SiriusXM: A Satellite’s Slow Orbit

SiriusXM. A curious specimen, wouldn’t you agree? Berkshire Hathaway, that venerable institution, accumulated a rather substantial stake – a full 37 percent, if memory serves – while the late Mr. Buffett still held the reins. A fondness for the peculiar, perhaps? Or merely a surplus of capital and a penchant for puzzles?

Yet, subscribers are abandoning ship, and the stock price… well, let’s just say it’s been on a rather extended vacation south. One is left to ponder: is there a hidden logic here, a secret understood by the former team at Omaha, or is this merely a case of misplaced enthusiasm? A generous gesture toward a fading star, perhaps?

The State of the Broadcast

SiriusXM enjoys a monopoly, of sorts. A legal one, mind you. Satellite radio within the United States. A tidy little arrangement, wouldn’t you say? They’ve leveraged new car sales – a captive audience, as it were – and secured exclusive contracts with personalities like Howard Stern and Andy Cohen. A clever tactic. One might even call it… theatrical.

For those seeking income, it presents a superficial appeal. A yearly payout of $1.08 per share, yielding 5.3 percent. A respectable return, especially when compared to the anemic yields offered by the broader market. Though, one must always remember, a shiny object doesn’t necessarily indicate a treasure beneath.

And, indeed, they can afford it. In the first nine months of 2025, the company generated $715 million in free cash flow. More than enough to cover the $274 million in dividends. A comfortable margin, certainly. Though, a full coffer does not guarantee a wise investment.

Mr. Buffett, as we know, favored a fair price for a sound enterprise. A P/E ratio just above 7 might have seemed appealing, given the monopoly and the dividend. A cautious gamble, perhaps. Though, even a cautious gambler occasionally misreads the cards.

Unfortunately for the bulls, the appeal ends rather abruptly. Customers, it turns out, are resourceful creatures. They’ve discovered alternatives – wireless internet connections offering a bewildering array of content. SiriusXM offers streaming, of course, but its advantage lies primarily in exclusivity. And as for tying subscriptions to new car sales? Increasingly ineffective, as automobiles become less accessible to the average citizen. A curious paradox, wouldn’t you agree?

Consequently, the subscriber base dwindled to 33 million in the third quarter of 2025 – a 1 percent decline. A slow leak, perhaps, but a leak nonetheless. And, as any seasoned observer of markets knows, a slow leak can eventually sink even the most imposing vessel.

Looking at the business, one detects a certain… reluctance to inspire confidence. Even their exclusive content seems more adept at retaining subscribers than attracting new ones. A rather limited ambition, wouldn’t you say? The company appears to be treading water, lacking any clear path to sustained growth. A sad spectacle, really.

Is SiriusXM Worth the Signal?

Considering the state of affairs, SiriusXM appears to be a buy… but only for those singularly focused on income. The 5.3 percent dividend is undeniably compelling. And at a valuation of just 7.6 times earnings, the stock is unlikely to plummet much further. Though, one should always remember that a floor is not the same as a foundation.

However, a satellite radio monopoly does not constitute a particularly robust competitive moat. With readily available streaming options, fewer customers feel compelled to pay for a SiriusXM subscription. Unless one is purchasing the stock solely for the dividend, one would be well advised to avoid it. A simple truth, elegantly disguised by a complex narrative. A common occurrence in the world of finance, wouldn’t you agree?

2026-01-20 22:22

The State of the Broadcast

Is SiriusXM Worth the Signal?

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