I am a fan of satellite radio. When I am not traveling, my office has Sirius turned on for more than 12 hours every day. On the road, I take my S-50 Sirius radio which has almost 20 hours of saved favorite music on it and listen to it on the plane or in my hotel room. When I made the initial decision between XM and Sirius six years ago, XM had commercials and so I selected Sirius with no commercials on the music channels.
Since I became a subscriber, there have been three business milestone events. First, was the early competition between XM and Sirius for content. Sirius 'won', depending upon your tastes, luring the expensive Howard Stern to their channels for $100 million a year. That is expensive programming for a subscriber base of 5 or 6 million, even if all of them listened to the shock jock. With an audience of say, 15%, that was a poor business decision.
The second business milestone was when Sirius and XM merged last year. That permitted them to combine programming, simulcasting the same content on both Sirius and XM channels. I'm going out on a limb, but I doubt if they saved 1/4 of Howard Stern's contract by dropping 1/2 of their other DJs and programming.
The third business milestone was in January when the bottom fell out of the automobile market. Sirius/XM was dependent upon new car buyers for new subscribers. New car owners can become easily hooked with a great assortment of programming and no commercials (on the music channels). But downstream of the automobile manufacturers losses is Sirius/XM, who loses with no new subscribers to pay for the expensive programming and fixed satellite infrastructure costs.
Serious threats to Sirius Radio tells that the struggling satellite music company has more woe than just poor automobile sales. America has discovered timeshifting for music. Much like TiVo has hurt the television networks, consumers are downloading music to play later on their radios or MP-3 players. There is no need for real-time DJ patter or platters.
Competitors such as Slacker enable timeshifting. You can listen to music over the internet with or without commercials (for a fee), you can even purchase personal radio players, much like my Sirius S-50 that allows you take your music with you. For Blackberry addicts, you can listen or cache music on your phone. And there many other competitors such as Pandora Radio.
So with the combined subscribership of 19 million or so, and with lots of competitors at much lower prices, can Sirius/XM stay in orbit? I think they are on the bubble. They are going to have to reduce costs so that they can remain competitive with the new products available to the consumer. Sirius XM Posts Q4 Profit tells that in the last quarter, tells that Sirius lost almost 50,000 subscribers in the 4th quarter. I think the product is good - but they have more competition than they imagined this time last year.