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Summary:

Lazard Capital Markets’ Barton Crockett initiated coverage of Sirius XM (NSDQ: SIRI) today with a “buy” rating and a $1.00 target — due in…

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Lazard Capital Markets’ Barton Crockett initiated coverage of Sirius XM (NSDQ: SIRI) today with a “buy” rating and a $1.00 target — due in large measure to the way subscribers are accepting higher costs. The changed outlook overall for Sirius doesn’t hurt: “After surviving a close brush with bankruptcy in early 2009, Sirius XM has falling costs, more than 18.5M loyal subscribers accepting price hikes, entrenched growth via factory installs in most new cars, and limited debt maturities until 2013, when rising cash flow should make refinancing easy.”

Crockett is especially impressed, though, with the way Sirius managed to institute a 15 percent pay increase in Q309 by adding a lug for the fees for music rights without increasing its churn. That increase followed higher fees for second radios and online access. Since then, writes Crockett, “churn rates have improved, suggesting subscribers are very loyal and willing to pay higher rates. We see the music rights fee driving $52M of revenues in 2009 and $256M in 2010 …”

The company’s previous massive losses add another upside in the form of carryovers that should “shield” it from taxes for another decade or so. Risks include churn and the growth of online radio to car streaming. Not mentioned: the very real possible loss of Howard Stern when his contract is up.

With all the talk about the possible value of online news subscriptions and paywalls, it’s intriguing to see an analyst’s report about the value of loyalty to a different business. I’m not suggesting major parallels with the news business: Sirius XM starts with a head start of customer relationships because of the number trial subscriptions built in to new car sales and limited (although growing fast) alternatives for radio-based in-car music. But it’s a completely subscription-based business and merits a look, both for what it does right and what it may need to as other options increase.

  1. Sirius XM Radio and Apple will change the news media world. News will be brought to the people from cars and cell phones along with the Apple Tablet and the Sirius XM skydock.

    see the story here to fully understand what is taken place and the future of the news media.

    Apple Tablet getting Sirius. Sirius XM Radio. Apple story in blog http://siriusnews.com/blog/ Breaking news on Wed Jan 27th, 2010

    The news media and their manipulation of the news is about to end. People will access the news from anywhere at anytime and LIVE and spin free.

    Richard Keane, narrator Stock Shock http://www.StockShockmovie.com
    http://www.SiriusNews.com

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  2. Shame on you Richard for shamelessly plugging yourself, your blog, and your unfounded opinions. I’m a big fan of Satrad but your unbridled enthusiasm makes most folks turn away from your comments as wishful hyperbole. There is absolutely no founded connection between the Apple Tablet release and SiriusXM. That being said, there are many of us that are very optimistic for Sirius’ future and hope that our dedication to the product will help them weather the storm of our current recession and ultimately show that this dedicated fan base will help this company to endure. YOU can only will these things so far.

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  3. I have to agree w/ Gary, Richard you are over stepping your bounds. After clicking on your site & reading your article you are becoming delusional. Get grounded and come back to Earth. You are ruining your reputation, especially when it comes to the movie & Sirius. Your over reaching is doing more harm to the case you are trying to make than helping. I would hope to think Sandra Mohr’s eyes are rolling. Are you doing the people a service or has this turned into doing your self a service?

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  4. I can tell you this… With Pandora on my Droid if Howard leaves Sirius there is no way I will keep my two subscriptions. Ill save the money and change the payment to Verizon for a new phone for the wife and we can listen to all of the free music we like without the monthly charge to sirius and get a bug 3G map of internet to boot… Richard the web site you linked to is weak. It seems to be yours so that would explain a bunch… Sad…

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  5. If you like Sirius XM, and can stomach re-living the dip to 5 cents/share, then see their “rags to riches” story on DVD. The movie is called “Stock Shock” and it goes over the history, development, and near-death experience of the stock. I did not know the inventor of sirius xm was a woman!–well she is now, at least. DVD is cheaper at http://www.stockshockmovie.com , but the DVD is pretty much everywhere for sale or rent.

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