Sirius XM’s Problems Still Run Deep


Congratulations, Mr. Karmazin! You managed to get a bailout from John Malone’s Liberty Media at the last minute, saving Sirius XM (SIRI) from bankruptcy. Now you can get back to the thriving satellite radio business!

Oh, wait…

Sirius isn’t going bankrupt this week, but it’s far from a safe bet. The big problems:

Growth is still slumping. Sirius’ long-term growth forecast issued last November calls for single-digit year-over-year subscriber growth at least through 2013. (See chart below.)

Sirius relies on the auto industry for most of its new subscribers. And, if you haven’t noticed, the auto industry is in the toilet.

Competition is only going to get stronger. Think all those free streaming music services on the iPhone aren’t good enough for many listeners? Major League Baseball will be streaming live game audio to its iPhone app this year — no satellites required. Sirius and XM were right to argue that they were competing with iPods and Internet radio services to get their merger approved. And now it could end up biting them.