Over the past several years during market visits and discussions with radio programmers and GMs, many have mentioned that they personally own stock in XM, Sirius, or both. Why? Because they secretly feel these new media companies are good investments, and they want to "hedge their bets."
Against what? The demise of commercial radio as we know it?
These investments are probably $1,000 here or 500 shares there. Individually, they aren't going to change the spreadsheets for satellite radio. But if you think about how much stock commercial radio employees might collectively own in XM or Sirius, it's probably a substantial amount of money. And this is money that is being used to hire Howard Stern, Martha Stewart, Oprah Winfrey, or buy sports franchises and NASCAR. It's money that allows XM and Sirius to broadcast their music channels commercial-free. And yes, it's how they're aggregating advertising dollars that are targeted at consumers, urging them to buy satellite radio (and by inference, cut back on the amount of time they spend listening to AM/FM radio). While terrestrial radio is slashing programming and marketing dollars left and right, satellite radio continues to spend, spend, spend - building content and continuing to advertise their wares to the American public.
So what can the average PD or GM or DJ do this week? Call your broker or log onto your stock trading site of choice and sell your shares in Sirius and XM.
And while you're at it, reinvest that money in your own career by purchasing shares of Saga, Emmis, Clear Channel, CBS, Entercom, Cumulus, Citadel, or the broadcaster of your choice. These companies have seen their stocks get beaten up so badly that most now fall into the "value stock" category. In Wall Street terms, that mean they are cheap, and yet, are good deals because these companies have solid holdings, they are still very profitable, and they have largely held onto their audiences.
In some cases, the value of their assets (radio stations, towers, transmitters, and yes, YOU) may now exceed the worth of their companies (as far as Wall Street is concerned). That means that while you may not agree with everything that broadcasters are doing (and count me as a part of that group), you are better off investing your assets in your own livelihoods, instead of "hedging your bets" with Howard Stern, Opie & Anthony, and every other former broadcaster who has cut and run.
The mavens in the stock market may be beginning to realize that satellite radio is a canard - a new medium that is more hype than reality. But if enough people invest in XM or Sirius, they will help these businesses become real - and healthy.
So, dump your XM and Sirius shares, and take your profits (or your losses), and sink some money into the broadcast company of your choice. Forward this blog entry to others in the business this week. And the next time someone at a party asks you about satellite radio, you'll have a clear conscience, knowing that you're not investing in the business that is out to put you out of business.