Sirius XM
And the viable business model
2010

PART 1
Introduction
Headquarters in New Yorok City, Sirius XM Radio, Inc. is the only provider of satellite radio, broadcasting more than 130 channels of digital audio via satellite to subscribers throughout the United States and Canada. The company's programming includes 65 channels of commercial-free music from every genre and 55 channels of news, sports, comedy, and talk radio. With impressive line ups of celebrity such as Howard Stern, Oprah Winfrey and Martha Steward there is something for everyone. Sirius's broadcasts are beamed from four in orbit satellites to more than 19.5 million subscribers who pay a monthly fee of $12.95 (Sirius). The service is mainly offered through new car sales with companies including Ford, Chrysler, and BMW among others penetrating 55% into the US market which accounts for 40% of their annual sales based on the 2009 annual report. Retailers like Wal-Mart, Best Buy and Radio Shack sell similar Sirius units for home and boat use. “Recently, Sirius has expanded to include music and comedy channels to mobile phone users; and music channels and select non-music channels over the Internet; a suite of data services; services that offer graphic information; and various real-time weather services, as well as operates a television service, which provides content designed primarily for children in the backseat of vehicles” (Sirius). These expansions are critical to the long term success of Sirius Satellite Radio which claims to be the station you can listen to what you want, when you want, wherever you are. As the premier subscription based satellite radio provider in the US Sirius XM must now compete with Internet and terrestrial radios, both are either free or low-cost services. Sirius XM concentrated their efforts and targeted the automobile industry, prior to the economic downturn and did fairly well. The decline of the automobile industry, along with intense competition, created a decline in paid subscriptions. The question is will Sirius XM radio be able to compete in a market where Internet radio and other forms of electronic media distribution are available for little or no cost?
History of Sirius Sirius Satellite Radio experienced many name changes through it life. It was originally called Satellite CD Radio, Inc when ex-NASA engineer Robert Briskman created it in 1990 out of Washington, D.C. Briskman, the former chief of operations at Geostar, a satellite messaging company, had created technology that could be used to broadcast digital radio signals by satellite. By 1994 the company had spent $10 million on research and development costs, and accumulated a deficit of $9.5 million. That same year Briskman and company decided to go public raising $7.5 million (Funding Universe). With the profits, CD Radio purchased two satellites however they could not broadcast until 1997 after they won a tough battle with the FCC paying $83.3 million at auction. The company had received a discount price under the FCC's "pioneer's preference" program due to its revolutionary technology. CD Radio began broadcasting in 1999 almost ten years after its debut. In November 1999 CD Radio was renamed Sirius Satellite Radio, after the brightest star in the night sky, and it moved into a new $38 million, 100,000-square-foot space in Manhattan that contained multiple broadcast studios, a music library, and a satellite tracking center. (Complete timeline may be found on Exhibit 1)
The Industry How the industry has evolved since its inception in 1948 when a few hundred television viewers watched the first-ever cable television broadcast. The primary goal of cable TV back then was to offer programming to rural and mountainous areas that were out of range from traditional broadcasts. The new technology was widely criticized with the big question asked, “Why cable TV would survive when most Americans could still tune into broadcast television for free”. As seen on the Exhibit 3 it not only survived but strived to be in over 97% of U.S. households. Meanwhile, the traditional broadcast networks -- ABC, NBC and CBS -- continued to lose viewers to cable networks that offered a greater variety of programming for a price. (Funding Universe)
Cable television is now a rapidly maturing industry with modest growth prospects. On the other hand satellite is in the very early stages of what's likely to be a long, multi-year growth curve offering similar growth prospects as cable did during its inception.
At the end it is about choices and like cable, satellite radio offers a wider choice for consumers. Even in large metropolitan areas like New York and Washington DC, there are only 15 to 20 broadcast radio stations available with even less choices in the rest of the nation.

History of XM Radio XM Satellite Radio began in 1988, when a consortium was formed to buy a license for satellite broadcasting of telephone, fax, and data signals. It was made up of eight organizations including Hughes Aircraft Co., McCaw Communications, Inc., and Mobile Telecommunications. American Mobile Radio (later to become XM Radio) paid $93 million in the auction for their license - 4 million more than Sirius Satellite Radio these were the only two licenses issued by the FCC. [ (Satelite Radio) ] In June 1999, XM received a $250 million investment in the form of convertible debt from General Motors, DirecTV, Inc., Clear Channel Communications, Inc., and three investment firms to launch two stationary satellites beaming across the United States. In September 2001, XM began the first U.S. digital satellite radio service in two markets: Dallas/Ft.Worth and San Diego and two months later, XM Radio was launched nationwide [ (Satelite Radio) ]. Their strategic partnership with GM paved the way to what would be their business model and competitive advantage over their rival. The company's new headquarters in Washington, DC would house 82 digital studios, one of which was large enough to record a full orchestra, as well as providing space for the 400 employees the firm was planning to hire. [ (XM Satelite Radio) ] Panero the CEO told the Washington Post, "We have to make this real and authentic, so that on the blues channel you feel like you're in a blues club drinking whiskey, and on a classical channel you feel like you're in a symphony hall." This set the bar for their aggressive content deals with ABC Radio Networks and affiliate Disney, MTV Networks, CNN, and USA Today many exclusive to XM. They were being noticed by the media, with Fortune magazine calling its radio service the product of the year and Time honoring it as the invention of the year and by the end of 2003 the subscriber base grew to 1.36 million, five times that of rival Sirius XM continued to revolutionize the Satellite Radio Industry offering disruptive technologies such as Delphi XM, NavTraffic plus creatively placing their programming on the internet and partnering with Starbucks on a dedicated music channel. All though they were receiving accolades and subscriptions were high they had still not been profitable in over a decade.
