seek out and buy devices that are "SatChoice" ready. The need to understand and comprehend the individual services technology goes away, and the consumer can sample each service prior to making their decision.
- Because of the ease with which a satellite radio consumer can switch, the services both will have a focus on bettering their content offering. Consumers choice will be based on the content.
The Benefits for Sirius and XM:
- A simplified platform for OEM's to implement without the worry of attaching themselves to the coat-tails of one service or the other. The installation rate could grow substantially.
- The ability to market satellite radio as a medium and focus on the choices and variety satellite radio has to offer.
- Because of flexibility, there would be a small sacrifice in "family plans", but not so much so that it would carry a dramatic impact. The freedom that "SatChoice" cards offer would easily enable a modest subscription price rate hike.
- Cards could be marketed with a free month of service (perhaps up to 3 months), giving a consumer buying an car (new or used) the ability to try satellite radio inexpensively, without obligation, and without the difficulty of installing hardware, antennas, etc.
- The marketing of satellite radio could center on the "SatChoice" tag line. Car Makers could tout their cars are "SatChoice" ready or "SatChoice" Standard, and the concept gets consumers to first accept the concept of satellite radio as a whole prior to making a provider selection.
- The numbers of people who will at least try satellite radio would increase, especially if they are seeing value in the card because of a trial period. The cards themselves become the focal point to the consumer, not the hardware. Having a "SatChoice" card simplifies the concept in the eyes of the consumer.
- The switch to such a system would carry benefits such that existing consumers would be compelled to upgrade on their own accord. This minimizes the satellite radio providers having to subsidize the upgrades. There will be a period of time where the older receivers will need to be upgraded, but the benefits received from "SatCard" implementation will far outweigh the costs of upgrading an older piece of equipment.
In my opinion, there is potential here for satellite radio to literally re-invent itself in the eyes of the consumer. Should a merger happen, much of what is stated above is still very applicable, and the opportunities get even better, such as every "SatChoice" card coming with immediate and permanent access to a sampling of commercial based channels for free. Think about a consumer, for a one time cost of $45 (to buy a "SatChoice"card), getting access to the satellite radio concept via 10 channels of commercial based or commercially sponsored music (less commercials than AM or FM). Suddenly something such as a "SatChoice" card becomes a revenue generator.
All of this is simply a concept at this point, and some may argue that these companies can "go-it-alone", but in my mind there is a huge untapped potential in a "SatChoice" card concept, and the acceptance and proliferation of satellite radio would expand exponentially.
Ford Motor Company, a satellite radio partner of Sirius, posted their worst loss on record. The loss of $5.8 Billion as compared to a loss of $74 Million a year ago. Slumping sales and employee buyouts account for large parts of the loss. Ford, similar to other U.S. Auto Makers is in a battle for market share, while trying to restructure at the same time. While assumptions that this will impact Sirius are often made, thatopinion is ill conceived. Fords production has only been trimmed by 10,000 for Q1, and they anticipate more production for 2007 than they had in 2006. Further, Ford targets a specific number of installs for satellite radio in order to earn warrants, and thus it would be in their best interest to install enough receivers. In the past Ford has bundled longer term Sirius subscription plans (as long as 3 years) as an incentive for buyers.
Reuters Story Excerpt:
DETROIT (Reuters) - Ford Motor Co (NYSE:F - news) on Thursday capped the worst year in its 103-year history with a deeper-than-expected fourth quarter loss and said it would cut its production for the current quarter and lose market share through September.
The No. 2 U.S. automaker posted a fourth-quarter net loss of almost $5.8 billion, or $3.05 per share, on declining sales of its profitable trucks and charges for employee buyouts. That compared to a loss of $74 million, or 4 cents per share, a year ago.
Ford's loss from continuing operations was $1.10 cents a share, which was wider than the average Wall Street analyst expectations of a loss of 94 cents per share as tracked by Reuters Estimates.
The company posted a record loss of $12.7 billion for 2006, leaping past Ford's previous record net loss of $7.39 in 1992.
Ford shares slipped initially in pre-market trade and then recovered to be unchanged from Wednesday's close of $8.20 on the New York Stock Exchange.
Ford, which is in the early stages of a four-year turnaround plan that includes closing 16 plants and cutting up to 45,000 jobs in North America, said charges reduced fourth-quarter results by $3.7 billion after taxes, or $1.95 per share.
