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  ) rode higher with the market in general, soaring 1.6% to close at $3.81. The media darling's pop was in line with the Nasdaq's equally impressive 1.7% gain on the week, as the company's shares hit a five-year high.

There was more going on beyond the share-price gyrations, though. Pandora (NYSE: P  ) announced its new CEO -- and it wasn't Mel Karmazin. There were more legal tangles for Sirius XM related to music royalty payments. And Microsoft (NASDAQ: MSFT  ) and Apple (NASDAQ: AAPL  ) also made waves on the streaming front.

Let's take a closer look.

Keep on moving
Sirius XM traded as high as $3.88 on Wednesday and Thursday, establishing a new five-year high. The last time the satellite-radio operator was being exchanged at these levels was back in May 2008, when the stock hit $3.89. If Sirius XM manages to take out that level we would be back to 2007.

It's not a surprise to see the satellite-radio star hitting new highs. It's on top of the world in terms of subscribers, revenue, profitability, and cash flow. Auto sales were stellar last month, fueling the stage for healthy subscriber growth in the coming months.

The only fundamental setback is that the legal fisticuffs continue pertaining to whether Sirius XM should be paying music royalties for songs recorded before 1972. That was when federal copyright protection kicked in on sound recordings. Several record labels and music organizations joined the fight this week.

The potential damages won't necessarily break the bank at Sirius XM. The real harm here is the potential hit to Sirius XM's reputation for fans of oldies who thought their premium subscriptions and royalty fees were benefiting the artists they were listening to directly.

There's a new CEO in town
The leading Internet radio provider finally ended its months-long CEO search, naming former aQuantive CEO Brian McAndrews as its new helmsman.

There had been plenty of speculation earlier this year that former Sirius XM Mel Karmazin would be up for the challenge, but Pandora made the right call. It didn't need an old-school radio guy. It doesn't need programming. Techies handle that, so to speak.

Pandora's challenge is milking more revenue out of online advertisers, and that's where McAndrews -- who grew aQuantive to the point where Microsoft acquired in a $6.6 billion deal -- is the right choice.

Everyone's making waves
Microsoft kicked off the week by announcing that it will make Xbox Music available for iOS and Android devices. It had rolled out last its streaming platform late last year exclusively for PCs and other Microsoft products.

A day later, Clear Channel (NASDAQOTH: CCMO  ) announced that it will beef up its iHeartRadio Talk app with more talk programming. That bears watching. One of Sirius XM's advantages over most of the streaming options is that they rely primarily on music. However, Clear Channel has connections with talk radio, and it's making them easier to stream on the go and in connected cars.

Then Apple stepped up with its iPhone event. We've known for months that iTunes Radio -- the consumer tech behemoth's push into Pandora's market -- was coming. On Tuesday we finally got a date. The new service will roll out on Sept. 18 as part of the iOS 7 update that Apple will push out to its more recent products.

Yes, that's this coming Wednesday. The streaming space that Sirius XM has been trying to be a bigger part of with its improving online platform is starting to get pretty crowded with some big names.

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

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  • Report this Comment On September 15, 2013, at 2:00 AM, BillFromNY wrote:

    I'm one of those dopey people who bought XM and Sirius when they were soaring due to irrational exuberance and they held them all the way down to the brink of bankruptcy.

    When I became convinced that the company would survive I somewhere found the sense to add 150% to my holdings at about twenty five cents. Thus it is by far my most valuable investment and I worry all the time that one day I will pull up the quote and find that due to some event Sirius is trading at $1.85.

    I expected to have sold half by now to lock in some of my profit but auto sales have been so strong this year that I have held off. But now I am concerned about .... Pandora.

    Suddenly it has become a hot item due to its rapid growth. David picked it as a Rule Breaker and naturally it about doubled within two weeks. I have seen at least one TV ad where a car manufacturer (think it was Ford but not sure) explicitly mentioned support for Pandora.

    Of course the mantra has always been that Sirius has far more content than Pandora, which is restricted to music. Fine, but the people that get Sirius only for its music content would have a strong reason to go with Pandora for price and possibly for the listening experience provided by Pandora.

    Am I out of line here? And I have enjoyed reading your Sirius columns for what must be years now.

  • Report this Comment On September 15, 2013, at 5:58 AM, zukerman wrote:

    BillFromNY, you should sell your stock for the profits if it causes you that much anxiety, take your profits and sleep better at night. I too bought in 2004, bought more from .12 and now average $1.36 at this time. My first thousand shares were for $6.86 and I was really sick when it dipped to virtually nothing. However, I never invested the money I needed so it's different for me. After being in this stock for this long you've learned no doubt that every article is written from that persons perspective. I'm curious why you held on to this stock if you follow what most here at the Fool have to say. Their CAPS rating has never had more than 2 out of 5 on this equity, ever. The author of this piece has the time, money and inclination to fiddle with the various sources of media and forgets most don't. He loves his Pandora and has been on their band wagon for some time now, but it's not just Pandora he listens to. I'm reminded of the Tom Hanks movie (Big) where he gets paid to play with different toys when I read anything Munarriz. Maybe a quick check on the tax consequences of selling at this time might help you decide what to do. I'm confused as to why Rick thinks this lawsuit will impact Pandora when he should recognize they cater to the younger crowd and the 70s and earlier will likely have little impact for them. Wall Street isn't what it used to be and you'll find that most writers will gravitate towards options and never really own Sirius. Even if you just call your broker and sell your oldest shares, you can claim the loss on your taxes and ride those low cost shares a bit further. Your never out of line unless you let others make your decisions for you. Good luck to you whatever you decide to do.

  • Report this Comment On September 17, 2013, at 10:19 AM, BillFromNY wrote:

    Thanks for the response, Zukerman. No, I haven't yet gotten involved with the Fool philosophy or CAPS and whatever else. I subscribe first: because David Gardner and one or two of his partners have proven to have an exceptional talent for identifying growth stocks to buy, and second: because stocks recommended here are usually pretty easy to follow from their posting boards and from articles such as this one.

    Right now I'm watching MAKO as a potential purchase and the MAKO board is just full of good posts including, for instance, some by surgeons who have used their product. Also good article references.

    Munarriz has been writing weekly columns on Sirius for years now, although he says that he does not own a single share.

    Taxes are not a concern since I have a very large capital loss carryover from the .com bubble burst now many years ago.

    And after I wrote the above comment Pandora announces a large secondary stock issue and warns of possible disappointments to come. The stock dives just when it was starting to soar. Could David Gardner have blown one?

    This is a tough business.

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