Up until now Liberty has been very curt, if not respectful in their answer to this question.  Essentially stating that current management is doing a fine job with the running of the company.  It is the type of answer you would expect when there is an active poker game happening.  That is not to say Sirius XM is doing anything wrong.  It is simply a case of everyone keeping their cards close to their vests.

The first glimmering that Liberty would enact some changes came when the company requested De Facto control of the Sirius XM licenses from the FCC.  In commenting on the issue Liberty Media expressed to their shareholders that they intended to appeal the FCC denial and offer more detail as to what they will be doing with the company.  The next hint came this week when Liberty Media’s Greg Maffei spoke at the Barclay’s Global Technology, Media and Telecommunications Conference.  During that conference Maffei spoke to Sirius XM’s Satellite Radio 2.0 initiative and the Internet delivered side of the business.

Maffei stated that he had excitement about some of the technology and would likely accelerate the Internet side of the business moreeso than is currently planned by Sirius XM’s current management.  This was music to my ears.  I have long wanted Sirius XM to offer a more robust Internet offering.  Sirius XM has a lot of potential in this area and can actually offer even more content over the net than they can on satellite.  In addition, the Internet side of the business actually allows two way and interactive communication between the service and the company.  The possibilities are almost without limits.

While there is a lot to like about current management at Sirius XM, there are some aspects that can be frustrating.  Management is so focused on the bottom line that areas like customer service, the number of program directors, marketing, and even top tier channels suffer.  Investors may love the cost cutting, but from a consumer standpoint Sirius XM is not an A+ company anymore.

Essentially it is interesting that Liberty Media would accelerate the technologies.  I see this as a good thing.  Whether Liberty takes control of Sirius XM or not is a matter of opinion, but if nothing else, we know a few little nuggets of information about some small changes that would happen.

Hear classic Pink Floyd and their newly remastered catalog which was recently released as part of the “Why Pink Floyd” campaign.  In addition listeners will get bonus content in the form of  solo albums by band members Roger Waters and David Gilmour and  other rarities including demos, hosted by Sirius XM’s Jim Ladd.

The Pink Floyd Channel will air Friday, May 25 through Monday, May 28 on Ch. 27. The channel will be available again Friday, June 29 through Monday, July 9 on Sirius Ch. 142 and XM Ch. 43; and available as a 24/7 channel online on Ch. 802 and through the Sirius XM Internet Radio App for smartphones and mobile devices beginning Friday, June 29 for an extended period.

If you are a Pink Floyd Fan this is your weekend to kick back, crack open a beer, and enjoy some classic rock that defined an era!

The 62% year over year increase in ad revenue and the the 38% year over year increase subscription revenue, on their own, seem like a step in the right direction. The reality is, the company is making about $1.55 per user.

It should also be noted that the company posted a net loss of $20.2 million, up from its $6.8 million loss for the same period the year before.

I’m not investing in Pandora but, it should be noted that those who are saw a nice 12% bump on the day. As a fan and investor of SiriusXM, what does concern me is the increase in users and listeners hours. I want SiriusXM to have ALL the subscribers.

Pandoras’ listener hours grew 92% to approximately 3.09 billion, compared to approximately 1.6 billion from the same quarter last year. As far as I am concerned, that is 3.09 billion hours people are not listening to SiriusXM.

The most recent data from NASDAQ regarding institutional ownership showed an addition of about 300 million shares during the first quarter.  Some notable activity included:

• UBS added 232 million shares taking its total to 233.4 million
• Vanguard added 8 million shares taking its total to 169.9 million
• Wellington sold 26.9 million shares bringing its total down to 168.6 million shares
• SAC Capital added 94.6 million shares taking its total to 98.3 million shares
• Coatue Management added 57.8 million shares as a new position
• Scout Capital added 56 million shares as a new position

Is high institutional ownership a good thing?  In most cases the answer is yes.  Institutions tend to hold an equity longer than retail holders, tend to buy and sell in blocks, and tend to offer a sense of stability.  However, some of those same points can also be perceived as negative.  What a retail investor needs to understand is that Sirius XM is no longer an equity held by mostly retail investors.  Those retail investors that remain could see some benefit in that.  The fickleness in an equity tends to evaporate as institutions step into the game.

The Indianapolis 500 is an American staple of racing tradition and a massive event that attracts some of the largest auto race crowds in the business.  These days auto racing is far more than a sport.  It is a lifestyle!  Sirius XM listeners will be treated to the live call and much more as  “The Greatest Spectacle in Racing” unfolds.

