Media Analysis: 2009 Do-Or-Die Year For Sirius XM
December 29, 2008 at 10:17 AM (PT)
SIRIUS XM faces an incredibly difficult road to survival in 2009, multiple media sources report. Almost a billion dollars of debt will mature by the end of the year; should the satcaster not be able to cover that debt, it faces bankruptcy.
The bills coming due include almost $200 million in FEBRUARY, $350 million in MAY and another $400 million in DECEMBER. THE MOTLEY FOOL's RICK ARISTOTLE MUNARRIZ predicts that, "Between its present liquidity and its authorization to have as many as 8 billion shares outstanding, SIRIUS XM has enough ammo to get through FEBRUARY. Now it needs to clear the MAY and DECEMBER hurdles."
According to an article in THE NEW YORK TIMES, "Satellite Radio Still Reaches for the Payday," SIRIUS XM is "one of the very few media companies whose revenue and number of subscribers are growing these days;" third quarter revenue grew 16% and the number of subscribers rose 17%. Yet SIRIUS XM is basically a penny stock on Wall Street because of its massive debt, a credit-averse economy that dashes any hope of refinancing, and woeful auto sales, which has been its main meal ticket to subscriber growth.
This same article takes a major shot a HOWARD STERN's relevancy as a media king on SIRIUS, versus his previous terrestrial audience of 12 million, who would react at the drop of the hat to his comments, most notably his remarks last week (NET NEWS 12/18) about him leaving SIRIUS.
A growing number of analysts and experts now doubt that SIRIUS XM CEO MEL KARMAZIN, who has enjoyed considerable success in traditional media, will be able to turn things around. ""He’s an amazing guy," WACHOVIA CAPITAL MARKETS analyst BISHOP CHEEN told THE TIMES. "It’s never paid to short MEL. But this is his toughest challenge. It’s something that seems even beyond his legend."
"I'm not trying to paint the rosy picture because we have challenges connected to our liquidity and certainly our stock price is dreadful," KARMAZIN told the paper, "But, you know, our revenues are growing double digits. We're growing subscribers. We're not losing subscribers."
The bottom line, which he admitted at a recent shareholder meeting: "There’s no question, this company needs to make money ... This company has a lot going for it, but it has never made a dime."