Sirius XM Radio (SIRI -3.42%) quietly hit a 10-year high this summer, and it's showing once again that it knows how to keep its top talent close. The satellite radio provider announced on Tuesday that it inked a new three-year deal with Christopher "Mad Dog" Russo, the sports talk radio icon who has hosted an afternoon show on Sirius XM since 2008. Terms of the deal weren't disclosed.
This isn't on the same level as extending Howard Stern, something that Sirius XM has already done -- twice. However, Russo's one of the few stars on satellite radio big enough for a channel to bear his name. Mad Dog Unleashed airs every afternoon on Sirius XM's Mad Dog Sports Radio channel. Before making the plunge to satellite radio, Russo spent two decades on terrestrial radio, hosting Mike and the Mad Dog on New York's WFAN.
Talk radio is important for Sirius XM. The commercial-free music stations are a big draw, but in this era of Spotify and Pandora (P), spinning tunes isn't much of a differentiator as drivers migrate to connected cars. It's the Sterns and the Russos that make it difficult to cancel the service, and it also keeps costs in check. The same can't be said for music with the royalty rates that tick higher with every passing year. Keeping Russo around is more important than the market's non-reaction to the development seems to suggest.
Sirius XM stock closed at $4.17 the day before Russo's deal, inching lower to $4.16 on Tuesday's news. The stock's trading range for the day was less than 1%. The same thing happened last week when Dan Rather was signed up for a weekly show.
Content land grabs are no longer news for Sirius XM, but the stock trading in tight ranges relative to historical volatility doesn't make this a boring investment. There's still a lot of activity taking place. More than 1.2 billion shares traded hands last month, the heaviest monthly volume for Sirius XM stock in more than two years.
Even the naysayers are getting busy. There were 229.4 million shares sold short as of mid-September, and that's the highest short interest for Sirius XM in more than a year.
One can argue that Sirius XM is becoming predictable. It is now consistently profitable. Revenue growth has been decelerating at a steady clip, going from 13% to 12% to 10% to 9% over the past four years. That's pretty ho-hum, and it could be why Pandora keeps getting mentioned as an acquisition target. It would give Sirius XM a leg up in the streaming market, sparking headier top-line growth in the process.
The Pandora buyout chatter was resonating this summer. The Wall Street Journal reported that Sirius XM's controlling stakeholder Liberty Media (FWONA) was attempting to buy Pandora. That seems to still be an option. Liberty Media CEO Greg Maffei touched on Pandora during a Goldman Sachs conference last week, arguing that Pandora's moving in the wrong direction and that Sirius XM could be good for Pandora.
With or without a head-turning buyout Sirius XM is proving that it's not boring, even if the stock and its ho-hum beta of 0.97 appear to be asleep at the wheel these days.