The raceday coverage is set to include extensive pre-race programming hosted by veteran broadcaster Jack Arute.  As the dropping of the green flag nears, listeners will hear expert commentary and analysis, plus interviews with many of the sport’s top drivers including Dario Franchitti, Will Power, James Hinchcliffe, Ryan Hunter-Reay, Scott Dixon and others.  If you can’t be at the race, or even if you are there, Sirius XM will offer all of the action and access that race fans desire.

This is just another example of the capabilities of satellite radio vs. other options such as terrestrial and Internet radio.  Sirius XM offers some of the most compelling audio content that can be found on the airwaves and continues to improve its lineup to more impressive levels.  The talk, sports, and news content offered by Sirius XM is unrivaled.

With that backdrop I could not help but relate it to life as a Sirius XM (NASDAQ:SIRI) shareholder.  The forecast seems so promising all of the time, but storm clouds are never far away.  It has been quite some time since all of the stars aligned.  A year ago 2012 was set to be a very promising year.  Minimal debt service, no satellites to launch, minimal capex, a price increase that would increase revenue, and an auto sector expected to recover.  Last year the outlook for 2012 seemed to indicate a near perfect storm for Sirius XM.

Now 2012 is here and we have once again seen storm clouds circle in.  There is drama with Sirius XM’s largest shareholder, Liberty Media (NASDAQ:LMCA), management that is exercising and selling option shares, auto partners embracing competitive services like Pandora, a satellite that still needs to be launched, and an economy that is yet to get into gear.  Is all of this as bad as it seems?  The short answer is no.  Sirius XM still delivers impressive revenue , subscriber, and EBITDA numbers and that trend is expected to continue.  The annual shareholder meeting did not present a lot of new data, but did offer some insightful moments that investors seem to finally be getting the grasp of.

Sirius XM trades at a high multiple.  Companies that trade at high multiples get punished on a regular basis depending on many outside influences.  For some  investors the top area of where SIRI currently trades ($2.40) seems justified, while to others that type of premium is not appropriate in this economy.  Both camps see the same numbers.  The difference is that some see the growth continuing on its current pace while others are not so sure.  Ironically, baseball probably provides the best analogy here:

There are 162 games in a baseball season.  Every team, regardless of how good or bad they are will win 60 games and lose 60 games.  It is the 42 remaining games that define the winners and losers.  Sirius XM seems to be sitting right in the middle of those all important 42 games.  Do they connect all of the dots and approach 100 wins?  Perhaps they split them and come in as a middle of the road team.  The worst fear (and not likely in my opinion) is that they lose 30 of those 42 games and miss the play-offs by a wide margin.

What we have here is a classic battle where those that apply a lower multiple to this company vs. those that feel the growth model will continue.  The likely situation in my humble opinion is that Sirius XM will probably trade somewhere in the middle until such a time that the Liberty media issue is resolved.  From a technical standpoint that means the recent low of $1.83 might serve as an appropriate bottom while the psychological top (thanks to a Liberty Media Forward Purchase contract for 302 million shares at $2.15) at $2.15 will serve as the top end.  Shy of new quarterly numbers, this is where the equity will likely remain until we have more clarity.

At the shareholder meeting several things were discussed.  Highlights include:

• Expect double digit revenue growth
• 13% of households in the United States are subscribers.  An impressive number that still shows room for growth
• Car sales are expected to go from 14 million in 2012 to 16.6 million in 2016.
• Satellite radio equipped cars are expected to approach 100 million bu the end of 2017
• 5,000 dealerships are participating in the used car program with more being added all of the time.
• Current guidance remains in tact.  Karmazin did indicate that the subscriber picture thus far in Q2 is good.  Reading between the lines we may see yet another boost in the subscriber guidance in August.
• Liberty Media is indeed the biggest shareholder and management is defending the public shareholder rights to the best of their ability.

The question and answer session presented some interesting points as well.  Sometimes seeing something like these question and answer sessions provides investors with some insight that are valuable.  This day was no different.  One shareholder inquired as to why Sirius XM was not on smartphones.  While long term holders may see this as someone with their head in the sand, a savvy investor looks at this differently.  Why is it that a shareholder that takes the time to attend the annual meeting is unaware that the company has been in smartphones via apps for quite some time?  If a shareholder is unaware, what about the average person out there?  Regular readers here are in tune, but perhaps there are ways that this company needs to get the word out better.

Another shareholder, very frustrated, inquired as to whether he would ever make money on his investment.  He bought in 2001 with Sirius trading at over $11 per share.  As unfortunate as that situation is, the likelihood of reaching $11 and a market cap of over $70 million any time soon is slim at best.  Investors need to understand this.