Ford expects its U.S. market share will fall through the third quarter as it pulls back from sales to car rental companies and other fleet operators.
The company suspended its practice of providing detailed financial forecasts a year ago.
The Dearborn, Michigan-based automaker also said its production would be down through the first half of the year but increase on a year-over-year basis in the second half.
Ford cut its previously-announced first quarter production target in North America by 10,000 units to 740,000 vehicles, a 15.5 percent decline from the same quarter a year ago. MORE HERE
One of my biggest issues and concerns with satellite radio has always been the OEM side of the equation. I have always been of the opinion that the exclusive OEM deals, while they may seem attractive to the respective companies has cased a major delay in the adoption of satellite radio.
Consider for a moment if the exclusive install deals were not existent, and interoperable radios (even as simple as both chipsets being installed behind the dash) were utilized. Factory installation of satellite radios would have evolved much faster, and installation penetration would have been much deeper more quickly.
By nature, consumers do not like certain things dictated to them. What they watch and listen to is high on the list.
What if instead of exclusive install deals the exclusiveness was on the marketing side of the equation? You buy a GM and both XM and Sirius are available. GM automatically comes with three free months, and GM promotes XM in their advertising, etc. However, the receiver is capable of receiving Sirius, and the consumer, should they choose to do so, can make a call and activate the service they want. What if Chrysler did something similar, and so on down the line?
Should a consumer be denied the service they really want? Should a Ford buyer who wants XM be forced into an aftermarket situation, or to order a port or dealer install? A GM buyer that wants Sirius? Are Sirius and XM really happy that this segment of their base is not necessarily there by choice, but rather dictation? I would venture to say that the adoption rate of satellite radio as a sector would show impressive improvement over current take rates if the consumer was not boxed into a decision. Wouldn’t it be better if the option was already there, and the consumer only needed to make a phone call?
I remember the days when loyalty to a cell phone company was based on the fact that the consumer did not want to give up their phone number. Now, consumers have the freedom to take their number to any carrier they want. The consumers decision rests with coverage area, hardware prices, reliability, marketing, and contract terms rather than the phone number.
Satellite Radio is about freedom. It is about unprecedented content offerings available to consumers on a nation-wide basis. It is about being a country music fan in New York City, and having the ability to listen to several channels of that content. It is about being a Hip-Hop fan in the middle of Kansas and having the ability to catch the latest tunes. It is about being able to take Fox News with you as you leave the house and start your commute. It is about being a Howard Stern fan or an Opie and Anthony fan and having access to them wherever you might be.
Why should something that represents so much freedom and choice be restricted when it comes to the car you buy? There exists a DISCONNECT in this situation. As an investor I would rather see 10,000,000 "satellite-choice" cars a year with a 65% take rate than 5,000,000 "restricted-choice" cars with a 50% take rate. Imagine the tag line "Satellite-Choice Comes Standard". They would be marketing the concept of satellite radio, and at the same time expressing the freedom that the consumer has with satellite radio.
As a consumer I would love to see something along the lines of what XM has done with the Passport applied to satellite radio as a whole, and implemented (particularly in the OEM side of satellite radio). I would love to see all satellite radios carry a slot by which the consumer can insert either a "SiriusCard", and "XMCard", or a dual mode "SATCard". These cards would be standardized in size and the consumers subscription(s) would tie to the card. A satellite radio consumer could buy the card for a nominal charge ($30 for a Sirius or XM card and $45 for a dual card), and that card could be inserted into a slot in the dash receiver of the car, into a plug and play device, into a home receiver, or virtually any other application. This would solve the other consumer issue of the subscription being tied to the car. Personally, I am a plug and play consumer, who prefers the ability to take my subscription with me to the house, the condo, the boat, etc., and would be a consumer that would fall into the bad side of the "take rate" category even though I have 3 satellite radio subscriptions on my account. Simply put, I see more value in a plug and play receiver than I do an OEM receiver tied to the car. The "SATCard" solution would be a great benefit to the sector as a whole in my opinion. I actually would not mind the OEM’s offering one "SATCard" over the other so long as I had an easy and viable option to obtain the content I want. If such a device existed, I would have a dual subscription.
