Why Apple should buy Sirius XM

“One of the perils of being a successful company is that you begin to attract quite a bit of attention. Sirius XM (SIRI), which has dominated the premium radio market over the past couple of years – reaching almost 25 million subscribers, is no exception,” StockSaints writes for Seeking Alpha. “Apple (AAPL) wants some of this success. The question, though, is what does this mean for Sirius XM investors when Apple enters the market. If you noticed, I didn’t say ‘if.'”

“Apple’s entry into the realm of music streaming is not news and has been rumored for some time. However, what is noteworthy here is the possible date of the announcement. We feel it will come in June at Apple’s annual Worldwide Developers Conference (WWDC),” StockSaints writes. “The growth of both Sirius and Pandora has enticed Apple. Companies don’t often enter markets if they don’t believe there’s profit potential. Apple is about cash production. And unlike Pandora, Sirius is raking in tons of it. Plus Apple knows from its own growth in iTunes, which grew market share by 63%, that music lovers still have an insatiable appetite for their audio. But here again, unlike both Pandora and iTunes, Sirius, by virtue of its premium offering is the standard.”

“To that end, Apple should make a bid for Sirius,” StockSaints writes. “Given that Sirius has almost 25 million subscribers, of which 20 million are self-paying, Apple is looking at a potential goldmine. First, Apple will want to differentiate itself from Pandora. Given all of the copyrights-related litigation that Apple has tossed at Samsung, Apple will want to look and feel different… Apple can use Sirius’ strong subscriber numbers to monetize the platform. Apple wants to up-sell. Sirius already has 20 million people that have demonstrated they are willing to pay. Plus, Apple now has access to Sirius’ affluent demographic that will be exposed to more Apple products.”

StockSaints writes, “Given Sirius’ current market cap of $21.5 billion and trading at $3.40 per share, an offer of $4.50 might close the deal. But would Sirius investors accept? Plus, Apple would have to get the approval of Liberty Media (LMCA), Sirius XM’s majority shareholder. I think Liberty would take it. So would I.”

Read more in the full article here.

25 Comments

    1. Ditto….Sirius was failing. I haven’t looked into them lately. But I would never buy radio for the amount they want. But I was against the iPod when it was introduced as well so who knows. People love their music, me I just throw 200 mp3 on a dvd and let it play in a loop……lol

      1. Indeed! It’s called Sirius XM because it was the desperate attempt of two independent satellite radio companies, Sirius and XM, to try to stay alive.

      2. XM was so much better in regard to quality of programming and a focus on music before Sirius took over to make it SiriusXM. Sirus, at the time, was headed by Mel Karmizan who was (I believe) a life-long terrestrial radio exec with Infinity and CBS Radio. XM before SiriusXM had some fantastic on air personalities and music programming that put music first before the commercial radio Karmizan came in and pretty much made XM much less fun and more commercial radio corporate. I miss the old XM radio.

    2. Keep in mind that Apple provides for Apple customers. A Sirius acquisition would make it an Apple service and not a stand-alone company. What would happen to those with Android phones ( for which there’d certainly be no Apple app)? I don’t think Apple would want to deal with the potential loss of those subscribers.

  1. Bought a car recently that came with Sirius for a few months free. Even at free I did not like it enough to use it. The content available just seemed less than interesting. I suppose if you were really a big fan of one particular kind of music and happened to like the DJ’s on that station, you are all set . . . but there was nothing really compelling to draw me in. I expected something really interesting like DVR for radio, time shifting of things that interested me, and a great interface to store up good content for my next road trip – nope.

  2. The only real argument would be to shut down the existing service and use the satellites to distribute content directly to Apple devices- bypassing the ISPs.

  3. A few years back it was Sony that the pundits thought Apple should by for their consumer electronics business. Wasn’t a good idea then and XM isn’t a good idea now

  4. I’m sure at least two or three years ago the same thing was said and Apple still hasn’t bought it. Apple hasn’t really bought anything even close to a billion dollars in value. If Apple can’t even reach an agreement for streaming royalties, then I’d hardly think Apple would be willing to pay all that money for Sirius XM. Apple seems to hate to part with money for acquisitions.

  5. Apple doesn’t do much in the way of subscription services. Nor should they ever. The success of iTunes proves that the cable TV billing model, while highly profitable when protected by legalized monopoly, is repulsive to most users. And that is why on a planet of 7 billion people, only 25 million are stupid enough to rent their music — and almost all of them are businesses playing randomly-selected background music.

    1. Apple does do subscriptions via AppleTV — MLB.com, NHL, NBA, etc. Granted it’s a toe in the water, but it’s there.

      Interesting thought though. Think about Apple merging Sirius technology (and the millions of cars with Sirius/XM radios in them) with iTunes accounts and with an iPhone/iPad app which lets you not only listen to Sirius programming, but also build your own stations ala Pandora/Spotify and access iTunes content. It could be a nice way to bypass mobile carriers and Apple directly beams your content via satellite to your device.

      1. good point. Apple really had no choice, since these major sports leagues refuse to allow their product to be sold without subscription (except via asinine ticket price). Strange that in these days when every other person is whining about financial gloom and doom, luxury industries like sports still have unprecedented pricing power.

  6. This is exactly why I avoid reading Seeking Alpha. Its content is written by amateur bloggers. Every time I come across yet another “Apple should buy this” or “Apple should buy that” article, I want to puke. Anyone with enough intelligence to be toilet trained should know that Apple does not make acquisitions like the one this idiot suggested. My hunch is that either he’s off his meds or he has a position in Sirius stock that’s going nowhere. Or all of the above.

    MDN: Slow news day? Please, try to avoid using Seeking Alpha as an authority source. You can do better than some punk who still lives with his parents posting useless blogs like the one above.

  7. For $21 billion Apple could build a better service and lose $1 billion a year on the service for the next 20 year. I wonder if Sirius XM can compete with Apple in that case.

    Apple has 500 million iTunes users who could use Apple services. How much does sirius have? 20 million? That’s a $1000 profit per user!

    No way Apple is going to buy this little footnote in human history.

  8. Yet another Extreme Loon Level Factor analcyst article. How do they come up with this crap?

    Apple is about cash production. NO IT’S NOT. Only an idiot who knows nothing about Apple would invent such a vacuous summary. Great going StockSaints who writes for Seeking Alpha. 😛

    <iOne of the perils of being a successful company is…

    …Every lameass analcyst becomes and expert at how to RUN your company and starts insisting that you buy a pile of entirely UNRELATED crap companies to ‘Fill Out Your Corporate Strategy Portfolio’.

    I got to watch Eastman Kodak fall over and break their ass pulling similarly idiotic, analcyst inspired maneuvers. I watched Kodak buy then bury TWO inkjet printer companies because they had not-a-clue about consumer printing. Recently Kodak gave up on consumer printing for a THIRD time. I watched Kodak buy Lehn and Fink (who sold Lysol) and totally screw it up, selling it off again in desperation. FAIL job deluxe.

    IOW:
    Dear Apple,
    Stick to your expertise, as per usual. Buying Sirius XM makes as much sense as buying an Apple orchard. 😯

  9. How about apple buying SiriusXM just because its now very profitable and will become a bigger cash cow in the future……thus allowing apple to reward its investors with other monies, leaving their cash stock piles out of the US alone?

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