Wall Street Analysis

By Paul Dykewicz

It appears that satellite radio operators have discovered something U.S. TV broadcasters have known all along: Sports sells. In looking back at last week’s financial activity, New York City-based Sirius Satellite Radio [SIRI] led the companies listed in Satellite News’ industry stock chart by rising 19.6 percent and closing at $2.72 a share by Sept. 9. The catalyst probably was the company’s announcement that it topped the 600,000-subscriber mark to remain on track for achieving its goal of 1 million subscribers by year’s end. It also may have been affected by something completely different. With the holiday selling season coming up, the company is rolling out its exclusive sports programming to lure subscribers to its national radio service that offers content terrestrial radio cannot match.

Washington, D.C.-based XM Satellite Radio’s [XMSR] stock price also rose but only by 1.1 percent to $28.52 a share. As the industry frontrunner, XM’s stock already has been rewarded. Mirroring the mindset at rival Sirius, XM’s significant news so far this month involves the introduction of new sports programming, including a second NASCAR channel.

And never discount the effect personnel moves can have on the shares of an otherwise stable enterprise, even though such results may not be readily apparent. An interesting development that has not been reflected yet in the stock chart was the unexpected announcement late Thursday that SES Americom CEO and President Dean Olmstead was moving out of the corner office. It will be interesting to see how SES Global’s stock fares this week as the dust settles. Shares slipped only slightly, to $6.75, on Germany’s Frankfurt stock exchange.

SES Americom, the U.S.-based satellite operator of Luxembourg’s SES Global [SESF.LU], is embarking on an aggressive growth strategy as many of its industry rivals likely will hoard their cash flows and scale back their capital investments after being purchased by private equity firms. Indeed, the entrance of financial investors into the satellite industry will slow the rollout of new services and will deter risk-taking. Private equity firms tend to marshal cash, to shun non-essential spending and to emphasize the annual return that they can generate for investors during their ownership period that typically won’t exceed five years. Rest assured – we will be monitoring that situation.

Paul Dykewicz is senior editor and senior analyst of Satellite News. He can be reached at 301/354-1769 or at [email protected].