Monday, June 8, 2009

Is Sirius Done?

Did Sirius make wrong strategic decisions. Was too much time and money wasted buying XM Satellite instead of concentrating on its real competition, free radio and the web? And while content is king, did Sirius spend too much for it without determining whether it could afford it? And could anyone have predicted that the economy would turn south and that the auto industry decline would have hit so hard.

Sirius is in the proverbial "between a rock and a hard place." "Sirius XM, which broadcasts football and baseball games, has lost more than $300 million in the past two quarters and has lost a net of 404,422 subscribers in the first three months of this year. Mel Karmazin, CEO at the New York-based company, said in its earnings press release on May 7 that 'satellite radio is now a cash flow growth story.' That story has yet to help Sirius XM equity shares, down 86 percent in the past 12 months."

And, unfortunately, I am one of their shareholders, not smart enough to sell at the top or willing to take a loss yet while it is at the bottom. I put a lot of faith in John Malone and his financial involvement to stay in for the long haul.

Perhaps there is growth opportunity for Sirius outside the car, through the mobile device and as an Apple iPhone app to extend the subscriber base. Perhaps there is synergy with a TV satellite company like Direct TV to add more subscriber value, and getting TV signals into the car. It is those untapped opportunities that might give Sirius the chance to recover.

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