Shares sold short in Sirius Satellite Radio (NASDAQ: SIRI) rose 23.5 million shares to 103 million between October 31 and November 15, according to data from Nasdaq.
Investors appear to be upping the bet that the Sirius merger with XM Satellite (NASDAQ: XMSR) will not go through due to objections from Congress and the FCC. The two companies need the merger to bring down redundant costs. Many in Washington argue that a government sanctioned monopoly in satellite radio will only lead to higher consumer prices.
The reason for short selling in Sirius, however, may be more complex than that. The company's subscriber base is not growing as fast as it once was. Sirius may not be able to do it alone without selling more stock or taking on more debt. Either one would be bad for common shareholders. In the September quarter, Sirius was still losing a lot of money -- $106 million on an operating basis against $227 million in revenue.
Sirius has total liabilities of over $2.2 billion and almost $1.3 billion of that is debt. Even if the company can grow at a rate it has not seen in a couple of years, paying that down is more than a challenge.
Douglas A. McIntyre is an editor at 247wallst.com.











Reader Comments (Page 1 of 1)
11-28-2007 @ 9:27AM
Barry said...
Why are you babbling about the merger probably "not happening "you say? Do you have any updated info. from Congress or the FCC? We all know how the shorts work with this stock and it has been business as usual all year with them so what are you babbling about? They actually pay you to babble without new info. Where can I get a job like yours?
11-28-2007 @ 9:47AM
Jeff said...
you're going to have to find more synonyms to babble if you want a job like Doug's.
11-28-2007 @ 10:22AM
sharon white said...
so what is wrong here if the merger goes thru that is the way our democratic society should work if the owners of siri and xmrs want it to be succesful they will make it happen without going to high and loosing customers ., by giving there investers there due for buying stock in them ,if not they will go under once they have diverted enough money to take care of them self so goes the real world
11-28-2007 @ 11:10AM
paul reaves said...
The merger will go thru. Take it to the bank.
11-28-2007 @ 11:30AM
Kurt said...
Wow so let me get this straight..hmmm. 1.5 billion shares outstanding and we've added 25million more shorts? Must mean we've added a little more than 1 percent more idiots......
11-28-2007 @ 1:13PM
Kurt said...
Also Dude...Just because short shares are up doesn't mean a thing...It could simply be a hedge for high open interest calls now covering.
11-28-2007 @ 2:06PM
Frank Tribunella said...
When this is all over, I THINK IT WOULD BE A GOOD IDEA, to investigate, the Congress Members, FCC, & SEC, who have been in the NBA's back pocket for years. The longer they wait, the more debt these companies take on, plus the cost to prove their case to the government, over & over. Would it be better if one of these companies go under. Then you would have a monopoly. If these people in Washington, are so worried about cost increases to WE THE PEOPLE, where were they, when Bill Clinton allowed the four major oil companies in this country to merage.
I don't remember any long investigation then.
11-28-2007 @ 3:01PM
Jack Scalfani said...
where do you get off saying:
Investors appear to be upping the bet that the Sirius merger with XM Satellite (NASDAQ: XMSR) will not go through due to objections from Congress and the FCC.
the last thing I read was major investment firms are giving the merge a 60%-70% chance of happening.
Also, if you would take a moment and think why people aren't jumping on board signing up for satellite radio is because of what we are talking about. If I didn't already have satellite radio then I would be waiting to see what happens in the merge. It only makes sense. The sooner this is over the better, for stock holders, for investment firms, and for listeners like me.
11-28-2007 @ 4:11PM
Joe Harrison said...
This terrific day is due to the shorts who were wrong again.
11-28-2007 @ 10:17PM
MUSCLE13 said...
Thats an easy one. Arbs playing the spread of the merger. It happens in every merger where there is a stock swap. Its actually a good sign that the merger is drawing closer. The author seems to have the story backwards.
11-28-2007 @ 10:38PM
hagalo said...
As a subscriber to sirius i say let the technology thrive by allowing a merger of two entertainment companies in a sea of others. Promote technology advances and continued market competition on fair standards. Allow the consumers, and not the lobbies, to decide the fate.
11-29-2007 @ 4:50PM
EMIL J KOVACH JR said...
Ten Years Ago, SATRAD Was Cutting edge Tech.
Unfortunately, In The TECH Business, That's A Few--Lifetimes.
SATRAD Dropped The Ball, More Than Once, Along The Way.
First, MENU DRIVEN CHOICE, Of All Channels, Was Not Available.
Here They Could Have Easily Found Out What The Subscriber, Really Was Willing To Pay For.
Second, In Ten Years, Which Is A Also A Life Time, To Auto Makers.
SATRAD Should Have Been Fitted, By Now, IN EVERY CAR Made.
As Standard Equip.
Third, Failure To Partner With The Right People.
Automakers, Yes, Content Providers, NO
LONG AGO, They Should Have Partnered With A
Financial Services, Or Similiar Partner, That Was Just As Interested In Reaching Consumers, As They WERE. (REMEMBER THAT).
And Pick Up Part Of The Saturation Cost (Making Sure Every Car Made Was SATRAD CAPABLE)
Within 3 Or 4 Years From Debut.
Fourth FAILURE To Look Closely At Emerging Tech.
FCC Has A Plan Too, It's Called WIFI And Had It 5 Years Ago
As The Nation Is Fitted Up With Coast To Coast WIFI, On The Old TELEVISION Bands, You Will Be Able To Connect Up To The Web, In Your Car, Home, Phone, Or ANYWHERE
To Listen To Content, Of Your Choice.
Including ANY Radio Stream, Or Video Stream, Or Anything Else
WIFI HOT SPOTS Will Be Obsolete.
The WHOLE USA WILL BE A HOT SPOT (ESTIMATE 3-4 Years)
And Guess What, It will Not Cost You, A Subscription Fee.
So Is Satrad's Future RADIO?
No, It Is Looking To Become a PIPELINE Into Your Car, Or Receiver. For Advertising.
Unfortunately, WIFI Will Be the Consumer's Choice .
Last ---FAILURE To Develop Unique, OWNED, Content
SATRAD Should Be Loaded With Quality Programming Not Available From Any Source--IT"S BEEN TEN YEARS--NOW!
NOT THE CASE
STERN IS THERE--Only Because Of Janet Jackson.
Sorry SATRAD, You Had You Chance
Combine? SURE
Instead Of Two Companies Being a BILLION IN Debt--We Will Have---
One Company TWO BILLION In Debt.
EMIL J KOVACH JR
12-01-2007 @ 7:42AM
Bubbagene said...
It ain't rocket science, understanding which side of the trade Mr. Knowledge is on,screw the blue light sale on my shares,I'm keeping mine.
12-04-2007 @ 4:06PM
Bill Burstein said...
Actually, what accounts for shorting in Sirius is not that investors are betting that the merger will not go through, but rather that they are betting that it will. If each share of XM will be exchanged for 4.6 shares of Sirius, and if a share of Sirius is now worth about 3.61 and a share of XM is worth about 15.01, then assuming the deal goes through I can short 4.6 shares of Sirius, netting 16.61, and I can buy a share of XM, costing 15.01. I pocket $1.60 difference. If the merger happens, the short position implodes into the long position, and I walk away with my profit.
1-18-2008 @ 3:15PM
kirby okeson said...
iwish i could get up todate info on this merger i bought it at 3.76 its now down to 2.66 i own 3000sshares of siri i need help should i sell it and take the loss by more or by xmrs. i need some advice.
1-18-2008 @ 4:12PM
kirby okeson said...
its a miricle siri went up .14 today i think the hold up on this merger all boils down to the fcc having it out for stern