This Week in Sirius XM Radio

Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio (NASDAQ: SIRI  ) moved sharply higher on the week, soaring 6.3% to hit $3.35. The media darling's pop was considerably better than the more modest upticks for the Dow and Nasdaq.

There was more going on beyond the share-price gyrations, though. Sirius XM's short interest dropped to its lowest level of the year. Pandora (NYSE: P  ) announced more milestones in auto integration. And royalty details behind Apple's (NASDAQ: AAPL  ) upcoming iTunes Radio also emerged.

Let's take a closer look.

Short people
There were 339.3 million shares of Sirius XM sold short as of mid-June. That may seem like a lot, but you'd have to go back to November to find the last time the number of bearish bets on the stock was this low.

Short interest has fallen for three consecutive exchange-reporting periods. That doesn't mean a short squeeze isn't possible. Again, 339.3 million is still a pretty big number. However, it does appear as if many of the worrywarts have moved on, since shorting activity peaked at 414 million shares in February. 

Pandora thinks outside the box
Automobile integration has been a big thing for the leading music-streaming service, and it's something Sirius XM investors can't ignore. Pandora announced on Tuesday that it has now received more than 2.5 million unique account activations through integrations from 23 automotive brands and eight aftermarket manufacturers.

This is a big deal. Pandora is now seamlessly available through dashboard entertainment systems for smartphone owners driving more than 100 different vehicle models. Native in-dash integration makes it that much easier for Pandora to pitch its cheaper alternative to other premium solutions, including Sirius XM.

Pandora estimates that a third of the new cars sold this year in this country will have Pandora installed. 

Apple jacked
It was easy to assume that Apple would be getting the better of the major and independent record labels when it completed negotiations with the music makers earlier this month ahead of the iTunes Radio announcement. 

It's apparently not that way at all. The Wall Street Journal's reporting terms that are surprisingly generous. According to the report, Apple will pay a label $0.0013 whenever a song is played, as well as 15% of the net ad revenue generated. That goes up to $0.0014 per play and a 19% cut of the ad revenue action during the second year.

The per-play rate is higher than what Pandora is currently trying to talk its way down from, though Apple has a few cost-saving perks, including no revenue on iTunes-owned streams, "Heat Seeker" promotional tracks, or the first two songs in any hour that are skipped before 20 seconds are played.

This is still going to make it harder for Pandora to secure lower royalty rates. It will also pressure Sirius XM as it tries to expand the reach of its Web-based offerings.

The battle intensifies. 

A Sirius future
It was an interesting week for Sirius XM. The new week isn't likely to be dull.

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Comments from our Foolish Readers

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  • Report this Comment On June 29, 2013, at 10:52 AM, zukerman wrote:

    Very interesting day as a Sirius stockholder indeed. We had our patented spike in the morning then back down to the opening price, followed by sideways action most of the day ignoring the market until 2:00. There was a noticeable take down to 3.31 where I believe Malone took his chunk, a dead cat bounce into the close where 39,000,000 were bought. This is the Russell rebalance @3:5999 but was surprised that it changed the share price by .02.

    Avafin had crashed and wasn't responding for obvious reasons on a day like this. This morning I find that over 100m is missing from there count. It will be interesting to see the open on Monday.

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    SIRI 21.28B $3.34 -1.80% 59.86M 1.34 $30.35M

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  • Report this Comment On July 01, 2013, at 12:53 PM, duze54 wrote:

    Pandora isn't lower cost as you have to have a smart phone and it generally has a limit on the GB's it consumed before it charges extra. So don't say a low cost option! I use SIRI because of that and content, talk and sports included. SIRI is adding internet to the dashboards now and I won't use theirs either. Costs for my smart phone would definitely go up as I constantly have only SIRI radio on in my cars. I have internet for my laptop, but it's not limited thru my DSL.

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