Sirius XM CFO Speaks Extensively About Advertising Opportunity At Investor Conference

Summary

  • CFO David Frear spends nearly an hour discussing Sirius XM Holdings.
  • Spends a lot of time discussing recent moves around advertising and the potential to grow those revenues.
  • Connected Vehicle Services conspicuous by its absence from the discussion.

There are a number of methods investors can utilize to monitor their investments - read the company's press releases and SEC filings, attend annual meetings, and listen to the earnings calls typically held four times a year. Another source of information would be presentations to the analyst community, where a company executive participates in an extended Q&A session, and the interviewer gets the opportunity to ask more follow-up questions. One such recent event was the Bank of America (BAC) conference where Sirius XM Holdings (SIRI) CFO David Frear participated.

My Background

Rather than burying my disclosures in small print at the end of this article, I believe it is useful to discuss my ownership, trading style, and holdings in some detail. This should allow the reader to make a more informed opinion about any bias that may creep into my observations. First, I bought shares in the company far too soon, planning on using covered calls to generate substantial current income. As the potential merger with XM dragged on and the credit crunch that led to the Great Recession drove the company towards bankruptcy more than a decade ago, I watched as the initial six-figure investment approached a six-figure loss.

A bailout package from Liberty Media that included a half-billion-dollar loan at 15% interest and convertible preferred stock that could be exchanged for 40% of the common stock saved the company, and that potential six-figure loss eventually turned into a six-figure gain. Along the way, I found Seeking Alpha to be a useful platform for access to transcripts of the conference calls and presentations. More importantly, I was able to gain insights from authors and other investors from the articles and comments.

Second, I eventually began writing my own comments more than a decade ago, and started writing articles on Sirius more than nine years ago. I have owned shares in the company during that entire time. Third, while almost all of my initial large position was sold a long time ago, I still retain a couple of very small positions purchased pre-merger.

Fourth, aside from those small, long-term positions, I am now more interested in trading large blocks of shares. I currently hold two such blocks. Both were intended to be short-term trades. One has a cost basis in the high six-dollar range and is obviously currently underwater. The other was purchased at just over $6 and has had multiple covered calls (using monthly calls and a $6 strike) written against it. Those short-term calls (including one expiring in September) have placed that net position firmly in the black.

I expect to continue selling calls and trading large blocks of shares, and may do so at any time. It is up to the reader to decide whether these positions have injected any bias in this article.

Key Takeaways

Towards the beginning of the interview, Frear was asked to describe the Sirius business. He essentially broke it down into three sections:

  1. The traditional satellite radio business, which he referred to as a subscription-based linear programming offer
  2. The Pandora streaming business, which is a combined subscription and advertising-based offering
  3. An advertising business

Not only was the advertising business considered a separate line (more on this below), but notably absent from the list was the Sirius Connected Vehicle Services (or CVS) business.

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