"Let's try something different," I wrote last week. "What will it take to make Sirius XM Radio a winning investment? The question isn't rhetorical. Kick in with your thoughts on what can turn things around for Sirius. I'll be back in a few days to go over some of the best responses."
You certainly chimed in, nearly three dozen responses deep. As promised, I'm back to go over a few of the more compelling responses. With shares of Sirius XM Radio
Show us the money, Mel
Time for Mel to move fast with the new financing structure and not general statements that he is confident it can be done. Investors are not as confident, will it be done and how?
Definitely. Sirius has three debt repayment milestones to tackle next year, and they're all huge.
- A $300 million Sirius convertible is due in February.
- $350 million in XM bank debt must be repaid come May.
- A $400 million XM convertible is due in December.
Until the company secures the funds to clear all three hurdles, the market is going to fear the worst.
Ad it up, Mel
Some factors I have never heard being talked about:
1) Double the satellites (post-merger) = double the bandwidth! More TV channels, and how about Internet capabilities? Mobile hotspot anyone?
2) Marginal increases of the ad revenue dollar -- 10 million subs is nothing to shake a stick at but 20 million will grab the attention of advertising heavyweights.
Doubling the bandwidth will become a greater selling point once interoperable receivers come out, capable of receiving both XM and Sirius. For now, the company is limited to offering up a sliver of the more popular channels from one service on vacant channels of the other as a smart upcharge service. Since the company can't replace the roughly 19 million hamstrung receivers already in the market that can only receive XM or Sirius, it will be limited in its upgrade.
The ad revenue potential is an even bigger head-scratcher. As an old-school radio guy, CEO Mel Karmazin should know how to milk ad revenue from broadcasting better than just about anybody. It hasn't happened here. In fact, it's actually going the other way. In the second quarter, Sirius ad revenue per subscriber clocked in at a measly $0.32 during the period. It was at $0.45 per member a year earlier. Naturally the commercial-free music channels are a big draw to premium radio, but if Sirius XM is going to sell ad space on its other content channels, it really needs to get on the ball here.
Is it a tough environment to smoke out sponsors? Sure, but even Six Flags
In with the new
With an extremely aggressive marketing/advertising campaign, the XMp3 could easily be perceived as the MUST HAVE tech-toy gift for this holiday season for baby boomers.
A hot new product can certainly kick a company out of the doldrums. The way that XM and Sirius have struggled outside of the car dealerships in moving new receivers, a retail hit would be huge.
XM and Sirius have put out promising portable players like Inno, Stiletto, and S50 in the past. The problem is that they have been dwarfed by the popularity of Apple's
You still have more to say
I'm just scratching the surface with some of your great responses. I'll be back in a few days to tackle the rest of the killer suggestions to get Sirius XM Radio on track.
In the meantime, feel free to post other comments on what you think it will take to get Sirius XM back into the market's good graces.
More news than static on Sirius XM:
XM Satellite Radio is a former Rule Breakers stock pick. A free 30-day subscription will shed some light on why the satellite radio company made the cut before being cut. Zumiez is a Motley Fool Hidden Gems pick. Starbucks is a Motley Fool Inside Value recommendation. Starbucks and Apple are Motley Fool Stock Advisor picks. The Fool owns shares of Starbucks. Try any of our Foolish newsletters today, free for 30 days.
Longtime Fool contributor Rick Munarriz subscribes to both XM and Sirius. He does not own shares in any of the companies in this story, save for Six Flags. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.