In October 2008, after months of delays that involved strict scrutiny from the FCC, XM Satellite Radio and Sirius Satellite Radio formally merged. Layoffs followed; media reports just three months later were questioning the continued financial viability of even the combined operation.
Today, Sirius XM is doing just fine, with profits coming in recent quarters after years and years of questionable performance. Now, it has kicked off what it is calling “a new phase” as an independent public company.
This new era for Sirius XM is thanks to a stock consolidation initiative that was completed on Monday. As such, the satellite radio and streaming audio company now has “a simplified capital structure and strategy for continued success” following the closing of its transaction with Liberty Media.
That’s the John Malone-helmed entity that saw shareholders in late August approve a plan in which Liberty Media exchanged existing SiriusXM shares for new shares in “SplitCo,” which has a new name: Sirius XM Holdings Inc.
Nasdaq trading is under the “SIRI” stock symbol, and this combines ticker symbols including LSXMA, LSXMB, and LSXMK into the already existing SIRI.
Pre-market trading on Tuesday already reflects the change, with the new “SIRI” priced at $26.05, compared to the previous closing price of $2.67.
SiriusXM CEO Jennifer Witz commented, “We’ve created a strong and profitable business, anchored by a subscription service that fosters deep and loyal connections with our listeners and a growing digital audio advertising platform which extends our reach to fans around the world, and we are excited about the future as we look to expand and strengthen both platforms. As we look ahead, we remain committed to three key objectives: enhancing subscriber value with a focus on content, technology and pricing; growing our advertising offerings to both engage new listeners and deliver effective results for advertisers; and driving efficiency across the organization to continue our strong track record of financial performance. We look forward to building upon SiriusXM’s twenty-year history as the audio platform of choice for millions of North Americans in their vehicles, at home, and on the go, with the goal of creating long-term value for our stockholders.”
Meanwhile, SiriusXM reiterated its full-year 2024 revenue and adjusted EBITDA guidance.
The company also, as promised, updated its free cash flow guidance for transaction impacts. “The company estimates these costs to be approximately $200 million and include transaction costs, incremental interest expense related to the debt assumed and incurred in connection with the Liberty Media transaction, and cash outflows at Liberty Sirius XM Holdings Inc. prior to the closing,” it said.
SiriusXM Chief Financial Officer Thomas Barry said, “After completing the transaction, which had the effect of reducing our outstanding common stock by approximately 12% before giving effect to the 1 for 10 adjustment, our capital allocation priorities are consistent: investing in our business, focusing in the near- to mid-term on reducing debt to return to our long-term target leverage, and continuing our capital return posture. In connection with our first day as an independent company, we have reiterated our revenue and adjusted EBITDA guidance and incorporated the impact of the transaction in our updated free cash flow guidance.”
SiriusXM’s 2024 financial guidance is as follows:
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Total revenue of approximately $8.75 billion
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Adjusted EBITDA of approximately $2.7 billion
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Free cash flow of approximately $1.0 billion
The company’s $200 million change to its free cash flow guidance reflects approximately $70 million associated with closing costs and go-forward incremental interest and approximately $130 million associated with historical, year-to-date cash outflows at Liberty Sirius XM Holdings Inc. prior to the closing of the transaction.
A NEW DIVIDEND PLAN
SiriusXM plans to continue its recurring dividend.
And, when adjusted for the 1 for 10 change in the Liberty Media transaction exchange ratio, this would be approximately $0.27 per quarter.
Meanwhile, with the completion of the Liberty Media transaction, the SiriusXM board has authorized a $1.166 billion common stock repurchase program; this is a continuation of the stock repurchase program of the former SiriusXM.
That said, “the timing and amount of any shares repurchased will be determined based on SiriusXM’s evaluation of market conditions and other factors and the program may be discontinued or suspended at any time.”