The Duopoly becomes a Monopoly
In 1999 CD radio filed a law suit against rival XM Satellite Radio stating that they had infringed on three of its eight patents. This was the beginning to a controversial merger that formed the only satellite radio provider in the United States. In February 2000 Sirius and XM ended their legal standoff and agreed to jointly develop unified standards for satellite radio. In July 2000 Sirius launched its first satellite from the former Soviet facility in Kazakhstan where Sputnik had taken off in 1957, and the third successfully entered orbit in December. At this point Sirius was well ahead of XM, which had not launched any of it satellites. On February 14, 2002, Sirius launched service to four states, and coverage was extended to the rest of the country by July 1. XM, which had officially launched in September 2001, had already gotten a big headstart in finding subscribers, and Sirius was now scrambling to catch up. By June 2003, Sirius had attracted 75,000 subscribers, far less than XM's 500,000. Many of the latter firm's listeners had been delivered with the help of investor General Motors (GM), which was putting XM receivers in its cars (Wikipedia). Sirius was banking on the installation of digital-ready radios to many of its partners' vehicles in the fall, and it also signed a deal with rental car giant Hertz to offer the radios at 33 airports. In January 2004, Sirius had 261,000 subscribers, compared with XM's 1.36 million (Wikipedia). The firm was projecting a subscriber base of 1.3 million in 2004, 2.5 million in 2005, and 4.9 million in 2006, when it expected to post its first profit.
In 15 years' time, Sirius Satellite Radio, Inc. had spent more than $2 billion developing a digital satellite radio network that boasted 120 channels of music and information programming, though it had yet to earn a profit. The signings of such high-profile franchises as the NFL and Howard Stern were expected to boost its subscriber base, but it remained to be seen whether Sirius could overtake rival XM Satellite Radio, which had been the first to market and had already developed a sizable subscriber base. After one of the longest and controversial mergers Sirius acquired XM on July 29, 2008. Both companies had to prove they would be beneficial to consumers and there was enough competition in the market place. Some of the stipulations of the agreement for the FCC approval include; the two services would offer à la carte programming and "best of" programming, along with low-priced plans and a three-year price freeze. They would also encourage the development of third-party products and interoperable receivers that can access both services, and dedicate 24 channels to noncommercial and minority programming. [ (Consumer Search) ] The merger offers a multitude of synergistic and cost savings opportunities. In 2009, Sirius XM finally turned a profit primarily based on merger related savings such as sales & marketing, advertising and general administrative costs. In an Interview Parsons and Panero said jointly, "The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago". [ (CNN Money) ]
Financial Status
Even though Sirius XM has strong revenue growth every year, net income (loss) to common stockholders for the second quarter 2010 was $`15.3 million comparing with (159.6) million for 2009 based on GAAP. In fact, Mel Karmazin, Chief Executive Officer, SIRIUS XM Said:
“The sharp subscriber growth and double-digit increase in adjusted revenue and adjusted EBITDA show that we continued to execute on our business plan during the second quarter, Compared to the year ago quarter, gross additions increased by 46%, deactivations declined by 8%, and customers paid us on average 11% more each month - clearly showing just how much subscribers love our service. Free cash flow in the second quarter 2010 was $108.3 million compared to $12.7 million in the second quarter of 2009. Our business has improved substantially in the past year, and we look forward to a strong second half and 2011.”
The company is increasing guidance for the full year 2010, prognostic adjusted revenue will come up to $2.8 billion and free cash flow will come to nearly $150 million. SIRIUS XM continues to target approximately $575 million. In the second quarter 2010, ARPU was $11.81, an increase of 11% compared with ARPU of $10.66 and an increase of more than 1.1 million subscribers in the second quarter 2009. (See Exhibit 2)
David Frear, SIRIUS XM's Chief Financial Officer said:
"We will continue to examine deleveraging opportunities as they arise with the objective of decreasing interest expense and improving free cash flow. The combination of increased adjusted EBITDA and lower debt has improved our leverage ratio to approximately 4.6x, a historic low for our company." ("SIRIUS XM Radio Reports Second Quarter 2010 Results")
The company needs to figure out how to recover retail sales through new partners, especially after Circuit City announced bankruptcy. The company has a big dept and they need to find new ways to fund it. Analysts expect a decline in subscriptions for Sirius XM due to the downturn in the automobile industry especially after Chrysler shut all its factories for the interim and General Motors (GM) will close most its factories temporarily this summer. In the second quarter of 2010, the company lost thousands of new car related customers even though Tuna Amobi whom is Standard & Poor's analyst estimated that the company will add about 100,000 new car subscribers. (Moritz)
The Company may have suffered from rumors that the company going to bankruptcy especially before the Liberty deal was announced. However, Amobi said:
“The Company may not reach positive free cash flow, a measure of profitability, until late 2010 or even 2011. Sirius still has network upgrades and substantial interest payments to Liberty Media, which recently invested $530 million. That could push them back [in getting to free cash flow] as well”.
In conference call with investors and analysts Sirius CEO Mel Karmazin focused investors' attention on the company's financial improvement when he said: "There was a time when the focus was on adding subscribers at any cost, with our strong subscriber position, all of the [carmakers] signed to long-term contracts, and a complete content offering, our focus is on making money."
Nevertheless, Sirius may have a harder time to reach its financial goals because of slow subscriber growth. ( Kharif)
Graphs of Satelite subscription reflected a flat level of growth, analysts expect Sirius-XM to take a hard look at programming costs. The combined company's market control power will give it the necessary leverage to cut programming costs by about 30%. In fact, Sirius XM has cut shows and stations costs. In the end of the first quarter in 2010, the company started charging an extra $2.99 for streaming its content online, which used to be free service. In addition, it raised prices for subscribers using multiple radio devices.
"We took actions over the last several months that we knew would adversely affect some subscribers, but we implemented them, as it was the right decision from a financial viewpoint," Karmazin said.
CEO Margolese was now projecting that the company would begin to break even with as few as two million subscribers, which represented just 1.5 percent of the total number of Americans who listened to radio. He was banking on listeners' unhappiness with the increasing amount of advertising on music stations (typically 15 minutes per hour), the limited playlists and the fact that many types of music were not heard at all, and the company's ability to deliver diverse nonmusic programming, such as sports events from around the country and different news viewpoints. Sirius was continuing to add content, reaching agreements with such performers as comedian Sandra Bernhard, who would have a show on the firm's comedy channel, as well as outside concerns including The Discovery Channel, A&E, CNBC, and the BBC. Total investment in the company now topped $1.5 billion, but it still had generated no revenues. ("SIRIUS XM Radio Reports Second Quarter 2010 Results") Technology
Sirius Company is using two main technologies Receivers technology and Satellites technology. Satellite Technologies are Digital Audio Radio Service (DARS) that use satellites and related equipment to broadcast radio channels to cars, home radios and digital radio receivers. There are three main companies in this industry: Sirius satellite radio, XM satellite radio, and WorldSpace. Sirius radio covers North America, including the continental U.S., Canada, and Alaska. XM provides service in the continental U.S. WorldSpace is covering the other parts of the world. Each company utilizes different satellite technology to provide service in their areas. The Sirius signal is separated into three ways: the first two satellites have a four seconds delay to maintain a large buffer of the audio stream and to help keep the audio playing in temporarily lost signals. The third is separate signal for global repeater network which is received by 36-inch satellite dishes and broadcast on a third segment of the signal.
