While private equity firms pay bubble prices for bubble assets, Sirius Satellite Radio's (NASDAQ: SIRI) Mel Karmazin is in front of Congress attempting to consolidate an industry whose outlook is not as bad as most perceive. Mel is essentially going for the kill by getting control of an asset that will turn into a free cash flow machine in the next few years.Financial news reports are filled with Mel in front of Congress battling for his XM Satellite Radio (NASDAQ: XMSR). As a reminder, Mel, over his long tenure as a radio executive, has made a lot of money for Howard, for Mel and for shareholders. Mel loves to make money for people.
On the opposite end of the spectrum, we have private equity firms battle for TXU Corp (NYSE: TXU), a company that was selling for $5 per share in 2002 and is now at $69. TXU is fraught with problems. The deal has to get regulatory approval in Texas and it has to address environment concerns due to its coal-fired power generation plants. In addition, there are reports this morning of a potential rival bid for the company.
Mel is consolidating an industry that is out of favor and few investors care about. The large private equity firms are paying peak prices in desperation to put their money to work.
Advice: Go with Mel and let the private equity bubble-head firms lose a fortune.
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
3-01-2007 @ 6:11PM
Lerone Williams said...
Well said Eric. I'am definitly not going to panic and keep my shares of siri and reap the benifits later. This is one of those stories that people are going to wish they were in while it was $3.62 :)
3-04-2007 @ 7:31AM
EMIL J KOVACH JR said...
"Mel is essentially going for the kill by getting control of an asset that will turn into a free cash flow machine in the next few years."
Could Not said It Better, Myself.
Unfortunately, He Does This By Forming A Monopoly, Which Mr. John Ashcroft, Former Attorney General, Seems To Believe Is Wrong.Rightfully So.
This Is The First Of MANY Important Opinions That Will Bring The Facts Of The Matter, Forward.
Which Is, Do You Concentrate Control Of One Market For One Owner, Which--Is "A Free Cash Flow Machine, In The Very Near Future?" Other Than Generating Free Cash For A Select Few, What Is The Benefits To The Market Place? Or People Mel DOESN"T Like.
EMIL J KOVACH JR
3-04-2007 @ 9:00AM
EMIL J KOVACH JR said...
"I would submit that a thorough study of consumer demands and preferences would show that terrestrial radio stations should not be considered part of the satellite radio market for the purposes of the review of the current merger ...," said the letter.
Former Attorney General--John Ashcroft
The companies' main argument for the deal being approved is that, while they are the only two satellite radio companies, they are in fact competing against the range of audio media including traditional radio, terrestrial digital radio, Internet-based radio and gadgets like Apple Inc.'s iPod.
FROM: Dow Jones News Wires.
EMIL J KOVACH JR
3-05-2007 @ 7:13AM
EMIL J KOVACH JR said...
P.S. I Wouldn't Slam Private Equity Companys, One Just Offered To Buy Chrysler.
Here, In Detroit. Where I Live.
EMIL J KOVACH JR