Sirius Acquirers, You Missed Your Chance
By James J. Cramer
RealMoney.com Columnist
11/22/2004 1:34 PM EST
Sirius Satellite Radio
BULLISH
· Competitors should have bought Sirius while its market cap was lower.
· Now it's large enough to do some acquiring of its own.
· Don't second-guess its price, either; the market will bear it.
Position: None
Told ya to buy 'em!
For about a year now, I have been telling people in the radio business that if you don't like Sirius Satellite (SIRI:Nasdaq - commentary - research), you better just go buy the darned thing because one day, it will be bigger than you are. When that happens, if it thinks that the wall has been hit, it always can buy you -- and then the game's over. We know that's exactly what AOL did when it looked like the business had hit a wall, and that's what Sirius can do now, too.
Think about it: Sirius now has a market cap of $7 billon. If you add up the market caps of Cumulus (CMLS:Nasdaq - commentary - research), Emmis (EMMS:Nasdaq - commentary - research), Entercom (ETM:NYSE - commentary - research), Westwood One (WON:NYSE - commentary - research) and Sinclair (SBGI:Nasdaq - commentary - research), you don't get $7 billion. If Sirius decided to, it could roll up all of the radio it wanted, but none of the radio companies save Viacom (VIA.B:NYSE - commentary - research) and Clear Channel (CCU:NYSE - commentary - research) is big enough to swallow up Sirius anymore.
That's what happens with these technologies. That's why I always thought that IBM (IBM:NYSE - commentary - research) should have bought Intel (INTC:Nasdaq - commentary - research). It is why I thought that The New York Times (NYT:NYSE - commentary - research) or Dow Jones (DJ:NYSE - commentary - research) or some other media outfit should have bought Yahoo! (YHOO:Nasdaq - commentary - research) after it cratered and that IAC/InterActiveCorp (IACI:Nasdaq - commentary - research) should have bought Amazon (AMZN:Nasdaq - commentary - research) when it had the chance. Those deals all are now impossible.
When you get the market cap, you have to use it. Otherwise, you most certainly will lose it.
The rational nonparticipants among you might say, "Jim, Sirius isn't worth $7 billion." To which I always say, "A stock is worth what you can sell the shares at," and I am pretty confident that you could sell a million shares of Sirius at or near the bid price that gives it that market cap. I am not interested in academics. Sirius folk can see it, too, and you have to wonder whether they could hedge their bets by buying up some terrestrial franchises.
Of course, there will be some at Sirius who will ask, "Who needs those?" I say, "I like to cover all bases if I can," and Sirius now can by virtue of its huge and opportunistic market cap. It probably won't happen, but if you are the new CEO of Sirius, you certainly have to think long and hard about not buying up all of those chains and making for a solid competitor to Clear Channel and Viacom's Infinity. |
