Sirius XM Radio Inc (SIRI) is Getting Serious About Its Stock

Sirius`s Ownership Structure

Sirius XM Radio Inc (NASDAQ:SIRI) is in the broadcasting business. It broadcasts all types of news, sports, music, weather and entertainment, much of it over the internet, to paid customers in the U.S., of which there were more than 23 million at the end of 2011. Its market capitalization is $22.3 billion and its P/E is 7. In the first quarter of 2013 its net profit margin was 13.77% and its operating margin was 27.52%, while for 2012 those figures were 102.88% and 21.33%, respectively.

Buyback Program

Sirius XM Radio Inc (NASDAQ:SIRI) announced a buyback program amounting to $2 billion, which, as a percentage of Sirius’s capitalization, is almost 10%. What makes Sirius XM Radio Inc (NASDAQ:SIRI)’ buyback program particularly interesting, though, is its ownership structure. Liberty Media owns half of Sirius, and another 30%, equivalent to $6.5 billion, is owned by institutional investors. That leaves only $4.5 billion available to retail investors.

Competition

CBS Corporation is a mass media company broadcasting a variety of entertainment, news and sports programs, as well as having the most viewed television network in the U.S.

It has a market capitalization of $30 billion and its P/E ratio is 18.4. CBS’ stock price has recovered remarkably well from the lows of $3.88 at the depth of the recession to reach $49.18 at present.  It is certainly in an older, steadier market than Sirius XM Radio Inc (NASDAQ:SIRI) or Netflix, Inc. (NASDAQ:NFLX), and this means less innovation but steady returns.  Since 2009, CBS has had a steady climb in net income each year–it went from $227 million in 2009 to $1,700 million in 2012.  Of course, CBS competes in with Sirius XM Radio Inc (NASDAQ:SIRI) over content and viewers, but the two companies have quite different models–Sirius is proud to have no advertising, whereas CBS is basically an advertising company.