With satellite radio's patron, the car industry, collapsing, things aren't looking good for the recently merged Sirius/XM: The stock's at 14 cents and industry types are predicting it could fall further. That seems bad.

At least one financial analyst is now even comfortable being quoted using the "B" word — bankruptcy.

CNNMoney: "The outlook for Sirius XM has grown increasingly worrisome and at the current time looks bleak," said Frederick Moran, an analyst with Stanford Group. "At this point, you have to question whether Sirius XM will survive 2009 in its current structure. There is a likelihood that it could enter bankruptcy."

As my colleague Henry Blodget said Tuesday, yes, Sirius could go to zero. (We've updated the numbers as Sirius' market cap has had $200 million wiped off in the last two days.)

Mel Karmazin's company currently has an equity market capitalization (value of the stock) of $455 million. It also $360 million of cash and $3.3 billion of debt, so its "enterprise value"—the implied value of the business itself—is about $3.5 billion. The only thing that has to happen for Sirius (SIRI) stock to go to zero is for the market to conclude that the company is worth less than $3 billion. This would wipe out the company's stock value, leaving the company in the hands of the debt-holders.

Why might the market soon conclude that Sirius is worth less than $3 billion? Because it's running out of cash. In the first 9 months of this year, Sirius had negative free cash flow (cash from operations - capex) of $300 million. $360 million of cash won't last long at that burn rate.

There wasn't any specific news sending the stock into freefall, although the post-channel merger buzz for the company has been miserable. I don't know if I've noticed any particular difference in each channel's playlist—this is possibly because most channels seems to hang on to their Sirius staff at the expense of XM's personnel—but no satellite radio subscriber I know has described the change as positive. Even if there wasn't a specific channel a listener mourned the loss of, the entire "change under the cloak of night" channel shift was shady, at best. If people are paying for your product, would it hurt to let them know more than two seconds in advance that a significant change was coming? Instead, I'm sure the company's customer service lines were flooded with complaints and probably cancellations as well. If XM Sirius can survive their stock price and apparently one billion dollars in debt owed this year (ouch), I'll be happy to hang around and suffer through XMU's current obsession with Passion Pit. But I'm not optimistic.

Sirius XM Keeps Tanking: Now 14 Cents [Silicon Alley Insider]

• Both services get new channels from their former competitors: Sirius gets the triple-A channel The Loft, the gospel station Enlighten, and stations branded with Willie Nelson (classic country) and B.B. King (blues); XM adds BBC Radio 1, E Street Radio, Little Steven's Underground Garage, and Shade 45, among others.

• All the decade-specific channels have been rebranded XM-style: Sirius Gold is now '50s on 5, '60s Vibrations is '60s on 6, Totally '70s is '70s on 7, Big '80s is '80s on 8. Also, XM's channels devoted to the '40s (on 4) and '90s (on 9) have been added to the lineup. However, according to commenters over at satellite-radio clearinghouse Orbitcast, the names may look like XM, but the slimmed-down playlists with "nothing but the most common hits that have been played to death" are all Sirius.

• Collegy-rock station Left Of Center's brand has fallen to that of XMU—a possible compromise for that channel's program director and music director being let go. (Similar compromises were made with a few of the decades-centric channels, perhaps facilitating the change outlined above.) Apparently the shows programmed by music bloggers are still intact there, at least for now.

• XM's alt-rock stations Fred, Ethel, and Lucy are all gone, and replaced by Sirius' slate of alt-rock stations. And there are no stations devoted to punk at all on the newly combined lineup.

• XM's standards station has been rebranded as "Siriusly Sinatra." Siriusly?

• Fans of XM's three Latin stations are all being directed to Sirius' one remaining Spanish-language channel; Aguila and Caricia's former 24/7 programming has now been consolidated into a single Sunday show for each format.

• On the flip side, fans of Sirius' one lite-rock station now have their choice of three formats devoted to smooth music. Um, yay?

• Hey, everyone gets four holiday-music stations! Including one devoted to Hanukkah music!

New Channel Lineup [XM]
New Channel Lineup [Sirius]
Now with combined channels, what do you think? [Orbitcast]

As gas prices skyrocket, people lose their jobs, and the economy in general sucks, consumers are less likely to sign up for an extra $12 a month to listen to the radio.

The nation's only two satellite services are growing slower than previously while the broader economy is in a slowdown. Fewer people have been buying new cars, which is where the companies derive the bulk of new subscribers. And as higher fuel and food costs take their toll, analysts worry consumers will quickly ditch discretionary services such as satellite radio....

One area falling far short of projections is the number of consumers buying satellite radio in stores, rather than acquiring it factory-installed as part of a new car purchase. In recent years, most analysts predicted retail sales would rise every year. In fact, they declined 35% last year.

And compared with other emerging entertainment media, satellite radio doesn't seem to be catching on as fast with the American public.