To explain how that works, all three signals decoded by Sirius receivers are transmitted at same time and end up broadcasting a variety of signals. This design has worked very well to avoid drop off of audio signal especially when driving under highways. The receiver uses Forward Error Correction encoding and decoding in order to recover significant satellite signal and error free audio the ground signal uses multi transmitters around the city to create require coverage. For Example, the music is recorded digitally in a studio and then encoded. The signal is sent from ground stations to the satellites transmitting to receivers in cars and homes. The receivers contain chipsets that decode the signal and play it through stereos. However, in some areas where taller buildings might block the signal from the satellites, the ground transmitters are used to resend the signal in order to eliminate the dead space. (COMTEX)
Sirius XM has three main stations which are located in Vernon, Sussex County, New Jersey. By 2000, Sirius XM had four satellite spacecrafts made by Space Systems/Loral. The first three satellites, which are named Radiosat 1 through Radiosat 3, were completely broadcasting by the end of the 2000 and the fourth one is storage at Space Systems/Loral’s California ready to be lunched in case of any active satellite has problems. Even though they have three active satellites, the way that the satellites orbit only allows two of them to broadcast at the same time. The period for the three satellites is 24 hours and the elliptical path ensures at least one satellite over the country at all times. Each satellite spends about 16 hours a day over the continental United States giving us great reception.
In 2006 through 2009, the company contracted Space Systems/Loral’s to launch the fifth satellite which was designed to be a ground vehicle used to cover more consistent reception. In 2008, the company made a contract with International Launch Services (ILS) to launch the SIRIUS FM-6 satellite which is under construction and is planned to be in service for the fourth quarter of 2010.
In Receive Technology, the receiver has two parts: the antenna module and the receiver module. The antenna module receives signals from the ground repeater or the satellite, and then filters out any interference. The signal is passed on to the receiver module which includes a chipset composed of eight chips. The chipset converts the signals from gigahertz (GHz) to a lower intermediate frequency. In fact, the receiver is revolutionary in wireless technology, designed to diminish and retain signal quality in destructive signal conditions and reasonably weak signal levels from far-off satellites. The main chip of the company receiver is a custom (ASIC) chip called the Baseband Integrated Circuit currently the STA240, which is produced by STMicroelectronics. Each receiver must be connected to an external antenna, which is vital to receiving a clear signal. Another major section of the company receiver is the tuner which is a custom Application Specific Integrated Circuit (ASIC), the STA210. The tuner connects to the antenna and receives the incoming satellite and terrestrial signals
Sirius Company creates car radios, home systems, and portable kits for both. As of 2005 through 2008, Sirius receivers are available in most of new vehicles, and it will be standard equipment in several models beginning in 2008. Sirius XM signed many exclusive contracts with large automobile companies. In addition, the Sirius XM created many broadcasting options such as; Sportster 5, Sirius Stiletto 100, Sirius Stiletto 2, Sportster 3, Kenwood H2EV Radio with Car and Home Kits, SiriusConnect for Pioneer SIR-PNR1, and Tivoli Sirius Table Radio. (Alto)
Challenges
In early 2001, while it projected that broadcasting would start in the summer; Sirius sold additional stock worth $230 million. Audio equipment manufacturer Kenwood USA Corp. was preparing to ship "Sirius-ready" radios for sale via the automotive aftermarket, though in April Margolese announced that only 20,000 were likely to be sold by Christmas. The firm had contracted out development of the microchip sets that would be installed in the radios, and the unit of Lucent Technologies charged with making them was having problems completing the work. Once again, the company was forced to push back its broadcast launch, even as XM prepared for its own. In May, Sirius XM announced that it would charge subscribers $12.95 per month, $3 more than originally forecast.
In the fall of 2001, a class-action lawsuit was filed by shareholders who asserted that company executives had inflated the value of Sirius XM stock by making false claims that its service would be launched in 2001. Shortly after the lawsuit was filed, CEO Margolese quit the firm, though he denied that it was due to the suit. In November, Sirius XM named Joseph Clayton, 52, to the top job. Clayton had formerly served as executive vice-president of Global Crossing Ltd., a telecommunications firm. After taking control, he inaugurated several money-saving measures, including reducing the company's headquarters from three floors down to two.
In October 2002, reportedly edging close to bankruptcy, Sirius XM announced a recapitalization plan that would convert $700 million in debt and $525 million in preferred stock into common stock, with Oppenheimer Global Funds, Blackstone Group LP, and affiliates of Apollo Management LP providing an additional $200 million in cash to keep it afloat. The plan was approved by shareholders the following March, and they also agreed to the issuance of $200 million worth of new stock. Following the reorganization, the total number of shares Sirius XM had outstanding would balloon from 80 million to nearly 1 billion.
Sales in the fall were strong, as newly introduced "plug and play" receivers sold well, and by January 2004. A deal was signed in the with DISH Networks to provide Sirius XM radio programs free of charge to subscribers of certain DISH packages. In June, an exclusive all-Elvis Presley radio station was launched, which broadcast from the singer's former home of Graceland in Memphis. In the fall, broadcasts of live football games from the NFL, as well as from 23 major college teams were launched. The company had also reached agreements with retail giants Wal-Mart and Radio Shack to feature Sirius radio receivers in their stores.
The problem for Sirius XM has been the decline in auto sales. This has been a medium that appealed to drivers who spend significant periods of time in their automobiles. Fewer sold automobiles create an economic hardship for a company like Sirius XM. Some would offer the suggestion that the business model for Sirius XM is flawed.
