The clock is ticking.
Speculators have their eyes glued to Sirius XM Radio (Nasdaq: SIRI ) . Liberty Media (Nasdaq: LMCA ) can make a move to increase its 40% stake in the company starting tomorrow, three years after completing the deal that spared the satellite radio giant from bankruptcy.
Will Liberty buy enough shares to grow its position to 50% or 80%? Will it swallow Sirius XM whole? Will it do nothing at all?
This is a good enough cliffhanger as it is, but naturally rumor mills would rather talk up rival suitors than playing this out to be the straight love story that it's likely to be. After all, this story doesn't truly get exciting until a third party steps in to make it a love triangle.
Unfortunately, the companies that can use Sirius XM the most -- languishing terrestrial radio operators -- can't afford the tab. Buying out Sirius XM, along with its more than 6.5 billion shares outstanding, would require at least $15 billion. Oh, and that's not including a reasonable buyout premium and tacking on the company's near $3 billion in debt.
Let's go over the three most logical buyers with that kind of money. Let's also go over why it will never happen.
Apple (Nasdaq: AAPL )
Set aside the fact that a good chunk of Apple's roughly $100 billion in greenery is planted overseas. There is little reason for Apple to acquire Sirius XM.
It wouldn't move the needle. Apple is growing quickly, with $108 billion in net sales in fiscal 2011. Sirius XM is growing much slower, with just $3 billion. The transaction would dilute earnings and create a conflict of interest.
Apple may sell digital music, but it's not in the premium radio business. It would rather take nearly a third of media and app sales from content creators and developers than throw its weight behind a single. It's taken more than a decade of growth and a megamerger to get Sirius XM to 21.9 million subscribers. That's impressive on its own, but Apple sold that many iPhones in less than two months.
If and when Apple would want to get into premium radio -- and it's still a very unlikely scenario -- why would it buy a North American satellite service when it can launch globally on the cloud by itself?
Google (Nasdaq: GOOG )
Big G is another name that folks like to push toward Sirius XM. Google is the world leader in online advertising. It's starting to make inroads with Google Music, and its Android platform has become the top smartphone operating system globally.
Why does this make it any more likely to be on bended knee? It was five years ago that Google shelled out what would eventually be $1.2 billion for radio advertising specialist DMARC. It didn't exactly pan out.
Like Apple, Google is a company that is growing a lot faster than Sirius XM's top line yet selling at a much cheaper multiple.
I get the reasons for Sirius XM's market premium. It has a monopoly in a premium broadcasting category that isn't proving to be as transitory as skeptics believe. However, I also know that buying Sirius XM would crush the stock as superficial investors bailed on the dot-com darling.
Microsoft (Nasdaq: MSFT )
The world's largest software company isn't afraid to crack open its checkbook and cut a big check. It's paying billions to take over search at Yahoo.com and get its mobile operating system going through the world's largest handset maker.
Who else but Microsoft would have paid $8.5 billion for Skype last year?
However, Mr. Softy's being more careful with its money these days. Investors expect chunky dividends and growth opportunities in line with its high-margin roots. Maybe it could have justified buying into Sirius XM when it was a lot cheaper a couple of years ago and its Zune portable media players had a shot.
Those days are long gone.
It's either Liberty Media or independence for the satellite radio giant. Given Sirius XM's improving fundamentals and strong auto-sales trend, either path should be rewarding.
Running of the bulls
I remain bullish on Sirius XM's future. It should come as no surprise that I'm promoting the CAPScall initiative for accountability by reiterating my bullish call on Sirius XM for Motley Fool CAPS.
XM Satellite Radio was a Rule Breakers recommendation before the Sirius XM merger. It's now gone from the scorecard, but if you want to discover the newsletter service's next Rule-Breaking multibagger, a free report reveals all.