This Week in Sirius XM Radio
Things never get dull for the country's lone satellite-radio provider. Shares of Sirius XM Radio moved higher on the week, climbing 2% to close at $3.84. That was a new five-year high!
There was more going on beyond the share-price gyrations, though. Sirius XM also priced $600 million in senior notes at an attractive rate, helping it move to pay off an earlier debt. A pair of analysts chimed in with fresh price targets above $4. And on the streaming front, Spotify revealed amazing growth and Pandora met more resistance in its plan to lower royalties.
Let's take a closer look.
A matter of debt
Sirius XM went panhandling, but it was for a good cause. The media giant raised $600 million in financing by offering senior notes that come due in 2012. The good news is that it's using the money to pay off older senior notes that were set to mature in two years. The even better news is that the rate on the new notes is 5.75%, 300 basis points better than the 8.75% notes it will be buying back.
Lower rates and tacking on another six years before maturity? That's a smart deal no matter how you slice it. Sirius XM followed up the financing news by announcing that it will redeem all of the 2015 notes -- $753.5 million in total -- next month.
Analysts continue to huddle above the $4 mark in assessing where Sirius XM will be perched a year from now. Barclays became the latest to issue a new research call, tagging the company with a bullish "overweight" rating and a one-year price target of $4.50 on Wednesday.
Earlier in the week, Barrington Research jacked up its price goal from $3.75 to $4.25. Barrington's target late last year was $3.
We know that streaming is popular, because we see Pandora posting healthy monthly metrics, despite the arrival of Sirius XM, Spotify, and others into the realm of online audio. However, we did get an interim glance at Sweden's Spotify this week. The on-demand darling continues to lose a lot of money, but revenue has doubled over the past year.
As for Pandora, songwriter royalty collector ASCAP is asking the FCC to block the streaming giant's plans to purchase a small FM radio station in South Dakota. Pandora believes that buying the station will allow it to pay lower music royalties, as existing terrestrial-radio operators with streaming offerings currently do.
This is going to be an interesting legal tussle, and it will shape the way streaming companies approach the market.
A Sirius future
It was an interesting week for Sirius XM. The new week isn't likely to be dull.
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