For the full year, Pandora sees revenues up in a range of $420 million to $427 million versus its prior forecast of $410 million to $420 million.  Its non-GAAP loss is now put in a range of -$0.11 to -$0.07 versus a prior range of -$0.16 to -$0.11 per share. Part of Pandora’s growth is due to a larger buildup of its sales force to better compete in advertising.

One issue that Pandora still faces is higher content costs.  As it grows in reach and listening, its expenses rise in a what is effectively a straight line.

SIRIUS XM Radio Inc. (NASDAQ: SIRI) is in a potential disarray after a large share sale by CEO Mel Karmazin that may actually help John Malone and Liberty Media Corporation (NASDAQ: LMCA) in its quest to take it over while Karmazin is publicly trying to defend the company against Malone’s efforts.

Pandora is up 18% at $12.22 in the pre-open session and this would generate an implied market capitalization rate of $2 billion.  That is valuing Pandora at 4.7-times revenue expectations for 2012.  SIRIUS XM is worth some $7.56 billion in market value, but it trades at only about $2.25-times revenue expectations of $3.37 billion for 2012.  Another difference between these two companies is that SIRIUS XM is profitable and it has a lot of exclusive content that Pandora does not have.

It is hard to think that things might be making a good turn at Pandora due to its cost structure, but that is what the market vote is with real trading and investing dollars this Thursday.

JON C. OGG

Today’s filing lists the underwriters initially as Goldman Sachs, J.P. Morgan, and Morgan Stanley.  As a reminder, Serafina acquired Intelsat at a value of about $5 billion for the equity value back in 2008.

Here is the company’s own description: “We operate the world’s largest satellite services business, providing a critical layer in the global communications infrastructure. We generate more revenue, operate more satellite capacity, hold more orbital location rights, contract more backlog, serve more commercial customers and deliver services in more countries than any other commercial satellite operator. We provide diversified communications services to the world’s leading media companies, fixed and wireless telecommunications operators, data networking service providers for enterprise and mobile applications, multinational corporations and Internet service providers (“ISPs”). We are also the leading provider of commercial satellite capacity to the U.S. government and other select military organizations and their contractors.”

Intelsat also has one of the largest satellite fleets with its global communications system featuring a fleet of over 50 geosynchronous satellites which covers more than 99% of the world’s populated regions.

As of March 31, 2012, the company’s contracted backlog (expected future revenue under existing customer contracts) was approximately $10.5 billion.  That is said to be more than four times its 2011 annual revenue. For the year ended December 31, 2011, Intelsat generated revenue of $2.6 billion and a net loss of $0.4 billion.

FULL F-1 FILING

JON C. OGG

Liberty owns roughly 40% of the company if it were to convert its notes into shares and this dates back to the peak of the market selling panic.  SIRIUS XM’s CEO Mel Karmazin has been fighting the loss of control and John Malone wanted control.  This was also going to be an interesting case for precedent as Liberty was trying to take control without a majority of ownership.

The news should be good news for SIRIUS XM holders at least in theory.  This will prevent the instant conversion of convertible notes into common shares which could have been distributed as a dividend or a spin-off by Liberty to its existing shareholders.  Ultimately, that will keep millions and millions of shares from magically appearing on the market that might have been sold by many Liberty holders.

Keep in mind that this is a decision from the FCC.  There may be other efforts taken by Liberty and John Malone to still take ‘de facto control’ of the company.

Today’s news had no real impact on the stock so we would call it perhaps not such a big event.  SIRIUS XM shares closed down 2.2% at $2.16 for an unofficial closing bell price.  There were some 87.8 million shares traded today against an average of almost 52 million shares.

JON C. OGG

Dish agreed to broadcast the channels for 15 years, but stopped after just 3 years charging Cablevision with failing to support the new channels. Cablevision sued Dish for $2.5 billion.

The Wall Street Journal reports that in a pre-trial ruling, the court found that Dish had “in bad faith” destroyed e-mail evidence. Dish appealed the ruling twice and lost twice, most recently last week. The ‘VOOM’ channels were canceled in 2009.