Signing Howard Stern in the Fall of 2004
In the fall of 2004, Sirius XM received a significant boost when it signed controversial radio "shock jock" Howard Stern to a deal worth $100 million per year for five years. Stern could be heard exclusively on Sirius beginning in January 2006. The firm had reportedly bid three times more then what XM was willing to offer which was a lot more then he was earning from Infinity Broadcasting. (Sirius). Stern’s was syndicated around the country and his show had been fined a total of $2.5 million over the years by the FCC for obscene content. Some of Sterns shows, six in all had been removed from Clear Channel-owned stations. Survey’s found that 30 percent of Stern listeners said they were "very likely" to consider subscribe to satellite radio if Stern was only available in that medium. Sirius was anticipating a spike in subscriptions but that never materialized.
Once Stern had been signed, Sirius issued $200 million worth of convertible bonds and 25 million new shares of stock, raising a total of $321 million in new capital. (Wikipedia) Ford Motor Company committed to install Sirius-capable radios as a factory option in twenty of its vehicle lines by the 2006 and 2007 model years. Ford previously offered the radios as dealer installed options exclusively, on the other hand, XM was getting half of its subscribers from installations in GM cars. These typically included a free trial subscription.
Sirius hired Mel Karamzin former Viacom CEO as the new CEO and elevated Joseph Clayton to the board chairman. Sirius hoped that Karamzin track record with Infinity Broadcasting would escalate Sirius's fortunes. In late December the company celebrated the signing of its one-millionth subscriber, and in early January it announced a partnership with Microsoft to broadcast video programming to cars. These included automobiles with televisions in the back seat which was a new arena for Sirius XM. |

Sirius XM – Business Model
In looking at the essence of a business model, it is defined as the manner in which the business delivers value to the customers, entices them to pay for that value, and converts payments into a profit: it reflects management’s theories about what customers want, how they want it, and how an enterprise can best position itself to meet those needs, get paid for doing so, and make a profit, as well.
The business model for Sirius is developed around a pay-for-service, radio giant, available to the general public. This is very similar to the business model that we see for premium cable television. It consist of a mix of programming that offers channels, without commercials, and talk channel radio programming like Howard Stern, both 100 and 101, and Martha Stewart. There is approximately six minutes of aired commercials for every hour of pay for- service radio. This is significantly less time for commercials then found on regular terrestrial radio. In addition, all the channels are free from FCC content regulation, which was something that Howard Stern continually dealt with during his years on terrestrial radio. In an attempt to skirt FCC regulations, Stern’s made a move to satellite radio specifically to enhance his program content. Both songs and talk radio on Sirius XM contain explicit language and content.
The business model for the financial side of subscriptions offers pre-payment opportunities either at the rate of $12.95 U. S. per month with an $8.99 U.S. per month per each additional receiver. Subscribers can also arrange for a lifetime subscription at a one-time cost of $499.99 US. It costs $15 for every radio that a subscriber activates.
In August 2010, revenue for Sirius XM soared 16% to $705.6 million. As the country’s only provider of satellite radio, the entertainment giant delivered its fourth consecutive quarter of good news which validates its model as a premium radio business.
Sirius XM appears to be moving in the right direction with a little change in revising its guidance somewhat higher. The firm is expecting a $150 million free cash flow, in 2010 along with $2.8 billion in adjusted revenue. Even though the free cash flow will decrease in the next two quarters the idea that Sirius XM can report that kind of free cash flow, when only a year ago it was considering filing for bankruptcy, is a good sign. This business model can also be considered successful because of the fact that with 19.9 million subscribers, Sirius XM is number three in subscriber based entertainment behind DirecTV and Comcast. Finally, the merger between Sirius and XM made them the only game in town without any other competitors providing satellite radio. Competition is a problem every organization faces at one time or another in their life. The Sirius XM business model will face serious competition from both subscription free radio programming, along with an economy that cannot seem to fully rally.
Competition
As technology begins to increase its efficiency in the global markets, competition has intensified for Sirius XM and has taken on many different forms. So, Sirius XM’s competition does not come from other satellite radio providers but in fact it comes from manufacturers who produce mobile entertainment devices: MP3 players, the iPod and iPhone. What Sirius XM tends to rely on are the endorsements that medium receives from celebrities and sports programming which includes; the National Football League and the Major league baseball organization. In fact, those are not the only competitors that have targeted Sirius XM for failure.
As a provider of business segments, Sirius XM offers Internet radio, commercial accounts, SIRIUS XM music for business, backseat TV for children, (Nickelodeon, Disney channel, and cartoon network) travel link and traffic and weather. The competition is interesting because it easily exploits Sirius XM’s original markets. 1. Traditional radio: Interestingly enough, AM/FM (terrestrial radio) aren’t as popular as they used to be, but the fact of the matter is, they are free. This choice of listening is somewhat limited, but they are free. 2. HD Radio: Digital audio over the air offering more choices and much better quality. That is the main difference between HD radio and FM/AM radio stations. There is a higher sound quality with digital broadcasting and as many as five stations can be broadcast per frequency. HD receiver’s can now be found as a factory installed item in automobiles such as; BMW, Ford Mercury and Lincoln. Quality has begun to play an important part with listeners, who are also willing to pay money in order to listen to or see their favorite programs. 3. MP3 players: These players coming in all different shapes and sizes from Apple’s iPod to Microsoft’s Zune, they are more user friendly and customizable than satellite radio and are adaptable to most cars. iPods are adaptable to automobile as well as in-home stereo applications and many can be connected to subscription services online – to continue to update music based on your preferences and creating playlists that take the place a program music on radio. Apple sold more iPods during a December quarter then both XM and Sirius have customers. You can even find GPS units, as a car accessory, shipped with MP3 players as part of the package. 4. Internet radio: Customers are paying more attention to Internet radio. Like CBS, traditional streamers like Live 365 and Pandora’s radio are becoming more popular. There have been significant improvements made with Internet radio offering higher bandwidths, faster modems, and wider programming selections bringing everything into the home as well as the office. It will mean even more, if Internet browsers can hook up to their in-car stereo or through Internet radio services that choose to have their electronic medium placed on mobile devices. 5. Cell phones: Customers are able to download songs over the air onto their mobile phone or medium can be loaded from computers. More than half a billion cell phones have the capability of playing MP3s off memory cards and have been shipped worldwide. That number will almost double by the year 2011 as we see wireless networks becoming faster than other carriers who will eventually offer things like on-demand and radio mobile music services. 6. In-home digital music systems: There is some new and interesting technology out in the market, with respect to in-home digital image music systems. New technology like, Escient’s FireBalls, Sonos Digital music system, Apple, TV/Airport express and more advanced videogame consoles stream music to your family, or to Internet radio stations filling homes and living rooms with surround sounds technology. 7. In Car Digital Music Systems: Microsoft’s Synk is a preinstalled device on some Ford automobiles and offers enhanced control over portable media player/cell phones to drivers. The problem is, that auto sales have slowed significantly in the past couple of years and that has affected what was a significant market for satellite radio. (Wikinvest)
It appears that not only is Sirius XM losing some ground with the faltering automobile market but it appears that electronic forms, portable and mobile, are creating a significant challenge for Sirius. Web radio services like Pandora, Foneshow, Stitcher, and Slacker are providing content to listeners that are much cheaper than Sirius XM or even free. The content has always been considered the hallmark for Sirius XM but talent, especially the likes of Howard Stern cost significant dollars in contracts. Howard Stern is at the end of his five-year contract, which provides him with $100 million per year, and is considering utilizing other forms to deliver his product. Sirius XM also pays $60 million a year to Major League Baseball, but on March 30th MLB will release a mobile application that will stream games live from all 30 teams to consumer’s phones. It will also offer video clips and on the spot score updates at only $10 for the entire season. Applications through Sirius include baseball games starting at $10 a month. At some point pricing will become an issue for the Sirius XM.