It has often been said that it is the speakers that "make" the stereo system. A great stereo with sub par speakers will sounds sub par. Satellite Radio is about freedom, content and choices. Market it that way in the OEM channel and you will have better adoption, more installations, and a healthier sector.
With all of the speculation about a merger, we may well wind up with something such as this anyway, but only time will tell.
With all of the merger speculation, various opinions will surface as to how likely it is and what the hurdles would be. One popular opinion out there is that Sirius and XM will "try" a merger, but really will not want to merge, and in the end, the merger will fall through.
There are several problems with this opinion.
When companies decide to merge, or a buyout is decided, all of the details of the deal are worked out prior to the announcement. In other words, the terms of the deal have already been negotiated, and cast in stone. At that point the merger or buyout is announced, and it goes to the appropriate governmental agencies for approval. If approved, the deal goes through, and everything moves forward. If not approved, the deal does not go through.
These companies are publicly traded, and the boards carry a fiduciary responsibility to the shareholders. To attempt a "merger ruse" where the companies seek out approval for a merger without the intention of merging would be not only irresponsible, but would likely land several people in prison. Further, the risk would be huge whereby they would be relying on the government to act one way or the other, and there is no guarantee that the government would move in the desired direction (opinions of our government in action aside).
Thus, the "trial balloon" of a merger is what is happening now. The companies can gage shareholder sentiment, gage the likelihood of government approval, and negotiate in the best interests of their respective shareholders. If such negotiations are taking place, once an agreement is reached, it is a "done deal" as far as the terms go, and from that point forward becomes an all-or-nothing scenario.
An interesting aspect of this potential deal is that in the case of XM Satellite Radio, only about 10 shareholders would need to be contacted (although all would have voting power). About 60% of XM’s stock is held by roughly 10 entities. For Sirius, the retail investor carries the stick with roughly 70% of the shares being held by retail investors.
Whether negotiations are being held is unknown, but comments regarding the subject have been made by both Sirius and XM management, and merger scenarios are being developed at a feverish pace by analysts covering the sector.
If a merger were to be announced, the window is fast approaching. At this point speculation is that approval could take as long as 1 year. With an election happening in November of 2008, many government agencies grind to a virtual halt on anything that requires a decision by about June (5 or 6 months prior to election). Taking this into consideration, and if these companies are considering a merger, the prudent move would be to leave enough time for the current administration to consider and decide on the issue. A 3 month cushion would be about the smallest cushion you would want, and would mean some sort of announcement by the end of March. Obviously, a bigger cushion would mean an earlier announcement.
In my opinion, if this is being considered by Sirius and XM, the window to announce is between now and the end of February, and if they are going to attempt it, the earlier they announce the better.
Stifel analyst Kit Spring has issued a note on XM Satellite Radio in reference to the RIIA suit. Springs doubts that the suit will have a negative impact on the enterprise value of XM.
- XMSR lost round one as a defendant in a lawsuit by the recording industry: Last May, the recording industry (RIAA) filed a lawsuit against XM alleging copyright infringements, essentially saying new radios with recording functions are like iPods, which require a higher licensing fee. XM believes these devices are legal based on the Audio Home Recording Act of 1992, similar to TiVo. The RIAA seeks $150k per song or $35B - 5 times the enterprise value of XMSR, an amount that seems completely divorced from economic reality. Last Friday, judge Deborah Batts ruled against XM's dismissal request. She will hear the case. See our Stifel regulatory team's note this a.m. for more detail
Springs sates, "We doubt the liability will be material to XMSR's enterprise value for the following reasons::
- Based on our analysis of NPD data and other retail channels, these devices haven't been very popular. To date, we estimate XM has sold only about 125k radios (vs.7.7MM subs) with the advanced recording features in question (Pioneer Inno and Samsung Helix allow for disaggregation of shadow recoding).
- Unlike an iPod, you can't take songs off these devices, so maximum economic damage is likely limited to both the number of devices and the average useful life of the devices, perhaps 3.5 years. These qualities lead to enormous differences in the economic damage relative to Internet file sharing, which has a viral/exponential effect. We'd also point out that the number of songs downloaded on iTunes per iPod is only about 20, another statistic that points to limited economic damage.