Last year, 21 million Apple iPods were sold in the U.S., according to Gene Munster, an analyst at Piper Jaffray. About 54 million Americans listen to Internet radio every week, according to Sean Ross, vice president for music and programming at Edison Media Research. By comparison, Washington-based XM Satellite Radio and New York-based Sirius together added 3.7 million net new subscribers last year. By the end of March this year, their subscriber levels reached a combined 17.9 million.

The miserable radio stations here in Phoenix finally pushed me over the edge this year, and I purchased a Sirius receiver, so it's a little hard to fathom going back to the FM dial at this point. However, once the renewal date comes around, if the gas prices are hovering around $18 a gallon—a projection based on my faulty memory and current trends—it's going to be difficult justifying an additional expense added to my driving experience, even if the stations are available online. I'd miss having BBC Radio 1 while driving around, but I imagine the shuffle feature on my iPod would fill in just fine, and in a vastly cheaper manner. (That being said, you'll never convince me to get on board with the HD Radio deal, especially if if Clear Channel is in any way responsible for the content.)

Slowdown Generates Static for XM, Sirius [Wall Street Journal]

Among their requests from the FCC: the other half of the satellite spectrum being made available for a competitor, that the merged company be banned from broadcasting local material or receiving local ad money, and that decency standards be extended to the satellite realm. The decency standards requirement seems to be the most offensive request, since one would imagine that paying for content would eliminate any sort of obscenity clause. Clear Channel contends that "One of the primary potential dangers to free, over-the-air radio posed by this merger is siphoning popular, including 'edgy' content, with consequent loss of advertising revenue." I start to see their point now, because if satellite radio takes away the bit on the KISS morning show here where they pretend to offer roses for cheating spouses to send to their lovers, the media world as a whole would fall apart. You can't pull that sort of stuff off via satellite.

Clear Channel Lists Satellite Merger Demands [HITS Daily Double]

Whether or not this plan will endear Federal Communications Commissioon regulators—who have so far been cool on the idea of the two companies joining forces—to the merger is still unclear; the National Association of Broadcasters, which has been protesting the merger since it was first announced, dismissed the plan as the two companies' last-ditch effort to "promise anything" in order to make the creation of a monopoly look good in the eyes of government officials. (Something we just thought of: Are there any people out there who want, say, MLB broadcasts and Stern, and thus subscribe to both XM and Sirius?) We just wonder what effect a merger will have on the two companies' music-programming options, and when the seemingly inevitable consolidation of, say, Left of Center and XMU will begin.

Radio Plan: A Price Shift for Satellite [NYT]

[Photo: Getty Images]

Still, there is a reason to root for a merger, and it involves the group most actively opposing it: the broadcast lobby. When XM and Sirius made their announcement, a spokesman for broadcasters said the satellite-radio companies were looking for a "government bailout."

But this argument is from the possessors of one of Washington's most potent lobbying forces. If any group is skilled in the ways of governmental largess, it's broadcasters.

If you fret about diminished choices with a joined Sirius and XM, think for a second about commercial radio in the U.S. Its ownership is highly concentrated, its programming is most commonly described as "soulless" and it is missing most of the public-interest programming we used to take for granted.

A radio station, after all, is but a state-approved monopoly on the public's airwaves. Remember when radio stations turned out news programs? (Broadcasters say listeners can fill any vacuum with a host of other sources.)

Compared with commercial radio, a merged XM and Sirius would look like Florence in the Renaissance.

It is said that one test of how much competition will exist after a merger is the extent to which a competitor squawks; the more complaining, the more there will be a thriving market. Judging by the decibels from the broadcasters, satellite and broadcast radio would soon be at each others' throats.

What's not to like about that?

While we're always wary of consolidation of any kind, we do have to admit that the idea of building a fire under terrestrial radio's ass is appealing; even one of the satellite-radio companies' offerings beats the pants off the forest of Jacks, Zs, and Lites that big radio has blanketed across the nation. Sure, the broadcast spectrum may have its limitations, but terrestrial radio's advantage in making individual stations more "niche" would be its ability to localize content—which may cost money in the short-term, but surely that's preferable to complete irrelevance. (Right?)

How Radio Listeners Will Fare in a Merger of Sirius and XM [WSJ]
My Near-Death Experience With Clear Channel [Inside Music Media]

XM has contended that songs captured and stored on their receivers aren't true sales, in part because they stay on the radio only as long as the owner remains a subscriber; also, they can't be moved, say onto a computer or another music device. Legally, XM has said, the recordings are little different from those taped onto cassettes from the radio for personal use, which is permitted by law.

It also has said the devices encourage its subscribers to buy songs they like, allowing them to bookmark favorites and facilitating digital sales with its partner Napster Inc.; buying the song allows users to transfer it to computers or other music players. XM has said that it is a big booster of the music industry, playing lots of new songs and always showing the song and artist names on electronic displays on its radios.

The music industry disagrees, saying users get to use and store the songs recorded with the devices just as if they owned them. "These devices go well beyond a radio transmission," says David Israelite, president and chief executive of the NMPA. "They replace the need to buy music."

