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Fred Jacobs is President of Jacobs Media, a media research and consulting firm. Jacobs Media clients have included CBS Radio, Premiere Radio Networks, Citadel, Greater Media, MTV Networks, Playboy, Amazon, Electronic Arts, NPR, Sylvan Learning Centers, and Taubman Malls. Learn more about the company here.


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August 2011

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« Satellite Blues II | Main | Mr. Popularity »


Dick Hungate

This latest series on "Satellite Blues" has been
some of your sharpest, most pointed analysis yet, Fred.
To admittedly over-simplify some, the reason for this
as I wrote two weeks ago here, is GREED...ON A COMPANY
AND PERSONAL LEVEL. "Let the next generation of dumb
bastards clean up the debris. I want my Outer Banks,
North Carolina beach house NOW, while the getting's
good! And if that means helping orchestrate the sale
of some Clear Channel programming to XM or Sirius to
dramatically boost current-year income (and in doing
so, to grab that fat golden bonus carrot dangling from
the stick) I'm there!. Hey, I'll use that age-old
standby rationalization that "We may not even BE here
tomorrow, the way this crazy world is going. I can
only control today...my little microcosm or domain."
And then there's the now-cliched NFL player quote, "I
gotta feed my family!" Ohh...don't get me started.
Remember, too, that the leverage on a "cheap" stock
is enormous. If a share is going for 7 bucks and you buy a ton on bad news and wait six months or a year for good news...and it goes up to 10 bucks...you just grossed yourself a painless 30% profit. I think there's probably as much or more short-term TRADING in XM and Sirius than there is long-term "investing" in them...even if for purposes of truly hedging ones bets in an IRA. Having said that, your point should be a clarion call to perpetrators in our industry. Show your loyalty by voting with your checkbooks. Don't help the enemy keep its 52-week share price up just so these shakily-funded firms can keep a decent Moody's or Standard-and-Poors credit rating and go to the credit markets more cheaply. SELL that stock today.

(As a quick aside, I got out of the market completely
last week. Not to sound like a know-it-all, which
too many folks already think I am, I believe rough
times are ahead for the U.S economy. It's been only
6 years since the bloody dot.com market pullback in
which I watched people's 401K's plummet 50%. I had
much of my own retirement cash in "Janus Twenty".
What short memories we all have! Interest rates are
going to keep rising, not falling...and that will
keep the lid on large stock market gains as cash will
find a home with such "no risk" instruments as CD's and
short-term Treasury notes. Better to exit early and
leave a few dollars on the table than to join the herd
to the door the day of a terrorist event and watch your
hard-earned money evaporate seemingly overnight. A
broker friend of mine said the other day, "Greedy
hogs get slaughtered...and one day soon 'cash will be
king' again".)

It goes back to what I wrote a few weeks ago: we all
need to be able to look at ourselves in the mirror and
see a person of integrity/ethics reflected back.
I totally agree with Fred here. A co-worker...a major
personality on a terrestrial station...said to me just
last week, "Right now I own 10,000 shares of Sirius.
I know you follow the stock market (once, years ago,
I bought 40,000 shares of Waterhouse Securities, using
the stock-momentum strategy of such early proponents
as "Inventors' Business Daily". My cost basis was $3.00
and the stock went to $40.00...do the math there)
so what do you think? Should I keep buying on dips?"
I said, "Joey (not his real name), you're a great guy
and you know I love ya. But by owning this and also
claiming to love traditional radio which has been so
good to you, you are more than just "hedging your
bets"...you're being an outright hypocrite! Are you
actually willing to sell your soul to the devil like
that? While simultaneously bitching that satellite
outspends traditional radio by a country mile on
marketing, PR, etc.? Where do you think they GET
the cash to keep shovelling coal into their steam
engine, so to speak? In the credit markets, their
ratings in which are partly determined by the average
stock price, liquidity, etc. PLEASE take an ethical
stand here and BAIL. There are zillions of other
great stocks you can own that bring no hypocrisy and conflicts of interest to the table." He did.

NOTE--- This is my last blog contribution for a long time. Heck, I don't even work for a Jacobs station! I just get so infuriated with what I see all around us. If anybody is or has been offended by my passion (which always has been my achilles heel), I really do apologize.


Interesting. But let's look at it objectively (which is how financial decisions SHOULD be made)

In the coming age of countless mediums for the delivery and consumption of audio entertainment the Satcasters are investing in orignal, non-duplicatable content that can be delivered over any medium - and radio companies are investing in getting as many AM/FM transmitters as the government will allow.

1 strategy is future focused. The other is straight out of 1990.

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