Sirius XM (NSADAQ: SIRI) faces a number of problems. Those caused the stock to drop to 20 cents yesterday, down from a 52-week high of $3.94.
Sirius is not only sitting on between $3 billion and $4 billion in debt. It has also never posted a net profit. There are still questions about whether its merger with XM Satellite will yield enough cost cuts to make the operation profitable.
But, none of those things are the final nail in the coffin. If one of The Big Three goes under, especially if it is GM (NYSE: GM), Sirius will lose one of its largest sources of new subscribers. Since some people who take the service drop it every month, which is normal attrition, those customers have to be replaced. For the company to grow, each month has to show net new additions which greatly outweigh cancellations.
Sirius cannot afford to lose its flow of customers from a major car maker. If it does, it debt service will overwhelm it, and finding new capital will be impossible. Who want to lend money to a company which is losing its most important sales pipeline?
If GM drops, Sirius will fall within a month.
Douglas A. McIntyre is an editor at 24/7 Wall St.











Reader Comments (Page 1 of 1)
11-19-2008 @ 5:36AM
al coholic said...
Sirrius may die but satellite radio will not go away. Millions of subcribers will pay to get it even if it becomes more expensive. There is no substitute for listening to what you want to when you want to.
11-19-2008 @ 7:37AM
Bill Benson said...
Another rediculous analysis... devoid of any factual merit. FOUR STARS. There should be an award given for the most negative arcticle posted regarding Siri-Xm. This guy would "rank" highly among the legions of them. Very amusing post. Looking forward to next month's literary achievment.
11-19-2008 @ 7:52AM
Keith Hawksley said...
Bill Benson
Although I may agree with you on your post, people will never take you serious if you don't fix your own literary prose i.e. your spelling
Rediculous
Arcticle
Achievment
11-19-2008 @ 8:08AM
Bill Benson said...
You are correct. Sorry, my fact...oops spell checker is out of order.
11-19-2008 @ 9:34AM
TC said...
Regardless of puncuation the previuos poster is correct. The media and certain analysts have done a great job of wrecking the small gains this company has made by consistently writing a negative spin on ANY bit of positive news coming from this company. You guys are a bunch of creeps, the lot of you.
11-19-2008 @ 9:55AM
matt day said...
if one of the big 3 goes under does that mean they wont produce cars anymore?? wouldnt they just reorganize and continue to operate??
11-19-2008 @ 11:12AM
Thor Lud said...
Matt Day you are 100% correct. They will continue to operate and reorganize..Lets face it GM has been losing money for years...not just during the current mess.
11-19-2008 @ 6:14PM
Addy said...
I love how people think satellite "radio" is SO wonderful and think it's a musical breakthrough. It's not that big of a deal and never really has been. I don't know anyone who has it in their car that didn't already get it with their car (they don't plan on renewing). And I know of no one going out to specifically get it or has done that. That isn't to say that people aren't but they are not in the numbers to significantly increase Sirius' revenue. It's another "bill," in my estimation, and who wants to pay yet another bill. I admit though at work, we listen to it the way radio was intended: for free through the computer. :o)
11-19-2008 @ 4:02PM
Chris said...
You're an editor at some shitty news website and can't even edit your own article properly? Let alone make an article worth reading...I seriously hope you're not paid for this garbage.
11-20-2008 @ 2:21AM
Jessy Scholl said...
Satellite Radio is here to stay however, I hope that Sirius/XM go out of business and do it before the year is out. The merger should have not been approved due to the debt and it is clear that one debt plus one debt equals too much debt and companies have been going out of business thanks to too much debt.
In addition, I can point out three additional stumbling blocks for both companies.
1. Both chose to build their own equipment in house instead of outsourcing it to their auto partner.
2. Sirius chose to sponsor a second rate NASCAR team in addition to races, and when that didn't work they chose to overload their lineup while XM chose to acquire Sirius and Sirius got talked into the merger when Sirius should have been destroying its rival through advertising and touting the benefits of satellite radio.
3. Both should have set up a national affilate network of over the air stations. This means that you would be able to listen to local radio on the satellite system while the local station would be able to tap into national programming for a monthly fee, but that would also mean that the satellite radio system would have to accept advertising and that isn't all bad because you don't have DVR's for cars and radio is free.
11-20-2008 @ 5:38AM
LOVE MY XM said...
LOVE IT, LOVE IT, LOVE IT....I GOT XM WITH MY NEW CAR PURCHASE;MY WIFE GOT SIRIUS WITH HERS. WE BOTH THOUGHT NO BIG DEAL...A RADIO'S A RADIO.WHATEVER...
