Satellite Radio the New Sunset Industry?

With XM being slammed again this week, with respect to mp3 recording of their signals on individuals’ players, it seems that the gains won’t be there to support the growth investors and shareholders expect, for 2007. This results in the satellite radio becoming just a bigger market for listeners, compared to an existing land-based radio marker. Instead of a 50,000 watt transmitter, it’s more like a 5,000,000 watts, capable of serving the country.
So, what does satellite do to increase shareholder value? Well, when the novelty of subscriptions wears off, XM and Sirius will have to increase its revenue, and the only way it will be able to do it, is with advertising.
Given that scenario, and being one that likes to listen to the radio in the car, is it enough to PAY a monthly fee for radio, when I can get it on my existing radio for FREE?

I know I had mentioned that it may be a short term gain to jump in with a potential to sign the rest of the automakers, but the satellite business opportunity for growth has narrowed significantly, with the recent ruling. Looks like the only one to gain in satellite radio is Howard Stern.

Satellite Radio - It's All Downhill From Here

I had mentioned last week that the only chance satellite radio had, was if there was a merger in the works. Well, the FCC has squashed that thought, and the stock in XM and Sirius took a big hit today. The only way I see things changing, is if the price dropped for subscriptions, and there is a major infusion of cash through a partnership with Google, for ads. Paying the exhorbant contracts and bonuses to the likes of Howard Stern, will not attract new subscriptions on a continuing basis.

MAYBE, and its a big "maybe", if the stock bottoms out by May, there might be some money to be made over the short term, if contracts are signed with auto makers to give XM and Sirius an outlet for growth.

User Fees Considered a Tax

In an interesting article on CBC, the Supreme Court of Canada recently ruled that governments that charge user fees, can’t do so, as it is effectively a tax. In our system (Canada), taxes can’t be imposed without representation. I am sure the US has the same sort of tax laws, with respect to this.
Why am I posting this here? Well, there has been an interesting discussion over cellular companies charging access fees, every month, which the companies have said is something that is collected on behalf of the federal government. A class action lawsuit was launched in 2004, saying the cell companies had misled the public about the monthly access fees, saying they were mandatory. Now, you can argue that this may be a separate issue, compared to the SOC ruling this week, however, with the precedent set from the SOC on user fees versus taxation without representation, I would think that the class action suit will start to have some merit against the big cell companies, if it’s true that the monthly system access fee, or a portion thereof, actually does go to the government.
If the monthly fee does go to the government, then perhaps there may be a positive correction in telecommunications stock in Canada, if people start putting 2 and 2 together. In my case, my system access fee amounts to about 30% of my monthly service contract…having this amount reduced, may make cell plans more attractive to the public, thereby increasing susbscriber growth projections, as things start to weed out in court.
This may take awhile to play out in the courts, but it will definitely help in telecom price targets, if the cell system access fee is determined to be a user fee collected on behalf of the government. Cell providers and equipment manufacturers will benefit with a favorable ruling against the monthly system access fee.

More Options Backdating Issues

I came across this article in CNN Money. Interesting new twist on the options backdating, that is reckless disregard for shareholders, in order to personally gain from taking away from the corporation.

Let's see who drops out on the next round of investigations.

Off-line Storage Startup Funding...Get a Piece of the Action

I came across an idea to provide off-line storage to people. The premise behind the idea, is to allow people or companies to store any computer files off-site, with unlimited access. This accomplishes 2 things; First, the files are secure from any on-line threats or internal espionage or compromises, and second, allows individuals to store any files away from their computer or any other storage facility to which they can be linked.

Offering unlimited access at a price of $10 per megabyte allows the entity to invest the initial revenue, and have the returns subsidize the operation of the storage retrieval. This amounts to operating expenses of approximately $400 per CD-R capacity, on a continuing basis, based on a 5% return.

Interested in getting into the action? Shares of the entity are available at $1,000 each, and represent 1% ownership. Click on the "make a donation" link on the right, and sign yourself up for a share. Co-operative ownership in off-line discrete storage is available. Money will be used to create an advertising campaign and target users with discrete data storage requirements.

Satellite Radio a Good Investment?

With the recent news of Sirius' bonus payment to Howard Stern, I can't help but wonder how Sirius can maintain a return to shareholders that would make it a good investment. Having lost 40% of its value in the last year, and seeing the subscriber numbers dwindling, and even outright cancelling subscriptions, I don't think that Sirius can survive on its own. There was talk on a mega-merger with XM, which seems to me, the only viable alternative, which would make it a formidable force against other media companies.

I wouldn't be putting any money into satellite radio stock, if you are looking for big returns. There will be a bottoming out of the stock later this year, and at best, single digit growth throughoout 2007.