Normally the threat to withdraw programming is a negotiating ploy when the content provider, in this case AMC, wants more money than the cable or satellite system wants to pay. This case is slightly different, though, given the rulings against Dish. This time Dish is no doubt hoping that AMC will drop the suit in exchange for Dish’s agreement to continue carrying the AMC channels, which include AMC, Sundance, IFC, and We TV. Problem is, Dish has a lot more to lose than AMC does.

Shares of Dish are down about -3% at $31.64 in a 52-week range of $20.89-$35.64. Shares of AMC are down -2.4% at $43.48 in a 52-week range of $29.66-$46.69.

Paul Ausick

Gabelli’s call noted, “We view the quarter’s results as especially strong given Sirius raised list prices in Q1 by $1.54 (or 12%) to $12.95. Subscriber ARPU +2.0% sequentially (below the 12% price increase) as the price increases only impacted 35% of subscribers, and Sirius likely used pricing promotions to mitigate churn.”

More data showed that SIRIUS XM’s net debt to trailing adjusted EBITDA now stands at 2.9-times, which is actually under the company’s own 3.0-times stated target. SIRIUS XM added 405,000 subscribers in the latest quarter and it is now at its highest count with some 22.3 million subscribers.  The company also lifted its year-end target for subscribers to rise by about 1.5 million in 2012 versus a prior projection of 1.3 million new subscribers.

The Gabelli report also hints at dividends or share repurchases coming down the pipe later this year due in part to the lack of attractive acquisition targets in this satellite radio (and satellite media delivery).  As far as which method the company will return money to its shareholders, “We believe shareholder returns will take the form of buybacks.”

What Gabelli is holding some merit on for its caution is that with EBITDA trading at 16.3-times its 2012 estimates it noted, “we do not believe there is a sufficient margin of safety to add to a position at current prices.”

Perhaps the larger issue is what ultimately happens with John Malone and the Liberty Media Corporation (NASDAQ: LMCA) and the effort for ‘de facto control’ as an unresolved issue.

Pandora Media, Inc. (NYSE: P) may also come under fire as CEO Mel Karmazin has said that SIRIUS plans to introduce a personalized radio service in 2012.

SIRIUS XM shares are up $0.01 today at $2.24 against a 52-week range of $1.27 to $2.44.

JON C. OGG

A new report from the Wall Street Journal shows that the expiration of a 2009 investment agreement has Liberty wanting to declare what is called “de facto control,” even though the fully diluted stake would be about 40% control if Liberty were to convert its preferred shares.

Where this gets interesting is that Liberty is sitting on huge gains in the preferred shares because it came in as a virtual white knight when SiriusXM shares were trading as though the company was a bankruptcy candidate. John Malone is rather well-known for seeking the most advantageous tax structures possible, and control would allow for what may be a tax-free spin-off of the SiriusXM shares to Liberty Media shareholders. What does not seem likely is that Liberty would take control to take Sirius private, nor to just hold it as a parent company or holding company structure. But in this day and age, we would not rule out any scenarios when it comes to money and media.

SiriusXM is asserting that Liberty has to buy more shares of the satellite radio monopoly before it can claim true control. Maybe Malone and friends at Liberty have proxy votes from other holders — maybe not.

There is one other issue that makes this situation even harder and harder to keep up with. Malone’s Liberty empire is already very carved up, and it is no easy task to keep with which Liberty is which Liberty. There is Liberty Interactive, Inc. (NASDAQ: LINTA) with its QVC networks. Then there is the Liberty Global, Inc. (NASDAQ: LBTYA), which provides video, broadband Internet and telephony services, primarily in Europe and Chile. Both companies have share derivations as well for classes of stock.

This one is not close to being over, and with 20+ million subscribers it could have a big impact on how America gets its media, if you took a de facto proxy fight argument to the extreme.

