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FRIDAY, NOVEMBER 27, 2009
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 OPINION 
6

Satellite Radio Is Doomed

Auto downturn looks likely to kill Sirius and the satellite radio biz

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(Newser) – The country’s only satellite radio company is close to filing for bankruptcy, and columnist Mike Elgan is having an “I told you so” moment. Before Christmas Elgan predicted in ComputerWorld that Sirius XM wouldn’t survive the recession, given its shaky financial status—and the downturn now looks certain to kill Sirius and "bury satellite radio forever," he writes. The problem, according to Elgin, is that Sirius hitched its wagon to the auto industry.

The company was counting on a huge increase in subscribers to pay its $3.4 billion debt, but since most of its customers are new car buyers who choose the satellite radio option, the huge dive in auto sales means "there's simply no way Sirius XM can pay its bills," he notes. Satellite mogul Chris Ergen has offered to inject millions into the troubled company, the Wall Street Journal, but it's not clear if the cash can stave off bankruptcy.

Jamie Foxx hosts his Sirius XM Foxxhole radio show live from Sirius XM's Washington studios late last year.
Jamie Foxx hosts his Sirius XM Foxxhole radio show live from Sirius XM's Washington studios late last year.   (AP Photo/SiriusXM, John Harrington)
XM Satellite Radio and Sirius Satellite Radio products are advertised side by side on the exterior windows of the Al & Ed's Autosound store in Los Angeles.
XM Satellite Radio and Sirius Satellite Radio products are advertised side by side on the exterior windows of the Al & Ed's Autosound store in Los Angeles.   (AP Photo/Damian Dovarganes)
A Sirius satellite radio player plays Howard Stern's radio talk show in a car in Orange Village, Ohio.
A Sirius satellite radio player plays Howard Stern's radio talk show in a car in Orange Village, Ohio.   (AP Photo/Amy Sancetta, File)
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Readers who subscribe to Sirius XM claim that satellite radio is just too wonderful to die, that somehow its sheer awesomeness will pull it through the hard times. But the world doesn't work that way, unfortunately. - Mike Elgan

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6 comments
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radnip
Feb 11, 09 4:52 AM CST
More amazingly astute executives. I'm am SO impressed with this nation's business schools, I can't begin to express myself... Reply
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IN RESPONSE:
YouAreWrong
Feb 11, 09 6:57 AM CST
Are you kidding me!?! Have you seen the people who major in business?
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iamdakotah
Feb 11, 09 9:52 AM CST
dumb Reply
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lrm
Feb 11, 09 1:55 PM CST
Don't blame the executives here. Sirius and XM had to purchase the rights to launch satellites from the government, which arbitrarily only offered two. So Sirius and XM had to outbid two other companies and pay $100 million just for the right to launch a satellite. Blame the government for being competition-unfriendly and for putting these companies in the hole so early. Reply
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Doctor_Zaius
Feb 11, 09 7:49 PM CST
Elgan is wrong. They may file BK but they will emerge from it strong. They already have 2 billion in subsriber fees per year and they are still growing. The recession will hurt them but not kill them. Reply
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New York Times

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The Motley Fool

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ComputerWorld

Ergen offering to inject millions into troubled company
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