Sirius XM Radio Inc.SIRI

Morningstar Rating

Stock Research and Analysis

by Morningstar Equity Analysts

Even with the diminished headwinds, Sirius XM's crushing debt burden and slowing subscriber growth are such that we think shareholders are at risk of total loss.

Burdened by decelerating subscriber growth and a business model that relies largely on Read more

Bulls Say

Combined paid subscribers to satellite radio totaled more than 18 million as of September 2009, compared with fewer than 2 million in 2003.

The combined entity is benefiting from various merger-related cost savings, including eliminating back-office operations, sharing marketing costs, and eliminating the bidding war for talent and content.

In February 2009, John Malone's Liberty Media empire saved Sirius XM from a liquidity crisis with a $500 million cash infusion, giving the company a new financial lifeline. Read more

Bears Say

The company has doubled the number of authorized shares to 9 billion from 4.5 billion in 2008. The company also seeks a reverse split to prop up its sagging stock price.

Even if the combined company realizes merger-driven cost savings, that benefit may be muted by slowing subscriber growth and rising churn rates.

Key on-air talent and programming could choose to leave Sirius if subscriber growth remains muted. Read more

Strategy

Sirius XM seeks to attract and retain the largest possible number of paying subscribers to its service. It has done so primarily by collaborating with leading automakers to maximize its installed base Read more

Management

We think Sirius XM's corporate-governance practices leave room for improvement. Former CBS Radio chief Mel Karmazin's $1.25 million cash compensation package in 2008 is less generous than the $5.2 million cash package he took home during 2007, reflecting Read more

Profile

Sirius XM provides a subscription-based digital radio service whose broadcast signals originate from orbiting satellites rather than earth-based transmitters. Specialized Read more

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