- Sirius negotiated separate licenses with the record companies for their recording capabilities, which we believe were around $9 per radio upon manufacture for recording consistent with the AHRA and$25 per radio (incremental $16) for advanced recording features. Sirius was the manufacturer of its advanced recording radios. We believe XM/Pioneer/Samsung are paying only the$9. If XM settled for 5 times what Sirius is paying, that equates to damages of $10MM, an immaterial amount, in our view
- In our view, the RIAA is incentivized to improve its economics versus XM, but at the same time not to materially harm the company. Satellite radio pays a total of7% of its revenues to record companies and artists combined, versus3% from terrestrial radio. So, record companies should prefer that satellite radio takes off, unless they conclude that radio in general (both satellite and terrestrial) is bad for record sales.
- Advanced recording will likely remain a niche product until manufacturing costs plummet: Looked at another way, we believe an incremental $16 fee for future radios with advanced recording features would be a slight detriment to adoption if manufacturers tried to pass all of the cost to consumers. If XM had to bear the full cost of advanced recording, as opposed to sharing it with manufacturers and/or consumers, this would represent a reduction to the economics per sub with advance recording features. If XM wanted advanced recording for every radio and fully subsidized it, we estimate this would cost XM an incremental $25 in SAC/CPGA (42%/25% increase). We doubt that XM will need to do this because competing technologies will also be restricted in terms of what they can offer. We believe that advanced recording features will remain a niche product for consumers that want to pay the extra $9-25, until manufacturing costs plummet. We do not belive the Street has baked in high assumptions for recording products.
Maintain Buy rating on XMSR: We continue to believe long-term forecasts for satellite radio are achievable based on the projected ramp of new car installations (from about 20% of new cars today to70% by decade end) and relatively high-take rates in new cars today (55%). We think SIRI and XMSR will attempt a merger in 2007 and see $7B of merger synergies. Of course, there is also a possibility that no merger occurs. Our $18 target is derived from a DCF, which assumes 9x 2011 EBITDA and a 10.5% WACC.
Satellite Standard Readers have become familiar with Applied Media Technologies Corporation (AMTC), the official source for SiriusBusiness. SSG has covered several press releases from AMTC including some of the biggest franchise names in the U.S. We recently caught up with Matt Holden, the Public Relations and Sales Support Lead for AMTC. Matt was kind enough to give us his time, and bring us up to speed on what AMTC is all about, as well as some outlooks for 2007.
SSG - Matt, thank you for taking the time to chat with us. Can you tell us a bit about your role at AMTC?
M.H. - Sure! Thanks for having me. I'm the Public Relations and Sales Support lead for AMTC. My team and I handle all of the advertising and marketing support tasks, including arranging and implementing new special programs (the corporate-level deals you've been seeing reported), maintaining AMTC's web sites, issuing press releases, and chatting with folks like you!
SSG - AMTC launched in 1991 with a core business of telephone hold systems. How important has TelAdvantage been to AMTC's business model?
M.H. - Very - without it, we wouldn't be in business! For the first twelve years of AMTC's existence, it was our only business. As AMTC grew, we fine-tuned our company's entire makeup, from the sales force and marketing to manufacturing and technical support, to support the unique needs of business owners. This successful track record and the facilities and staff that made it possible were key factors in SIRIUS' selection of AMTC as the provider for SIRIUSBusiness. TelAdvantage is still generating a very substantial portion of AMTC's revenue, a trend we don't see slowing down. Our Creative Services department, the folks who write and produce TelAdvantage messaging in our in-house studios, are probably the busiest people at AMTC.
Going into 2007, we are getting into new technologies and new models which allow SIRIUSBusiness and TelAdvantage to take even greater advantage of their natural synergy. For example, we're now offering storecasting, which is what you hear when you go into a store, music is playing, and occasionally the music fades out and an advertising message runs. Using our TelAdvantage messaging technology in conjunction with SIRIUSBusiness' music stream, AMTC's storecasting offering gives our customers the best in the business on both sides of the equation at a fraction of the cost of other vendors.
SSG - One aspect of music in business is the laws surrounding royalties. Many people do not understand that playing FM radio or CDs in a business is almost always illegal, and additional royalties need to be paid. Can you explain the laws in an easy to understand way, and why contracting through a company such as AMTC resolves those issues?
