Sirius XM Radio
Sirius XM Radio (Nasdaq: SIRI) broadcasts more than 130 channels to subscribers across the United States and Canada, and with the help of its three satellites, it can beam its programs directly to car radios, homes, store intercoms … even aircraft!
Sirius started as Satellite CD Radio in Washington, D.C. in 1990 and later went public in 1994. In 1999, it moved its headquarters to New York City and changed its name to Sirius Satellite Radio, Inc., then launched three satellites into orbit a year later. By 2002, Sirius’ services spread nationwide. Not content to cut its northern neighbors out of the fun, it expanded its business over the border and launched Sirius Canada in December 2005.
Products and Services
Over the years, Sirius’ products and services have become increasingly ubiquitous: Subscribers pay a flat, monthly fee to access its broadcasts, and businesses can sign up for a subscription-based service that enables them to play the company’s commercial-free music in their establishments. Sirius also has agreements to install radios in Ford, Chrysler, BMW, Mercedes-Benz, Jaguar, Volvo, and several other brands of vehicles, and more than 40 of Hertz’s rental models include -- you guessed it -- Sirius products.
If the all-Elvis channel or the Korean channel didn’t already give it away, Sirius’ program roster is vast -- want an injection of news and culture? The company has exclusive satellite radio rights to National Public Radio. Ready to rumble? Sports are a huge part of its business. Sirius is the leader in sports radio programming and has exclusive satellite radio broadcasting rights to all NFL, CFL, and NBA games -- all in all, its broadcasts cover more than 350 sports teams.
If you’d like to “get Sirius,” you’ll need to do two things: Pay for an annual subscription, and buy a receiver to catch Sirius’ satellite signals. A variety of retailers, including Best Buy, Target, Wal-Mart, and Costco, sell these receivers. Plus, subscribers can tune in to all of Sirius’ proprietary music channels and most of its talk stations on the company’s website, Sirius.com.
Despite its name, Sirius isn’t just a one-trick radio wonder: In 2007, it developed the first live in-vehicle television network -- called Backseat TV -- which broadcasts family-style shows from Cartoon Network, Nickelodeon, and Disney to back-seat passengers. Backseat TV has two significant competitive advantages: First, it works while the vehicle is in motion. (Imagine never knowing how that Columbo episode ended because you had to make an emergency stop at the Quickie Mart!) Second, Backseat TV uses terrestrial repeaters -- a Klingon-sounding term that basically means that the signal won’t suddenly cut out the instant you drive behind a row of tall buildings.
Besides, isn’t the Spongebob SquarePants theme song at least a tad less monotonous than the oft-repeated “Are we there yet”?
Only subscribers to Sirius Satellite Radio can use Backseat TV. These folks can buy the Backseat TV service for their pre-existing vehicles, as long as they already have an FM radio and a rear-seat video monitor. Otherwise, they can get the system pre-installed when buying a 2008 Dodge Grand Caravan, Dodge Charger, Dodge Magnum, Chrysler Town & Country minivan, Chrysler 3000, Jeep Commander, or Jeep Grand Cherokee.
One name that many associate with Sirius is shock jock Howard Stern. Stern (or more to the point, Stern’s mouth) has garnered a reputation for costing radio stations millions in FCC fines for inappropriate language -- but that same risqué behavior brought 12 million loyal listeners to The Howard Stern Show by 2005. Sirius doesn’t censor -- nor does the FCC control -- its content, and the explosive impact Stern could have on its business was evident.
On Oct. 6, 2004, the company announced the signing of an exclusive five-year deal with Stern for a whopping $100 million per year. Time described this $500 million gorilla as “either a stroke of programming genius or a colossal waste of money -- the biggest gamble on an entertainer in any field, be it film, television, sports, or radio.” The deal required Stern to move The Howard Stern Show to Sirius effective Jan. 9, 2006. In addition, Stern received the rights to three Sirius channels; he currently has two -- Howard 100 and Howard 101 -- but still retains the rights to a third.
Sirius’ “Merger” with XM Satellite Radio
In 2006, Fools Tim Hanson and Brian Richards pointed out that Sirius had “massive debt obligations, more than $1 billion in losses over the past year, and a troubling addiction to shareholder dilution.” There was also the added threat of XM Satellite Radio -- and as the old saying goes in business, if you can’t beat ‘em, acquire ‘em. So after a really sticky ball of red tape gooed things up for more than a year, the FCC finally approved what has come to be called a “merger” between Sirius and XM (Sirius actually bought XM in the deal) to form Sirius XM Radio Inc.
The merger gave the combined company 18.6 million subscribers and made it the second-largest radio company in terms of revenue. However, as of October 2008, investors started to worry. Sirius had $1 billion in debt that would come due in 2009 but didn’t have the money to pay it off. Concerns about the company’s future sent the stock to a new low that month, and the shares dropped to just 28 cents each.