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The SIRIUS XM Radio Bailout: Why Some Listeners Are Threatening to Leave

Opinion

By

Updated November 23, 2008
I’ve been writing and editing the Radio portion of About.com since 2002 and I can count on one hand the amount of news stories or controversies which have generated more reaction than the recent programming consolidation of the SIRIUS and XM services.

Subscribers are livid. Dismayed. Pissed. Ready to bail.

You’d think with the business model of Satellite Radio – you know where subscribers foot the bill and not the advertisers like traditional Radio – that somebody, somewhere in some office would have thought, “Hey, before we change around all the programming on both services maybe we should ask our customers for input.”

You’d think.

Once You Open the Box, You Can’t Put It Back In

What were all those management types thinking? Well, for one thing they were hoping to clot their money-bleed by paring down programming costs, having now merged into one big happy monopolistic family. The problem is, each service initially did such a good job of offering diverse programming and even creating a unique XM or SIRIUS style on similar channels that they spoiled everyone by delivering what they promised.

Who expected a radio entity to actually do that???

As a casual observer, it seems to me that both services went on outrageous spending sprees - trying to outdo each other - to reel-in high-profile talents when they might have been paying more attention to the day-to-day bottom line where budgeting and programming can be balanced.

Hence, even though subscribership has grown (18.9 million subscribers), SIRIUS XM continues to lose money. Its 3rd quarter loss this year was $4.8 billion dollars due to an impairment charge it calculated. I had no idea what that was so I looked it up.

According to investorwords.com:

“A specific reduction on a company's balance sheet that adjusts the value of a company's goodwill. Due to accounting rules, a company must monitor and test the value of its goodwill, to determine if it is overvalued. If it is, the company must issue an impairment charge on its balance sheet, to take into account the reduced value of the goodwill.”

I’m not completely sure I get all that but I find it ironic that an impairment charge takes into account the reduced value of the company’s goodwill. Considering the way subscribers feel they've been treated with the surprise programming changes, I’d say that kind of makes sense.

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