M.H. - Playing music in a business environment is considered a "public performance" of the work. While there are certain exemptions to the law which permit playing broadcast radio in the smallest of business without paying royalties under very specific circumstances, no exemption is made for CDs, iPods, or any other music source (including satellite radio). Most businesses are well beyond the limits of these exceptions.
Each musician is represented by one or more of the three performing rights agencies: ASCAP, BMI, and SESAC. In order to be completely covered, a business owner needs to pay royalties to all three agencies in addition to whatever fees the music source itself incurs. Each agency requires its own signup questionnaire and has its own requirements and pricing schedules. It's a complex and overwhelming process.
SIRIUSBusiness dramatically simplifies the process. For just $24.95 per month, we not only provide the SIRIUS subscription, but also pay all three performing rights agencies on the customer's behalf. The business owner doesn't need to worry about what square footage his store is or what she serves in her restaurant; each customer pays the same flat fee as a part of the subscription.
SSG - Why did SIRIUS Satellite Radio choose to partner with AMTC for its commercial subscribers, as opposed to handling them internally?
M.H. - SIRIUS, like XM, is a company geared toward consumers. Their marketing, sales, and R&D efforts are focused on building better products for your car, your boat, and so forth. SIRIUS realized it would be inefficient for them to try to create an entirely new sales division, marketing campaign, and product line to address the needs of business owners. Instead, they turned to AMTC. As an industry leader in another media technology, it was a perfect fit.
AMTC's partnership allows SIRIUS to focus on the consumer side, while providing commercial subscribers with support from a company used to the unique challenges business owners face. For example, AMTC coordinates professional installation and sells commercial sound equipment (including speakers, amplifiers, et cetera), both of which are crucial to a business owner.
SSG - What does AMTC do to help its customers get the SIRIUSBusiness equipment installed in their businesses?
M.H. - We have a nationwide network of certified installers that work with us. When a customer requests professional installation, our installation department pairs him or her up with a local installer. All AMTC-certified installers adhere to a very competitive labor rate schedule created by AMTC. In most cases, installation is completed within 14 days from the date of purchase.
SSG - SIRIUSBusiness seems to fill a market sector that before now was untapped by AMTC. How important has SIRIUSBusiness become in AMTC's operations? Do you find that SIRIUSBusiness helps you sell TelAdvantage, and vice versa?
M.H. - The two products definitely go hand-in-hand, and a very strong percentage of our customers use both SIRIUSBusiness and TelAdvantage. In fact, we offer a 10% discount when they do. The great thing about our two product lines is that they have a big "the whole is greater than the sum of its parts" benefit. With just a TelAdvantage digital player, a business gets on-hold messaging. SIRIUSBusiness obviously gives the business background music. When the packages are combined, other opportunities arise - for example, storecasting. The reverse is also true; many of our customers play a combination of TelAdvantage messaging and SIRIUS music programming when their callers are on hold.
SSG - One concern that businesses always have is the "down-time" where service is not available, or not working. What "up-time" do customers experience with SIRIUSBusiness and TelAdvantage?
M.H. - With other satellite music services, such as Muzak, there is a dish that has to be aimed precisely at the satellite to get signal. That dish is a wind trap, and frequently gets blown out of alignment, causing loss of signal. Another huge problem for dish-based providers is weather. When it rains or snows, you lose your music. We even had a customer a few months ago whose Muzak reception died when an endangered pelican built a nest in his satellite dish! SIRIUS doesn't require a dish, but instead uses a tiny, 10” tall antenna, so our signal isn't affected by the weather.
Satellite reception is also tricky in certain geographical and urban regions. For example, customers in the Rocky Mountain states often have issues with Muzak's reception, as the mountains block the line of sight to the satellite. Since SIRIUS' satellites orbit over the Rockies, this doesn't happen to SIRIUS subscribers. In urban areas, large buildings can block visibility to the Muzak satellite. With SIRIUS, that's not an issue either. SIRIUS has installed terrestrial repeaters in virtually every major US city. If your business is near a repeater, you'll receive maximum signal strength regardless of the surrounding structures.
TelAdvantage players don't need to be permanently connected to any service; as long as they are plugged in, they're ready to go. All the messages are stored on and played from local media, such as the iQueue II's CompactFlash card.