It may be determined that Liberty either has to get enough shareholders to side with it or that it has to buy another 10% stake in SiriusXM to effect its ability to take control and conduct a tax-free spin-off to the Liberty Media shareholders. Unfortunately, that might imply that shareholders would have to wait another year for the long-term capital gains tax rates to apply, and the entire U.S. tax structure is up in the air right now as many of the tax rates are set to expire or change, at least for some, at the end of 2012.

Stay tuned.

JON C. OGG

Yesterday, New York State Supreme Court Judge Barbara Kapnick granted our motion for summary judgment and dismissed with prejudice the case brought against us by One Twelve, Inc., Howard Stern’s production company, and Don Buchwald, Stern’s agent.

In March 2011, One Twelve and Buchwald commenced an action against us in the Supreme Court of the State of New York, County of New York. The action alleged that we failed to honor our obligations under the performance-based compensation provisions of our prior agreement dated October 2004 with One Twelve and Buchwald, as agent; One Twelve and Buchwald each asserted a claim of breach of contract. The Court found the agreement unambiguous and that we had complied with all our obligations under the agreement.

FULL FILING

The news today has so far been worth a 3% gain to $2.24 for Sirius shares.

Jon C. Ogg

Today’s unusual options trading was out in the January-2014 $2.50 Calls.  We have seen some 25,000 options contracts trade, which is 2.5 million shares worth of exposure on a fully leveraged basis.  This appears to be a new position as well because the open interest was 15,093 contracts before today.

The 25,000 options contracts were on the bid rather than the ask, meaning it was a sale of some sort rather than someone buying speculative calls.  Whether or not this was a hedge or just a high premium capture is hard to know, but most likely it is at least one big bet that a high-premium buyout is not coming here.  This may just mute some of the old and recent buyout rumors which we generally considered more as ”hope” than reality.

JON C. OGG

Canaccord Genuity’s analyst named Thomas Eagan has noted, “We do not think this is the case because Liberty can monetize its stake without increasing it. Moreover, we’d be surprised if Liberty spent $1.5 billion for an additional 10% after getting 40% for less than half that.”

The firm actually noted Liberty’s potential spin-out of SIRIUS.  Eagan noted, “We believe a spin-out of its 40% SIRI stake would help monetize the investment. Liberty could comply with Reverse Morris Trust requirements by adding True Position, SIRIUS debt and cash to the spin to net to 50.1%+ of the Sirius NewCo.

It was also noted in the report that recent filings reflect diverging strategies and that the takeover belief stems from Liberty’s recent FCC filing from March 20 which indicated that Liberty believes it has a de facto control of Sirius after the expiration of its standstill agreement and due to its 40% stake. Sirius has reportedly replied to the FCC saying that it does not agree with Liberty’s assessment.

Liberty Media has an $11 billion market value and is one of the John Malone entities.  SIRIUS XM now has a $9 billion market value but its heavy debt load still has the company as having a negative total net tangible assets value of -$3.7 billion as of the end of 2011.

JON C. OGG

What is interesting here is that the implications are serious if you read through the charges.  In the most extreme outcome, SIRIUS XM could face far higher royalty payments for content ahead.  That either means reduced margins or implies higher prices that have to be passed down to the consumers who pay to subscribe to SIRIUS XM’s satellite radio service.

Ultimately, the charge is that SoundExchange is in collaboration with other record industry organizations and that it “has orchestrated an illegal boycott designed to choke off such competition.”  SIRIUS pays less under the direct licensing model and the company is taking the stance that the organizations here are making it more costly.

SiriusXM noted that it has signed nearly 80 direct licenses to date, but it maintains that it would have attained far more direct licenses without this group involvement.

The Company believes that if SoundExchange, the trade associations and major record labels are allowed to continue this conduct, it is likely that similar anticompetitive harm will result to other rights users who are unable to secure direct licenses to rights.  Full details of the charges are here.

Why does this sound somewhat like the jukebox and mob ties of years past?

At $2.25, SIRIUS XM shares have traded in a range of $1.27 to $2.44 over the last year and Thomson Reuters lists a consensus price target of $2.52.

JON C. OGG