HOW WRONG WE WERE...WE BOTH LOVE OUR SAT-RADIO AND WILL RE-NEW AFTER OUR FREE SUBSCR. RUNS OUT. I HAVE NOT LISTENED TO AM/FM FOR ABOUT A YEAR-- I'VE TRIED--BUT KEEP SWITCHING BACK TO SAT.
RECENTLY, SINCE THE MERGER, A GRADUAL BLENDING OF XM AND SIRIUS CHANNELS IS HAPPENING...MAKING EVEN MORE CHOICES. I LOVE CUSTOMIZING MY LISTENING EXPERIENCE. I LOVE MY XM/SIRIUS RADIO. SO DOES MY WIFE....HAVING SAID THAT...
I BELIEVE THAT AFTER THE SO CALLED "HEARINGS" ( MORE LIKE FREE TV TIME FOR POLITICIANS GETTING FACE TIME ON CSPAN AND CNBC) THE FEDS WILL BAIL OUT THE BIG 3 WITH BRIDGE LOANS AND/OR FREE MONEY AND WILL MAKE IT POSSIBLE FOR THE BANKS TO OFFER THE PUBLIC DECENT CAR LOANS AGAIN....
THIS WILL ALLOW U.S. CAR MAKERS TO CONTINUE PRODUCTION AT THE USUAL PACE AND INSTALL SIRIUS/XM UNITS IN THE NEW CARS ONCE AGAIN. THE PUBLIC WILL GET HOOKED ON SAT RADIO...IT IS TOO AWESOME NOT TO. IF SIRIUS/XM CAN WORK THROUGH THE DEBT COMING DUE, IN A MATTER OF TIME, THE COMPANY WILL FLOURISH.
11-20-2008 @ 11:40AM
Harv said...
Doug, I'm soooo tired of you posting the MOST negative blogs you can post! Do you really think the Gov't is going to let the auto industry fold? Hell they can't give away our tax dollars fast enough. Siri is hurting in a bad way...and potentially could fold, but damn man you sure are good at kicking the stock as hard as you can. Do you get a thrill out of Siri's problems? It sure sounds like it!
11-20-2008 @ 2:11PM
JAY said...
As a share holder,just read NOV.08 vote proxy&annual report.With this co.loosing sooo much money how could the compensation commitee award Mel Karmizen 4 MILLION$$ in feb.08 and $100,000 raises to its execs.The Board of Directors are supposed to make PRUDENT financial decisions with OUR money.Instead, they raid the cookie jar.NYSAttorney General Coumo,investigate board of directors&send them to JAIL!! Just read the annual report. It`s clear as a bell and a sinfull SHAME.This is a SIRIUS CRIME!!!
11-21-2008 @ 10:39PM
matt said...
I just joined sirius last week, if they go bankrupt would you assume someone else would pick up the service?? or would all the hardware I pruchased be no good and my contract be void?? matt vancouver-
12-06-2008 @ 4:42PM
RED said...
Blah, Blah, Blah. All I want for Christmas is 25 cents a share. Then I can sell and buy some new CDs.
12-10-2008 @ 4:27PM
whoami said...
Al Coholic says:
"There is no substitute for listening to what you want to when you want to."
Yea... it's called streaming FREE audio online.
12-17-2008 @ 5:45PM
Paul Johnson said...
Sirius Satellite Radio is an awesome service, technology for the technology challenged. Though 4 billion is a lot of debt, once the auto industry recovers--and it must, Americans need cars like we need freedom--Sirius will get new subscribers like never before. I can get my hometown sports, favorite music, news, weather--all this ipod stuff is well and good, but people like me--baby boomers in their late 40's and early 50's--don't need it. We need and want the type of entertainment Sirius provides. Channel 10--the exclusive Bruce Springsteen channel is an awesome channel, plus baseball, plus football--doesn't anyone but me see how unique and amazing Sirius is?
Sirius is here to stay. 4 billion in debt will be refinanced with the new fed rate once the capital markets flow again. Buy, buy, buy!!! It's a unique chance to get 10 times the return on your investment within a few months
1-01-2009 @ 1:35PM
mark said...
Gentleman here are a few building blocks NO ONE talks about! Disney,Microsoft,Google,Rupert Murdoch,Carl Ichan,GE. As they said in Apollo 13,I believe this will be our finest hour!
2-10-2009 @ 9:39PM
ron said...
Gentlemen I love my sirius system. I have one for my car ( which I also use with a boom box in the summer to listen to radio without commercials) and another one for my office and have not had to listen to all the " superstations" out there which have more commercials than music or talk. I bought it when it first came out however with the impending bankruptcy scare I probably will not purchase the new offer they have( I believe lifetime subscription or cost saving for paying up front) until I hear more about this