Opportunities:
(SIRI) is the designation Sirius XM for shares on Wall Street in the stock market. Those shares been stuck at the $.60 range since August in a recent survey from Street.com and has labeled Sirius XM with the uncomplimentary suggestion as the company most likely to go bankrupt.
Sirius XM is a $4 billion market Co. (which Includes the Liberty preferred shares) and has $3.3 billion in debt with three quarters of that debt coming due between 2011 and 2013. 2010 shows $550 million in cash on the books for Sirius XM and may be the beginning of a drive to more profitability and possible avoidance of bankruptcy.
There are opportunities for Sirius XM profitability. First the company has accumulated billions in deficits but those are considered tax loss carry forwards and offset future liabilities. Now that Sirius XM has become somewhat profitable it gives them an advantage.
Another thing that Sirius XM has done is to embrace all of the leading smart phone platforms and it has done this streaming App through Apple and the Apple App Store. It is said that Digital delivery is competitive, particularly when premium service like the service that Sirius XM offers is pitted against free offerings. This helps provide an incremental platform that could possibly open the door, at some point, to international offering simply because of the reputation of the brand.
Another opportunity, is the fact that Sirius XM‘s content has the freedom to make changes at will, something that neither cable or satellite television providers enjoy. This gives Sirius XM greater flexibility with programming costs which can include proprietary channels and self-directed music stations.
And there are still others that feel that Sirius’ issues are manageable. Here are the reasons why! 1. Brand recognition for Sirius XM is recovering from almost 2 years teetering on the edge of bankruptcy. People now understand what Sirius XM is and what services it can provide. 2. With new subscriptions in quarter two totaling 583,249 the company is back to growing at the pace that it was before its problems 3. There is a fairly good feeling out there in the automobile industry that that industry is on its way back and Sirius XM is a big player in that market. 4. Markets like smart phones, which are new markets in the industry coupled with use cars will add both to the bottom line and to the growth of the firm. 5. The cost to begin a businesslike satellite radio is quite prohibitive and in fact, Sirius XM could be considered a monopoly, a good one, but a monopoly. They do however face competition in other ways and from other manufacturers of electronic products that was mentioned above. 6. The company can pay off debt as their cash flows grow. Sirius XM may have to consider some kind of price increase, maybe $2 or $3 more in the next year, which will definitely go to the bottom line to pay off debts. 7. Sirius XM could, by 2013, be making more than $1 billion in earnings before interest, depreciation, taxes, and amortization. The firm may also have about $1 billion in free cash flow. In addition, off the margins should be close to 30% by that time.
What all this tells us is that Sirius XM, in the next five years, might become an emerging radio and Internet giant possessing a significant media platform and entertainment platform.
One more opportunity could be what is called, “Cloud Computing” which is a somewhat simple concept, whatever data a customer has, like videos and music, can be stored on the net so that it can be streamed at any time to any particular device. Both iTunes and MP3 tunes are looking at this as a possible service. The point of this is that you, as a customer, no longer are required to store your video and music information on your own thumb drives or lifeboats. All of that information is stored elsewhere and you can get access to it any time anywhere. Potential customers have been polled about their thoughts on how much they might pay for that kind of service. The consensus of opinion amongst respondents was that a $10 fee per month would be acceptable. This is interesting in that arena where even though consumers would enjoy a free radio there are a significant number of customers who would pay $10. Sirius XM will need to make a decision soon that will customers and their investors simply because of the potential change that cloud computing has brought to the industry.
It would be fair to say that Sirius XM is already or should be considering these changes to their industry. Whether the firm decides to offer competitive pricing to customers or whether the FCC decides to put a cap on Sirius XM’s pricing, a decision will need to be made because the free landscape has not only become more aggressive but the offers are becoming more accessible available in your automobile, whether simple in-dash or on USB port or smart phone.
Mel Karmazin, CEO of Sirius XM, is looking to improve cash flow for the company and has, what is considered, about a 50% chance of succeeding. Add that to Liberty Media’s (LMDIA) fixation to avoid Sirius XM bankruptcy makes the shares at these levels interesting. Liberty can offer cash for all of the outstanding Sirius XM shares that it does not already own between the second and third year of the merger but a poison pill (corporations use this as a strategy to avoid hostile takeovers. In essence, the target company wants to make its stock much less attractive. “Flip-In” and “Flip-Over” are the two kinds of poison pills. Flip-in permits the shareholders of the company to buy more shares at a discount rate while flip-over permits stockholders to purchase shares from a company that acquires them at a discount) may restrict that happening before August 2011.
There is the possibility of a reverse split in the near future which would allow institutional holders who face share limiting the option to buy stock.
Sharply declining auto sales figures along with the end of the cash for clunkers program does not offer much of an exciting future for the company, but many think that Kamazin can continue to cut costs from the model. And moving into 2010 it appears that he has done just that. There are several options available to Sirius XM. What they need to do now is consider which would be the best move for them.
