Sirius XM survives, but digital radio is gaining

Satellite radio company Sirius XM staved off bankruptcy recently, thanks to a two-phase, $530-million investment by Liberty Media Corp.

Now comes the hard part.

The company faces the same question of long-term viability as its competitors in terrestrial radio: Will consumers in the future be amenable to anything less than absolute control at little to no cost?

What if, in the not-too-distant future, wireless Internet and cellular data networks can deliver the same quality of programming as satellite radio — but at the price of terrestrial radio?

Sirius XM has seen its subscriber base peak at approximately 20 million and its stock price plummet.

Terrestrial radio companies such as Regent Communications, Citadel Broadcasting and Cumulus Media have fared no better in recent years, with stock price declines in some cases surpassing 90 percent.

Sean Ross, vice president of music and programming at Edison Media Research, recalls being asked on numerous occasions when the satellite radio industry took off in 2001 whether the new service — with its diverse, ad-free programming — spelled the end of terrestrial radio.

Now he wonders if both media formats need to downsize expectations — and for the same reason.

“Listening has been in a steady decline for the last 15 years,” he says. “People still want preprogrammed entertainment, but we have less time and energy for it.”

From 1998 to 2008, according to a report in the New York Times, the average share of Americans who listened to the radio at any given time shrank by 14 percent. Edison has found, moreover, that declines in listenership have been sharpest among teenagers and college graduates.

Of course, short-term macroeconomic problems have only exacerbated the problems facing the radio industry.

Terrestrial stations, like all media companies, have suffered from a steep drop-off in advertising revenue.

And Sirius XM, the product of a merger last year of the two former satellite radio competitors, has been an indirect casualty of the dramatic decline in automobile sales; new-car buyers who activate already installed receivers account for an outsized share of the company’s subscriber base.

Sirius XM is racked, too, by $3.2 billion in debt, what with the enormous capital costs required to launch satellites into space, not to mention hefty salary contracts with superstars such as Howard Stern, Oprah Winfrey and Martha Stewart.

”A company like that had to assume a lot of debt,” notes Jeff Jarvis, the popular Buzz Machine blogger, author of “What Would Google Do?” and, he ruefully adds, “Sirius stockholder.”

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