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Monday, October 30, 2006

Radio Stocks Runs Like A Scalded Dog

The word is that video killed the radio star. Seem that way. YouTube. AOL Video. Yahoo! Video, MovieLink, IPTV.

:Might as well bury radio and sing “Danny Boy”.

Thing is, radio won’t die. At least not shares in radio companies.

Last week Sirius shares took a big run from $3.68 to $3.95 in one day. The NBA started on Sirius, but there was no big news there.

XM had an even bigger move over the course of a trading day. It jumped from under $10 to $11.95. The company made an announcement about some convertible securities, but nothing that would seem to move the stock almost 20%.

Traditional radio giant Clear Channel also made an impressive move from $31.52 on last Tuesday to $35.46. The company’s management indicated it might be willing to consider a private equity buy-out.

It may be that nothing will come of the action, but at least some of Wall St’s big money is looking at radio again. Maybe it’s because it hasn’t gone away and stocks in the sector have gotten so cheap. Sirius has not been this low since late 2004. XM has not been this low since 2003. Clear Channel has come up some, but its but, its August low of $27.17 is as low as the stock has been since 2002.

XM and Sirius still lose a lot of money. But, there is a segment of the investing community that believes that they are growing fast enough to become profitable before they have to raise more money. Clear Channel had an operating profit of almost $1.5 billion in 2005 on revenue of $6.6 billion.

High definition TV may be great, but try watching it while you are driving.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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