The company had planned for $400 million in EBITDA (earnings before interest, taxes, depreciation, and amortization) for 2009. Recent increases in the music world of fees should help grow EBTIDA along with the planned increase in family subscriptions and additional add-ons for Internet streaming. Another very attractive opportunity is in the used-car market where an estimated 15 million pre-owned cars are equipped with satellite radio.
In all reality, the Howard Stern contract is a very unprofitable venture along with NASCAR, and Major League Baseball. There is the belief that Sirius XM, with the current auto manufactures problems, has renegotiate their agreement with General Motors to pay them a lower revenue share which would result in lower subscriber acquisition costs. Satellite capex (capital expenditures) will likely be reduced beyond 2011 after the last spare satellite is launched into orbit and that will free up cash flow. Don’t forget nearly 7 billion in NOL’s (net operating loss) makes it valuable to other competitors however the poison pill, put in place April 2009, reduces the value and creates operating losses for someone who purchases Sirius XM before August 2011. There may be a light at the end of the end of the Sirius tunnel but only time and the economy will tell the real story.

Part 2
Key Problem: Sirius XM is in the business of providing satellite radio for both home and vehicle used to customers across America and Canada. The road has been long, and littered with obstacles that they either drive up against or have to drive around. In 15 years Sirius was able to get off the ground as a satellite radio company, merge with XM, its biggest rival and sign some of the biggest name talk talents in radio history. Only recently, has Sirius XM begun to see a glimmer of hope, in their subscription based business model. The problem is that as Sirius XM begins to move ahead Internet and terrestrial radio’s continued to hold them at bay. It’s difficult to compete with free but with a 1.5% capture of the 208 million drivers in United States there appears to be room for improvement in the subscription based business. HBO, Showtime and other subscription based television entities fought the same fight with free TV and seemed to do quite well. That was based on creating exciting opportunities for viewers either through pricing models or content, of the material they produced or purchased. Sirius XM is in the battle for its life and has significant opportunity to win.
Appling VRINE Model to Sirius XM As we analyze Sirius history and future we look at the VRINE Model to determine its competitive advantage. In the competition portion we identified several forms of substitutions hurting the Satellite Radio Industry. Below we will take a closer look at each factor Value, Rarity, Inimitability, Non-Substitutability and Exploitability to see how each one will help Sirius compete in the future.
Value – There is definitely a value and that is proven with 18.5 million subscribers and their unique content programming
Rarity- They are rare in the Satellite Radio Industry since they are the only ones approved by the FCC in the U.S. However the substitutions are offering many competitive programming options that are quickly closing the gap.
Inimitability – They are definitely inimitability. Due to FCC regulations there are huge barriers to entry keeping competition, at least from other satellite radio companies, away.
Non-substitutability – This is a tricky one because there are definitely substitutes such as the ipod and Pandora, just to name a few. But Sirius XM does offer exclusive programs that customers can’t find anywhere else.
Exploitability - Sirius XM is taking advantage of the resources and capabilities actually turning a profit. If this question was asked before the merger Ii believe the answer would be different but at this time they are exploitable.
So after much discussion we all agree that Sirius XM passed the VRINE model however will these competitive advantages be enough to keep them profitable in the future.
Applying Diamond Strategic Models:
We looked at Porter’s “Diamond Model” as a method of applying a strategic tool to help make a decision on creating conditions for Sirius XM that enhance innovation and improve competitiveness. There are five parts that are assessed to help a firm make the decision about the value of the business and the directions for moving forward. These parts are base on arena (geography, product areas, technology), vehicles (acquisitions, strategic alliances), staging/pacing (sequence of events, which comes first), and differentiator (price/quality) and, economic logic (how we make money, connection to the differentiators).
Sirius XM has been around, as a satellite radio provider since 1988 and has grown to what may soon be a profitable organization. Before the merger Sirius and XM were competitors in the same markets, basically the United States. Although Sirius was the first entity to have satellites in orbit, XM did a much better job of enticing potential customers away from terrestrial radio to subscriptions to satellite broadcasting. Technology played an important part in the arena that the two firms competed in. As much as technology was the same for both companies, and although product areas were also similar, XM appeared to have the jump on Sirius with subscriptions. Geography did not matter that much, because there were both working and soliciting customers in the same geographical area.
Merging the two companies to become one became the vehicle to propel Sirius XM forward. The acquisition was a strategic move that enhanced the opportunity for survival. Along with their strength with the merger came the strategic alliances that both firms created with the automobile industry (factory installed Sirius XM receivers) and relationships with retailers by the name of Wal-Mart, Best Buy and, Target to sell Sirius XM receivers in those retail establishments.
Both companies, prior to the merger had created certain alliances particular to their business interest, which only helped create a more powerful vehicle until the recession. With the recession came serious threats to the manufacturing and retailing side of the auto business. The downturn affected the purchase of automobiles and consequently, the purchase of new satellite radio subscriptions for the merged organizations. That was definitely a downside to the merger (acquisition) but there is also a bright side. The economy has begun to rebound, auto manufacturers are beginning to build again and the opportunity for Sirius XM to increase their subscription base becomes a reality. But staging and pacing also play a significant part in the business equation for Sirius XM. The bottom line, what are the sequences of events or what comes first? It is either, acquire to go into a new place or go into new place and then acquire.
Sirius and XM, after the merger, accounted for potentially 1.3 million subscribers as now a single company. There are about 208 million drivers in the United States and the significant majority of those drivers utilize terrestrial radio as a means of entertainment. The number of Sirius XM subscribers accounts for about 1.5% of those 208 million drivers. This opens up a significant opportunity to market to, what is potentially a limitless market. In order to do that a company, like Sirius XM, looks at differentiators that separate them from the competition. In other words questions need to be answered. How does Sirius XM get people into the product? What separates Sirius XM from the competition? What drives people to the satellite radio product? Quality, price, accessibility, and content are all differentiators that drive customers either to satellite radio or away from it. Terrestrial radio is free while Internet radio is low-cost.