SSG - AMTC offers customized solutions for telephone on hold systems, where the client can insert messages regarding their products and services. Do most businesses take advantage of this type of solution? How affordable is it? How fast do you turn around these solutions for your clients?
M.H. - Absolutely. AMTC's messaging offering is two-fold. First is the custom messaging - customers submit a script questionnaire, and we write a script and have a message available for download within five business days. The vast majority of our clients do utilize these custom messages, announcing their addresses, hours, and so forth. Custom recording is sold by the minute, and is available for as little as $25 per minute. The standard TelAdvantage package retails for $349.
Most of our TelAdvantage sales efforts focus on what we call "special programs". We create a package specifically targeted to the dealers, agents, franchisees, etc. of a large multi-location company. We have hundreds of these special programs, including corporately-endorsed programs for Chrysler, Ford, Volkswagen, Allstate, Nationwide Insurance, and Morgan Stanley, to name just a few. As part of a special program, we build a library of “standard” messages.
For example, when we built our program for Ford Motor Company, we recorded messages about all their car and truck models, their warranties, their service and parts department, popular features in their vehicles (such as SIRIUS Satellite Radio), and so forth. Since every Ford dealer in the country would want those kinds of messages, we record them on our dime. Then, every Ford dealer that buys a TelAdvantage package gets access to all those messages as part of their standard HoldDirect subscription, which is less expensive than even one minute of recording. Standard messages save our customers a ton of money.
Additionally, standard messages make it easier for us to work with regulated companies such as securities or brokerage firms. These firms require their franchisees, agents, dealers, or whatnot to obtain corporate approval for the material they play on hold. They typically call it "compliance approval". AMTC works with the corporate headquarters to make sure the standard messages are approved by the compliance departments, and then we know they're approved for any agent to use. Even for companies without compliance requirements, there is something to be said for a level of brand consistency such that if you call a Ford dealer in Florida or Alaska, you will hear the same messaging.
SSG - SIRIUSBusiness is still fairly new in the business audio solutions world. Have you seen great interest in the product?
M.H. - Definitely! As you've seen from our press releases, we're signing with new franchisors and major corporations all the time, typically one or more a week. That's in addition to all the individual stores, hotels, restaurants, offices, and auto dealerships that are "getting SIRIUS" every day.
When directly selling against Muzak, our primary competitor, we almost never lose a deal on a level playing field. The problem is, Muzak locks its customers into 3-year or 5-year contracts. The businesses we speak to often can't wait to make the switch to SIRIUS, but are stuck in contracts. As the word gets out about SIRIUS, though, business owners are starting to circle their contract end dates on their calendars. Each month, we add more new subscribers not only through our own marketing efforts, but through prospects that are finally getting out of background music jail and regaining their freedom to choose a new vendor.
SSG - What do your clients that sign up for SIRIUSBusiness find as the most compelling reason for joining?
M.H. - It's different for everybody. Obviously, the fact that SIRIUSBusiness is available at a third or in some cases even a quarter of what prospects are paying for Muzak plays a big part, as is the fact that we don't require a contract. The signal reliability is another big one, as I mentioned earlier. Many of our clients choose SIRIUS to "get legal" after they've heard from ASCAP, BMI, or SESAC about playing the radio or some other consumer music service. Folks playing the radio also come to SIRIUS to escape commercials - we've even had a few people sign up after a competitor's commercial played in their store!
We also hear a lot of our customers complain that Muzak in particular is extremely repetitive. Employees of businesses playing Muzak tell us that they can set their watches by what time certain songs will play. SIRIUS has a song library of well over a half-million songs, and each of the 67 music channels we carry has a dedicated, full-time program director whose sole responsibility is to choose fresh, varied songs each day.
Other deals (for example, our recent Pizza Ranch agreement) are keyed on the support services we offer. Pizza Ranch was evaluating SIRIUSBusiness and XM's business offering, and chose to go with us because we could provide installation and technical support. We also provide the sound equipment for new stores, which makes AMTC a one-stop shop for music. When a new business is opening, the owner has a million things they're trying to get done. We do everything we can to make the process easy, from purchasing to installation and post-installation technical support.
SSG - One thing that businesses consider is the length of contract and hardware costs. Can you break that down for SIRIUSBusiness and TelAdvantage?
