Could one man attract 4 million subscribers to a struggling radio network in less than 2 years?
Kudos to Sirius Radio CEO Mel Karmazin and staff for adding Howard Stern to the network and generating more revenue than profit loss in the 3rd quarter. I can finally consider Sirius (SIRI) a reasonable buy.
For the first time ever, Revenues of $167 million exceeded a net profit loss of $164 million, marking a bright turnaround for the third largest satellite radio company. Sirius posted a number of highlights in the 3rd quarter:
- Acquisition costs fell by 23%
- Revenue soared 150% year over year
- Subscribed growth increased by 135%
- net profit loss improved to $164 million from $180 million
These positive numbers have raised many eyebrows on the street as Sirius makes lengthy strides toward the satellite radio king, XM Radio. The biggest reason for Sirius’s massive subscriber growth is attributed to Howard Stern’s arrival to the Sirius network.
On the day Howard Stern inked the deal, “We had 600,000 subscribers on the day he was announced and now we have 5.1 million,” said Karmazin.
The Howard Stern effect is the exact media arsenal that Sirius dreams for. Along with the recent deal with NASCAR, Sirius now caters to the large Stern contingent as well as die-hard racing fans. It looks like these new additions along with the big time NFL deal should help Sirius become profitable in 2007, if not in the 4th quarter.
I’m not even going to probe the Sirius balance sheet because it is a disaster. The satellite radio industry is still in its infancy, but both Sirius and XM Radio are confident that profits lie ahead in the near future.
Sirius is supported by a nice bottom floor of $3.60, their 52 week low. SIRI looks like a good buy right now and should gain ground throughout the holiday season.
I’ll probably end up getting back into XM Radio in a year or so. Another XM 9 bagger would be nice, but now isn’t the time to pull the trigger.