Sirius XM realizes that one of the barriers to customer subscription acquisition, is price. But price is not the end all to the decision-making process, if the quality and the content match the needs and wants of customers. Subscriptions in the world of TV have fared extremely well against “free TV”. The entertainment medium is visual, and the cost can be somewhat significant, based on the variety of content within the subscription market.
Economic logic is the last part of the “Diamond Model” strategy and essentially looks at how a company makes money once it makes its decision to enter a market, or to continue in that market. There is also a serious connection to the differentiators mentioned above. The differentiator of price is a barrier to applying the “Diamond Model” strategy to Sirius XM. But the differentiators of content, quality and time are differentiators that help the model recommend that Sirius XM is a possible contender in the electronics market.
Porter’s model looks at opportunities for satellite radio to thrive in the market based on the marketing strategies it considers. Integrated with metered pricing, Sirius XM has the opportunity to penetrate enough of the 208 million drivers with an offer that will meet their needs and allowed them the opportunity to control the pricing that they pay for the service that they want.
Option #1: Stay the Course Current economic conditions and the continued plight of automobile manufacturers created a vacuum in the new car and car rentals subscription business for Sirius XM. Sirius XM is convenient and a good source for music, talk and other forms of entertainment, especially when someone else paying for it. All different forms of Internet media, stream any and all types of radio programs that is available for either no cost or low-cost. Sirius is now, just beginning to show a profit after 15 years of service and a merger with XM, its biggest rival. Staying the course would not be beneficial for Sirius XM’s survival and will definitely lead to their unfortunate demise.
Option #2: Reduce monthly fees and increased programming content One of the conditions that Sirius XM must acknowledge is the fact that there are Internet companies that offer services at very low cost or for free. If the services are free it is very difficult to convince people that they should pay for the privilege of getting what is the same kind service/product. Internet radio is an example of low-cost while terrestrial AM/FM is the example of free radio. You can turn it on when you go up the street to buy a gallon of milk and a loaf of bread and pay absolutely nothing for the privilege; it is all supported by sponsorship dollars. Terrestrial radio does come with an attached price, which is the cost of time; because a significant amount of time per hour is spent listening to commercials this interfered with the fast paced lifestyles of many listeners. This offers Sirius XM a considerable differentiation with a potential of increased subscriber penetration. What Sirius XM must do is increase the benefits and value for the paying consumer. Sirius XM has some work to do understanding customer’s needs and wants by specifically exploring additional content that might appeal to either current or potential customers. Reducing current fees is one way to attract new customers. Enhancing content, the same way they did by adding ESPN, Howard Stern and Martha Stewart is also a way to attract new customers and keep the current ones. In 1994, Sirius XM paid $10 million for content research. Any additional money for research and development would be wisely spent to enhance the content. The positive on that alternative is that you would make satellite radio more attractive however on the other hand you are decreasing the price further depleting your revenues.
Option #3: Offer flexible customer options to new subscribers. With only 1.5% of the US drivers (208 million) registered as Sirius XM subscribers; there remains significant room for the conquest of new customers. It has been documented that 45% of trial subscribers become permanent subscribers. What comes into play is what exactly will intrigue and entice customers to consider a trial option with Sirius XM. What is the hook? It appears that if you can hook the fish you land it almost half the time. With 206.5 million drivers on the road Sirius XM requires a marketing plan that grabs prospective customer’s attention. An example of a marketing technique to win new customers could be to offer Sirius XM for a 30 day complementary trial, followed by 30 days at half-price with a 20% discount for the remainder of the year. That translates to $110 for a year subscription. If Sirius XM could capture 45% of the 10% of 206 million drivers, who listen to terrestrial radio at the flexible option of $110 per year, it would add an additional $2.25 billion to their bottom line. This option increases the much needed revenue stream but does not offer any new content opportunities.
Option #4: Introduce metered pricing as an option to attract short trip or infrequent satellite radio users. Metered pricing would be away to offer satellite radio, in blocks of time, to compete with Internet or terrestrial radio. Time might be in blocks of hours, in blocks of portions of the day or even a flat rate charge of one dollar per hour of use forl radio time. The benefit is that you hear favorite programs without commercial interruption. Introducing minimums, into the plan, would guarantee Sirius XM a minimum amount of revenue per customer. Many car owners use their automobiles for short trips are only a few times a week. Paying the full subscription price, when you only need the service of minimal amount of time, is not a value to in frequent users. The challenge would be to continue to create and enhance programming that would appeal to a broad base of listeners for short periods of time. Examples that come to mind are drive times in the morning, drive times in the afternoon and evening sports or entertainment content.
Recommendations
Option #4 is this team’s choice for marketing Sirius XM satellite radio to continue current subscriptions and to create and enhance new subscriptions based on the needs of their customers. The suggested method of marketing is to offer “metered pricing”. For the Sirius XM consumers who are already subscribers this new opportunity may or may not seem attractive. But a considerable number of the 208 million drivers in the United States use their automobiles for short periods of time driving to and from work, up the street to the grocery store, or occasionally will make a longer trip. The quality content and accessibility of satellite radio makes it attractive to potential customers. But price is an issue!
With metered pricing Sirius XM can offer their customers what they want. That pricing could work as a flat rate, and blocks of time or number of hours and a set price per hour. An example of that would be the requirement to pay for a three-hour minimum and pay somewhere between $.75 and $1.00 per hour. This would work especially well during morning drive-time, afternoon drive-time and even for long trips. The idea of time, and how people use that time, is an issue in everyday life. Sirius XM has the opportunity to get people back some time as commercial free radio. Quality of reception, content that appeals to a broad based listening audience and commercial free entertainment that can be purchased based on what the customer can afford or what minimum time they spend in their vehicle could create a significant opportunity for Sirius XM claim their portion of the listening audience.

