SIRIUS XM Declares a New $2 Billion Share Buyback Program


SIRIUS XM Radio Inc. (SIRI), the largest satellite radio broadcaster in the U.S., has decided to enhance it shareholders’ wealth further. Yesterday, the company’s board of directors has decided to authorize a new $2 billion share repurchase program. With this, the company’s aggregate authorized capitals for share repurchase from Dec 2012 amounts to $6 billion.

In Mar 2014, Liberty Media Corp. (LMCA), which owns 53% of SIRIUS XM, called off its plan to acquire the satellite-radio provider completely. As a result, SIRIUS XM has decided to resume its share repurchase plan on a timely manner. In addition, management provided a strong business forecast for 2014. We believe that these two encouraging factors have impelled the board to announce another share buyback.

SIRIUS XM broadcasts music, sports, news, talk, entertainment, traffic and weather news in the U.S. and Canada for a subscription fee through its proprietary satellite radio systems — the SIRIUS system and the XM system. The company owns an extensive satellite network, covering the whole of the U.S. providing audio content through more than 170 channels.

Management expects full-year 2014 revenues to cross the $4 billion mark. Free cash flow will likely stand at $1.1 billion. SIRIUS XM also estimates an addition of 1.25 million new subscribers in 2014. Adjusted EBITDA is projected to be around $1.38 billion. The company had nearly 25.83 million subscribers at the end of the first quarter of 2014.

SIRIUS XM has diversified its business model from a pure radio entertainment provider to a web-based safety and navigation information provider for cars. The company has acquired the connected vehicle services unit of Agero Inc., which provides several telematics services. Agero has strong telematics partnership with almost all major car manufacturers including Acura, BMW, Honda, Hyundai, Infiniti, Lexus, Nissan and Toyota.

SIRIUS XM currently has a Zacks Rank #2 (Buy). Other stocks in the same industry which are also doing well include Nexstar Broadcasting Group Inc. (NXST) and LivePerson Inc. (LPSN). Both the stocks currently carry a Zacks Rank #2 (Buy).

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