Uncle John's Cabin

Question of the Week - Get Sirius Dude

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Wow, you really seem to like this stock. In concept, I liked the business model when I first saw it. It seems to bring up comparisons to cable TV vs. OTA broadcasts which certainly worked out well for the cable businesses. When my wife bought a new car, we got a trial subscription for 3 months and enjoyed playing with it. Am I correct in remembering that it is completely commercial free? I have to say we enjoyed the variety of all the available channels to listen to. But in the end, we did not pay to continue the subscription.

I'm trying to understand the basic business model here. While it seems like cable, in many ways it acts nothing like cable TV.

Pros and Cons on sat radio in general.

Pros -
1) The variety seems endless, there is something for everyone.
2) Commercial free radio is pleasant
3) It is not location specific, no matter where you drive, you get the same stations
4) It even has portable adapters to take it out of your car and carry around.
5) Many new cars feature it as a built in feature and each new car purchased must bring in some revenue

Cons -
1) I found the number of channels distracting while driving. Much like cable TV, "1000 channels and nothing on."
2) Driving and surfing the radio are not a good mix. Surfing on your couch with the TV is.
3) It costs money to listen to what amounts to background music or talk (limited market) when you can get similar noise for free
4) Cable TV still had commercials to pay for part of the costs and profits, satellite radio does not seem to have this. (It's one of the biggest draws yet biggest differences between cable and radio.) Am I wrong here?
5) OTA or terrestrial radio stations have a huge lobby and are paying congress to prevent the merger between Sirius and XM as a form of protection. Congress has held 4 hearings on this already for some "unknown" reason. Even ExxonMobile did not have this much trouble merging. I believe today marks the 375th day on deliberations since the merger was proposed. This is the longest ever in history without a verdict.
6) Sirius does not really compete with only radio. It is competing with tapes, CDs, and now, it's biggest threat, MP3 players. (I refuse to call an MP3 player an iPod! An iPod is a brand, not a device.)
7) It would seem costly to add Sirius radios to older cars that did not have it built in.
8) Cable TV companies were granted exclusive rights to certain areas. Sat radio does not have this advantage.
9) I would venture to guess very soon there will be cell phone hook ups to cars (like "Sync") but with internet connections as well. This is a real killer. If you already pay for a cell phone with internet, you should soon be able to stream internet radio though it. Most people that would be possible targets for this market already own cell phones so why pay for radio twice?
10) Cars are now being built with hard drives to make radio listening like a TiVo experience where you can actually rewind to catch a tune or spot you missed. This would work really well with an internet cell phone.
11) MP3 players, not radios seem to be the portable music device of choice these days.
12) Someday soon, cars will probably contain complete computers in the cars as well with cell capabilities.

Based on this list off the top of my head, knowing that the Sirius XM merger is being strangled in congress and the high cost of entry, when a similar device that everyone is paying for (cell) "could" provide the same thing, I really wouldn't even bother with looking at the companies financials etc. Quite honestly, it will be an obsolete business before it become profitable. With portable electronic device convergence, why pay for yet another device when your cell phone can and will do it all?

No offense to any fans of this service here but I don't see a profitable business model ever. The high cost of entry and the speed of competing device convergence leaves no room for another subscription device whether the merger could get through congress or not. Radio as we know it probably only has 10 more years left as a profitable business model as well.

Could you make money on trades here? Sure if the merger goes through (or from pure speculation) but why bother hoping on a government that won't act and a business model that is doomed to failure in a few short years?

Given all of this, I can see many better opportunities in the stock market than Sirius. There is no crime to walk away from this one and go make money in a better stock. It took too long to make money in this business. Grieve and move on!.

Sorry dude. Get serious and sell this stock while you are up.

Best of luck,
Uncle John