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XM-SIRI Marriage: Is Satellite TV Next?

by: Gino Lattarulo July 28, 2008 | about stocks: DISH / DTV / SIRI    

Gino Lattarulo

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Now that the marriage of Sirius (SIRI) / XM (XMSR) has set a new precedent in mergers, you have wonder how many other companies will take a swing at cost conservation that would not have been tried before this. One area that comes to mind is Dish Network (DISH) and Direct TV (DTV). Although they did try to merge in 2002, it is interesting to consider the possibility that they may make another attempt.

A lot has changed in six years after all. I severely doubt they would get consideration for one very large reason: competition in rural areas. Satellite radio has competition from Internet, terrestrial radio, and devices like the iPod; all available for competition in just about every corner of America.

Not the case with Satellite TV, because cable is not available in these countless rural areas. I live 30 minutes outside of Raleigh, NC and although I get cable, a great many neighboring areas rely on Satellite TV because of the unavailability of cable. Major service live television is not really available (yet) on the Internet. Yes, there are some Internet TV sites but it is not going to stream across a 56k modem, which is also the only option for Internet access in a great many of these areas. Besides, Internet television is still more of a concept than a viable alternative right now. The only other competition of Satellite TV would be the good 'ol rabbit ears on a UHF signal.

In major cities the competition between cable and satellite is of course a virtual bloodbath. If there was a way for both satellite TV companies to work together as a single entity in these areas while keeping separate in non-competitive areas, it could help the bottom line quite a bit. I realize that is a radical idea riddled with conflict-of-interest problems and laws that I probably have not heard of, but what the hell, I like to think up ideas that are impossibly crazy from time to time just to generate lively conversation and see what the reaction will be. Any takers?

Stock Position: None.

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This article has 9 comments:

  •  
    Jul 28 10:32 AM
    100% agreement with your article. I'm originally from Nebraska and many of the farmland area outside Omaha,
    Lincoln and the tri-city area of Grand Island/Hastings/Kearny still have no access to high speed internet, cable tv or good cell phone service.

    Another factor is that by the time DISH/DTV were to
    be voted upon by the FCC; with a high probability that
    democrats will be in office, the merger would be denied by these dummycrats



    KaptKos
    Reply
  •  
    Jul 28 10:57 AM
    Only Johnny Adelstein at the FCC could compare Sat Radio to Sat TV with a straight face. Totally different situation as this writer notes.

    Can't wait to see the NAB and their pals get crushed once this industry lifts off!
    Reply
  •  
    Jul 28 11:56 AM
    Well you got your merger. I see that's what was really holding down the stocks, as you have suggested so many times. Yeah, right.
    Reply
  •  
    Jul 28 03:58 PM

    we're letting the short term traders off at the bottom. this is your exit. thanks for coming along for the ride.
    Reply
  •  
    Jul 28 04:14 PM
    Did I miss something? Why the drop?
    Reply
  •  
    Jul 28 05:34 PM
    The stock really took off and popped!
    Reply
  •  
    Jul 28 05:48 PM
    The Re-pukians in the FCC were the ones who refused to let the merger take place a few years ago. DISH had worked out the purchase price and everything but they would not let them merge because it would be a "monopoly". Just a few weeks later they allowed the two largest cable companies merge and now the sat radios. Go figure.
    Reply
  •  
    Jul 28 07:17 PM
    Maybe this stock will go to zero and then I won't have to worry about when to sell. The bleeding just won't stop.
    Reply
  •  
    Jul 29 07:30 AM
    Saturday, 7/26/08, I wrote the post bellow. I want to say that the first line to me is still the most impostant and sometimes most difficult to remember. Here's what I know now that I didn't now then.
    1. Sirius didn't close the deal over the weekend because they had financing issues to work out and probably new NAB wasn't running to file an injunction.
    2. XM's shares are still trading and Sirius sold shares in it's assisting of XM Note offering that includes an Arbitrage play that has shares being shorted to lock in the share purchasers profits. Minds greater than mind have tried to explain this "dillutive" offering of collarateral shares of Sirius to XM's Notes, so I'm not going into it here. I know it puts a lot of downward pressure on Sirius shares until their sold, and helps XM get a better cost in their Note Offering. This was planned by Management and not Announced until Monday. Long term its good for the merged company and sucks for common stock share holders in the "short" term. (PUN INTENDED)
    3. The Market in General took a bath on Monday and Cramer pulled a "JUDAS" act on Sirius, stating that it was like playing a $2.00 Lottery ticket. Oh which way is the wind blowing today Mr. Cramer.

    This is why my first statement below turns out to be the most important and the rest will follow when the Sh*t gets better defined.

    Pop or Drop on Monday?

    Not that I think what happens to the stock is all that important in the next two weeks, but I know a lot of folks do. The stock can only move up. Why would you dump shares now? That happened last week. A little patience even in the short run will get us to 2.90- 3.10, an old technical channel (4 -6 months ago). Then the company will let out the PR dogs, retaliate against legal issues (because now they can), give meaningful future guidance, introduce new products and details on what you'll be able to do with existing equipment, and report good third quarter "retail" results because of all the pent up demand. The fourth quarter will be all about Inter-Operable Radios and "Where can I get One?". I would not be surprised to see 4.65 - 5.25 by the end of the year. For those wanting to get out you'll probably get 3.72 -3.90 (roughly 2 x the 1
    1.86 - 1.95 low recently set) in mid November. Just my opinion, patience here will be nicely rewarded. For those who have been in for a long time you don't need anyone to tell you that now is not the time to be Weak-In-The Knees.
    Reply
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