Shares in Sirius (SIRI) are up about 20% over the last month. Nothing has really changed. No new earnings.
The supposition is that the chances of a merger with rival XM Satellite (XMSR) have improved. That may be true. But, if testimony by management of the two companies aimed at getting the deal approved is any indication, the satellite radio business is not a very good place to be.
One of the offers that the companies have made is to allow consumers new packages that "would give satellite-radio subscribers more choice over what stations they paid for." That may not be good for revenue.
And growth at the companies has slowed. According to TheStreet.com "XM added 338,000 net new subscribers, taking its overall total to 8.25 million. But the pace of new subscriber gains was below year-ago levels, when the company added 398,000 users."
Sirius and XM have fundamentally agreed to cap price increases to get the deal done. Of course, that means that revenue improvement in the future will depend to a large extent on subscriber growth. And, that is not going so well.
Douglas A. McIntyre
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