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No. of Recommendations: 4
Welcome Eric, you should post here more often. You are the first Sirius long I have come across, either here or on SI (we won't mention Yahoo) who has made a serious attempt to analyze their finances. I haven't followed this stock closely for a while, so I can't offer any serious rebuttal to your thesis. Your numbers look right (a refreshing change) but I remain skeptical that current Sirius common holders will ever see a profit. If I were a shareholder, I would especially worry about Leon Black, who will potentially have the power to put the company in bankruptcy and have them come out of it on his terms, something he has done in the past (e.g. Vail Resorts and Samsonite).

I do believe you are wrong on one (relatively minor) issue that I remember from when I was following the company. You say:

By the way, the FCC's requirement that the competing systems be interoperable didn't arise until early 2000, nearly two years after the spectrum sale. Talk about changing the terms on a deal. That's like me selling you a house and then, two years later, making you invite your neighbors for dinner every night. There isn't a deadline currently for interoperability and it's plainly bad for both businesses. It's my hope that the FCC drops this demand or that it is thrown out in court

In fact, the FCC gave the companies an extension on the interoperability requirement, which was part of the terms of the original license auction, but which became an ongoing issue when the companies couldn't agree on the technology. For example, this is from the 1997 annual report.


AMRC has proposed to use a different transmission technology from that of the Company. The IB Order conditions the Company's license on certification by the Company that its final receiver design is interoperable with respect to the final receiver design of the other licensee. The Company believes that it can design an interoperable receiver, but there can be no assurance that this effort will be successful or result in a commercially feasible receiver..

It seems to me that it is strongly in the interest of both companies to achieve interoperability. Failure to do so would, at the least, invite a challenge to their respective licenses when they are up for renewal at the end of the first 8 year period.
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