The issue of debt was also raised with a question as to whether Sirius XM could be required to pay off all debt in the event of a change of control.  Some of the older debt holders would have that right, but realistically speaking, they would have no real reason to call that debt and lose substantial interest payments.  Mel Karmazin correctly stated that the company would actually LOVE for some of these debt holders to call their debt.  It would allow the company to refinance the debt at much more favorable rates.  All debt since 2009 can not be called if the change in control is to Liberty Media.  Simply stated, there is no realistic situation in which bond holders would want to recall debt in the event of a change of control.

Recent insider sales were also discussed.  Mel Karmazin expressed that the ONLY stock he owns is Sirius XM.  Despite his planned sales of 60 million shares, he will still hold an impressive 68,000,000 shares.  Without saying it directly, he seemed to indicate that he was a bit overweight in this equity.  Realistically speaking should Karmazin have his entire fortune placed in one equity?  probably not.  He made a prudent move, which actually mirrors his management style.  Yes, selling shares does not always look good, but at the end of the day, the management team at Sirius XM all carry substantial positions in the company.

The last issue is the elephant in the room.  The Liberty media stake.  Karmazin could not speak to many specifics, but he did express that he is focused on keeping the best deal in play for the public shareholders.  We will have to stay tuned on this one.

Since raising over $100 million for their U.S. Expansion,  Spotify has been growing like wildfire, adding over 10 millions users in the past year, with reports saying as many as 15-20% of those are actually paying subscribers.

Spotify now has 16 million Pandora crushing tracks available, which can be listened to on demand and for free on your desktop, mobile phone, or iPad at anytime.

The company was launched in Sweden in 2008 to create a better, more convenient and legal alternative to music piracy. Since then, Spotify has become the world’s largest and fastest growing music service of its kind.

Their plans include free version which has occasional advertising, a $6.99/mo unlimited version with no ads, and a $11.99/mo premium which includes offline listening, enhanced sound quality, and exclusive content.

To take advantage of the deal, customers will need to pick up a new 2013 model equipped with, Audi’s latest and greatest navigation system, the MMI Navigation Plus.

The system includes hard-drive navigation, jukebox with 10 GB of storage, a CD/DVD, and an integrated speech dialogue system with whole-word input.

This latest promotion is a nice addition to the sweet 3-month music subscription Audi owners are already enjoying.

“We continually strive to innovate and give our customers the best in-vehicle experience, and we are excited to give our customers the opportunity to experience premium entertainment and data services such as SiriusXM satellite radio and SiriusXM Traffic.” Johan de Nysschen, President, Audi of America.

In fairness, AGT did have lower rating this year when compared to last, but there were still an estimated 10 million viewers and this year the talent competition was up against the hit show Dancing With The Stars.  An audience of 10 million is not something to ignore, especially when the central figure on that show is the biggest personality on the satellite radio airwaves.

While Sirius XM does garner the bulk of their subscribers from the auto channel, we must consider that there are 10′s of millions of cars on the roadways with satellite radios that are not active.  Why not let those consumers know that they can get Howard as well as just about anything else with a subscription to satellite radio?  Yes, an ad campaign would cost money, but Sirius XM is booking profits now and a concentrated campaign on a show like America’s Got Talent may be a catalyst that could help the company boost their metrics even further.

Sirius XM has been quite adept at keeping their subscribers once they get them with money spent in retention programs.  Kudos for this performance.  However, it is time to take things up a notch and to let the masses know you exist.  Spotify is cutting deals with Coke to expand their brand.  Facebook with their impressive Facebook Music service is propelling competitors to new heights while Sirius XM seems to squander such exposure.

It is not too late.  America’s Got talent has a long season ahead of it.  Howard Stern has been brilliant in exposing AGT to Sirius XM fans, it is time for Sirius XM to be brilliant and expose satellite radio to America’s Got Talent fans.  Sometimes investing getting exposure to a new audience is a good thing.  Sirius XM has done great in the auto channel.  Now they have a real reason to get into advertising on television.  Let’s hope that we see the Sirius XM brand on America’s Got Talent sooner rather than later.

While this move does not deliver de jure control of Sirius XM to Liberty Media it does get them much closer than they were, and at a price point less expensive than many anticipated.  If you were looking for a premium in the stock on this transaction, it has not materialized yet, and likely will not be as significant as many hoped for.

Sirius XM has been trading down ever since their Q1 earnings release.  The news of a Liberty purchase today may be what helped propel the equity up slightly as the market closed yesterday, but now that the price is known, watch out for the action today.   The very fact that Liberty is making a move is significant.