Appendix
Exhibit 1: Complete Time lines for Sirius Company Year | Event | 1990 | Satellite CD Radio is founded in Washington, D.C. | 1992 | The company becomes known as CD Radio, Inc. | 1993 | Sky Highway Radio Corp. is purchased. | 1994 | The company makes its initial public offering of stock on the NASDAQ. | 1997 | A broadcast license is purchased in a Federal Communications Commission (FCC) auction. | 1999 | The company name is changed to Sirius Satellite Radio, Inc.; the company moves to new headquarters in New York City. | 2000 | Three satellites are launched successively into orbit. | 2002 | Nationwide radio service begins. | 2003 | A $220 million pact is signed with the NFL. | 2004 | Howard Stern signs an exclusive contract with Sirius, beginning in 2006; Mel Karamzin is named CEO; the one millionth subscriber signs up for Sirius service. |
Source: This information from website http://www.fundinguniverse.com/company-histories/Sirius-Satellite-Radio-Inc-Company-History.html | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Exhibit 2 : XM Radio History Dates | Events | Description | Nov 12, 2001 | XM Radio Launches Nationwide | XM is available nationally. | Sep 25, 2001 | XM Officially Launches the First U.S. Digital Satellite Radio Service | XM formally launches service in its two lead markets, Dallas/Fort Worth and San Diego | May 8, 2001 | XM launches "Roll" | Sea Launch successfully launches XM's second satellite, "Roll." | Mar 30, 2001 | XM Announces Delivery Of Production Design Chipsets To Radio Manufacturers | ST Microelectronics delivers the first production chipsets to radio manufacturers. | Mar 18, 2001 | XM launches "Rock" | Sea Launch successfully launches the first XM satellite, "Rock." | Mar 1, 2001 | XM Ready Radios Hit Retail Shelves | XM Ready radios from Pioneer and Alpine hit retail shelves, allowing consumers to purchase head units which will be able to control XM tuners when they go on sale later in the year. | Oct 19, 2000 | XM and ST Microelectronics announce the delivery of custom chipsets to radio manufacturers | XM and STMicroelectronics, one of the world's leading semiconductor vendors, successfully completes fabrication and initial testing of XM's first pass custom chips. The chips are delivered to XM radio partners for integration into the manufacturing process of XM satellite-capable radios. Delivery of these custom integrated circuits is a major technical milestone in the production of XM's radios. | Sep 13, 2000 | XM Demos First Prototype Satellite Radio | XM's demonstration of first prototype satellite radio wows the crowds during an open-house at the XM broadcast complex in Washington, D.C., followed by a performance by Aretha Franklin that evening. | Jul 31, 2000 | XM Announces First Round of In-House Programming Talent. | XM begins building out its programming team, hiring the first 15 members of the group that will bring the nation a revolutionary new audio experience. | Jul 14, 2000 | XM is On The Move | XM completes move to new headquarters at 1500 Eckington Place, Washington D.C. - the largest state-of-the-art broadcast complex of its kind in the U.S., with 82 all-digital studios and 150,000 square feet. | Jun 6, 2000 | XM Names TBWA / Chiat/Day as Advertising Agency of Record. | After completing its national agency review XM selects TBWA/Chiat/Day Los Angeles as its advertising agency of record. | Feb 9, 2000 | Sony Signs Contract with XM | Sony licenses XM's technology and begins developing world's first satellite radio that can be transported between the car and home. | Oct 5, 1999 | XM announces IPO at $12 per share. | XM Satellite Radio Holdings Inc. holds its initial public offering of 10,000,000 shares of common stock at $12 per share. | Jul 8, 1999 | Clear Channel, DIRECTV and General Motors invest $250 million in XM. | The combined $250 million is comprised of $75 million each from Clear Channel and the private investment group and $50 million each from General Motors and DIRECTV. American Mobile also completed its acquisition of WorldSpace Inc.'s interest in XM. | Oct 12, 1998 | American Mobile Radio Corporation becomes XM Satellite Radio. | American Mobile Radio Corporation President and CEO Hugh Panero announce that the company has changed its name to XM Satellite Radio Inc | Sep 24, 1998 | Contract Signed with ST Microelectronics | ST Microelectronics licenses XM's technology and begins developing the first satellite radio chipset for automotive use. | Aug 10, 1998 | Lee Abrams Receives Coveted Award | Content & Programming SVP Lee Abrams receives recognition from one of the most influential radio industry publications: The Album Network names him as one of the most 120 influential people in the radio industry. Lee has also been recognized as the number one radio programmer of all time by "Radio & Record" Magazine and as a member of the "Newsweek" Cultural Elite 100. | Jun 17, 1998 | Letter of Agreement Signed with Alpine | Alpine signs letter of agreement to license XM's technology and begin developing satellite radios for automotive use. | Jun 10, 1998 | Hugh Panero named CEO | Hugh Panero is named President & CEO of American Mobile Radio Corporation. | May 27, 1998 | Letter of Agreement Signed with Pioneer | Pioneer signs letter of agreement to license XM's technology and begin developing the world's first satellite radios for automotive use. | Mar 10, 1998 | Contract Signed with Hughes to Develop and Launch Satellites | American Mobile Radio Corporation engages Hughes Space and Communications International (now Boeing Space Systems) to build two HS 702 geostationary satellites with payloads to be provided by Alcatel. | Mar 10, 1997 | License is Granted to American Mobile Radio Corporation | American Mobile Radio Corporation is granted a satellite DARS (digital audio radio service) license by the Federal Communications Commission. | Jun 6, 1992 | American Mobile Radio Corporation is founded | American Mobile Radio Corporation is founded to provide a multi-channel, nationwide audio service with high-quality digital sound and an unprecedented variety of programming. |
Source: XM Satellite Radio Sirius Satellite Radio

Exhibit 3: Financial adjusted | Unaudited Adjusted | | For the Three Months Ended June 30 | For the Six Months Ended June 30 | | 2010 | 2009 | 2010 | 2009 | ARPU | $11.81 | $10.66 | $11.65 | $10.57 | SAC, per gross subscriber addition | $59 | $57 | $59 | $59 | Customer service andbilling expenses, per average subscriber | $1.01 | $1.05 | $1.00 | $1.06 | Free cash flow | $108,331 | $12,694 | $(18,872) | $9,048 | Adjusted total revenue | $705,560 | $607,836 | $1,376,122 | $1,213,317 | Adjusted EBITDA | $154,313 | $132,219 | $312,070 | $241,055 |
Source: This data came from SIRIUS XM Radio Reports Second Quarter 2010 Results http://investor.sirius.com/releasedetail.cfm?ReleaseID=496253 Exhibit 4:

Source http://web.streetauthority.com/cmnts/pt/2004/11-24.asp Published: November 24, 2004

Exhibit 5:

Source http://web.streetauthority.com/cmnts/pt/2004/11-24.asp Published: November 24, 2004

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