M.H. - Certainly. The contract part is easy - there isn't one! AMTC's policy has always been that if you provide a good service at a fair price, there's no need to lock a customer into a contract. They will keep coming back on their own.
Our SIRIUSBusiness Equipment Kit contains everything a business needs to connect SIRIUS to an existing sound system: the receiver, a commercial-grade outdoor antenna, and all the requisite cabling and so forth. It retails for $239. For a new business that has no sound equipment, our sales representatives can build a custom sound system for the space for the lowest price in the industry. A nice sound system for a small business can run as little as a couple hundred dollars. We also offer leasing options to help reduce up-front costs on sound equipment, with a $1 buyout option when the lease term is up. Muzak's leases are usually structured such that businesses rent the equipment forever - you never own it.
TelAdvantage is sold as a turnkey messaging bundle, which consists of the iQueue II digital player, a CompactFlash card, and a USB reader/writer. The bundle also includes one minute of custom recording and a year's subscription to HoldDirect.com. The complete package is $349. As with SIRIUSBusiness, there is no contract whatsoever.
Customers who sign up for both TelAdvantage and SIRIUSBusinessreceive a 10% discount, as well. Additionally, we offer rebates to companies which have named AMTC their endorsed vendor, which reduce the price even further.
SSG - How well does the brand of SIRIUS Satellite Radio resonate with potential clients?
M.H. - SIRIUS is one of the hottest brands in America. The buzz has given us almost universal recognition. I can't tell you how often we hear, "I've got SIRIUS in my car, and I love it!" Some businesses are a little concerned at first because they equate SIRIUS with Howard Stern, but they quickly relax when we let them know that Stern's programming isn't included with the SIRIUSBusinesssubscription.
SSG - A common misconception is that a service such as TelAdvantage and SIRIUSBusiness are only for the "big companies". Does AMTC cater to the small business?
M.H. - Before we came along, both business music and on-hold messaging were cost-prohibitive for all but the largest companies. We've revolutionized the markets for these services by slashing prices by more than half and getting rid of contract commitments. We've also simplified things by manufacturing plug-and-play products that are easy to use, offering professional installation, and constantly using our customers' feedback to improve our service and our equipment.
For the first time, you don't need to be a Fortune 500 company with a technician on staff in order to utilize these types of services.
SSG - What types of businesses utilize services such as yours?
M.H. - All types! SIRIUSBusiness is playing in every industry you can imagine - retail stores, warehouses, hotels, restaurants, auto dealers, doctor's offices and hospitals, gyms, miniature golf courses, arcades, and even the locker rooms and training facilities of a few professional sports teams. Likewise, TelAdvantage is a great solution for any business with a high call volume. Some of our highest-volume TelAdvantage industries include insurance agencies, moving companies, hotels, airlines and cruise lines, automotive repair shops, financial planning offices and staffing services.
SSG - Can you give us an outlook for 2007? Should we expect to see growth and more announcements regarding SIRIUSBusiness?
M.H. - 2007 is going to be a banner year for AMTC. We've got countless more corporate endorsements and nationwide rollouts in the pipeline, several of which are already signed and simply aren't public knowledge yet. We had $3.85 million in revenue for 2006 and we're on pace to shatter our goal of $5 million for 2007.
As a company, AMTC is in a major growth surge. We're increasing our sales staff by more than 50% for 2007, including opening a satellite office, and are also ramping up staffing in other key departments to handle our increased volume. We've got some very ambitious plans in the works for new internal tools and procedures to make AMTC an even more efficient operation, which translates into better customer service and ultimately higher production. Some of these tools are already becoming available to AMTC staff, so the benefits are already being realized. 2007 is also going to be an extremely exciting year on the research and development side of things. Every one of our product lines will be receiving at least one major new product. We've got new SIRIUS hardware coming soon, several very significant new sound equipment products, and a few new messaging players.
SSG - If readers and businesses are interested in TelAdvantage, SIRIUSBusiness or other products and services you offer how would they go about contacting AMTC?
SSG - Thank You for speaking with us today, is there anything additional that AMTC would like to add?
M.H. - I'd just like to say that all of us at AMTC are extremely excited about the coming year, and all the buzz that's starting about who we are and what we do. The satellite radio blogging and forum communities online have been a huge part of that, and we truly appreciate it. We're looking forward to generating a lot more interesting stuff for you all to talk about!