While we haven't used the devices in question, we wonder if the NMPA (and the RIAA, which filed a similar lawsuit last year) has a point; the setup sounds, to us, not dissimilar to Rhapsody or other music sites that allow for people to tote songs along with them as long as they keep paying their subscriber fees. Which is why going the lawsuit route and throwing around that $150,000-per-infringement figure seems unnecessary—surely this matter can be resolved in a more tidy way, especially since satellite radio does allow for greater discovery possibilities, from its wider playlists to the fact that its interfaces actually serve the way-too-dormant practice of back-announcing songs that are playing.

Music Publishers Sue XM Radio Over Songs Stored on Receivers [WSJ, reg. req.]

But at the first day of the Digital Music Forum East conference yesterday, Music Choice CEO David Del Beccaro, who occasionally affected an overly calm voice in a possible attempt to make the other panelists sound frenetic by comparison, dropped an interesting piece of satellite radio science during the kickoff panel, "The State of the Digital Music Union."

He claimed, "music is fourth on satellite radio behind Howard Stern, sports, and news."

Given the increasing sagginess of the music market these days, this factoid doesn't surprise us much; both Stern and live sports broadcasts are exclusive "gets" for satellite-radio customers, while the music stations can sort of be replicated by a person's home music collection or, in very isolated cases, local radio. It does make us wonder, though, what will happen to the bandwidth devoted to music should the proposed XM-Sirius merger happen. Obviously, there will be some consolidation—there are currently six stations devoted to classic rock between the two services, and that doesn't even count the oldies channels devoted to more splintered takes on the form—but will the merger give the merged companies a convenient excuse to trim down the number of music channels? We suspect the answer is yes, although we're guessing that, through some cruel twist, Radio Margaritaville will remain standing while both channels devoted to classic hard rock get wiped clean.

Music Lags on Satellite Radio [Listening Post]

XM and Sirius will also need to address what might be called the Howard Stern problem: The foul-mouthed radio host is among several edgy radio personalities that decamped to satellite radio, where regulators have no jurisdiction to enforce federal indecency rules. The FCC can only enforce indecency rules on free over-the-air broadcasts.

Requiring XM-Sirius to voluntarily abide by federal indecency standards could be one condition that is placed on the deal. The companies appear to be trying to address that issue by allowing consumers great flexibility in programming. That might include allowing consumers to purchase a tier of service that didn't include Mr. Stern and other radio personalities whose shows might be considered inappropriate for children.

Of course, Stern isn't the only host whose banter could come under scrutiny, as the combined networks' line-ups include such potentially potty-mouthed stars as Luda, Snoop Dogg, Trick Daddy, Rancid, the Who, Eminem, and "Mista Shitstorm" himself, Richard Simmons.

Sirius-XM's Fate Hinges on Definitions [WSJ.com]

Consumers and their advocates are likely to worry that a combined company would mean higher prices for satellite-radio service. Both companies now charge $12.95 a month. But company executives say market forces would limit the possibility of higher prices. "We are competing with companies that give away their product for free," said Mr. Karmazin, alluding to conventional over-the-air radio.

Satellite-radio customers will still be able to use their existing satellite radios for the foreseeable future, but to take advantage of a combined service, they probably would need to upgrade to a newer radio. Currently, Sirius and XM run on separate, incompatible systems, although a team of engineers from both companies has been working on a radio that could pull in both signals...

The companies could also eliminate duplicative services. For example, XM features a Christian-music-themed channel called "The Message," while Sirius has its own Christian pop channel dubbed "Spirit." By Mr. Karmazin's reckoning, the two companies could eliminate such overlap and concentrate on unique shows and new technology to deliver it. "There's going to be more consumer choice," Mr. Karmazin said.

Indeed, a cursory glance at both XM and Sirius' line-ups reveals plenty of overlap; if the deal were to go through, sketchy estimates indicate that the combined classic-rock channels would yield more than 2,312 airings of "Blinded By The Light" per hour. That said, we do look forward to seeing what happens when the companies on-air talents are forced to share quarters, just to see what happens when Ludacris makes a play for Deepak Chopra's coffee mug.

Sirius and XM Agree to Merge, Despite Hurdles [WSJ]

NEW YORK - A lawsuit in which record companies allege XM Satellite Radio Holdings Inc. is cheating them by letting consumers store songs can proceed toward trial, a judge ruled Friday after finding merit to the companies' claims.

U.S. District Judge Deborah A. Batts made the finding in a case brought by Atlantic Recording Corp., BMG Music, Capitol Records Inc. and other music distribution companies against the licensed satellite radio broadcaster. In a lawsuit last year, the companies said XM directly infringes on their exclusive distribution rights by letting consumers record songs onto special receivers marketed as "XM + MP3" players.

XM claimed that their users are keeping the music for private use, and are therefore protected by the Audio Home Recording Act of 1992; the judge gave them the old hells no on that. We're guessing XM will want to get this matter resolved as quickly as possible, especially with the potential Sirius merger. Nobody wants to hook up with a company carrying an STD (Seriously Troubling Development).

Judge: XM might be cheating music firms [AP]