Tuesday, January 6, 2009
Sirius XM Plummeting To Earth
One reason TDP has been pushing hard for increased TV news coverage of NASCAR-related issues is because the economy has been forcibly restructuring the sport during these last three months.
ESPN.com's Ed Hinton (click here) just called the economic impact of this recession his top NASCAR story of 2008.
Aside from the obvious news about drivers and sponsorships, there are a myriad of NASCAR issues that seem to be escaping the mainstream media. One of them is the struggle of NASCAR's satellite radio partner Sirius XM.
Sirius and XM started individually with a lot of promise and exclusive sports programming, including NASCAR. Sirius XM currently has the satellite radio contract to carry the Sprint Cup, Nationwide and Camping World Truck Series races live.
Unfortunately, the recently merged company also has about one billion dollars of debt and Sirius XM stock has plummeted (click here) to less than fifteen cents a share.
Recently, (click here) the New York Times painted a less than optimistic picture of the struggles of the Sirius XM corporation. Here is an excerpt:
Its balance sheet is larded with nearly $1 billion of debt that matures in 2009 and must be refinanced, but try finding a sympathetic banker in our current hard-luck environment.
Sirius XM has nearly 20 million paying customers, many of them evangelists for the service, but what does that matter if you can’t pay your debts?The company has never turned a profit and cannot predict when it ever will.
These are not good words for NASCAR fans who are used to enjoying the Sirius 24-hour line-up of NASCAR content that includes both original shows and live races.
Since the final 2008 racing weekend in Homestead, it has been Sirius that has carried the load in terms of providing updated news, interviews and conversation as the sport goes through this painful off-season experience. Both SPEED and ESPN have failed miserably on the TV side.
While syndicated MRN and PRN shows are helpful and the NASCAR news on the Internet is regularly updated, there has been no comparison to the parade of NASCAR personalities and journalists who have appeared live on Sirius since the 2008 season ended. For hardcore fans, Sirius is a valuable tool for keeping up with the sport.
It was 2005 when NASCAR announced (click here) that it was switching satellite radio partners from XM to Sirius beginning with the 2007 season. The price tag for the entire deal was $107.5 million.
NASCAR likes to slice the pie into many pieces to generate as much revenue as possible. Among other things, Sirius is the satellite radio alternative to the commentary from the three NASCAR Sprint Cup TV broadcasters.
It allows fans to either listen to the races strictly on Sirius or use the audio from the Sirius broadcast while watching the video from the TV partners. The TV mute button is very popular with NASCAR on Sirius listeners.
DirecTV recently announced (click here) that Hot Pass is cancelled for 2009 because of the rotten economy and the fact that the service relied directly on subscribers to foot the entire bill. It was not very clear if 250 thousand of DirecTV's 13 million subscribers would add Hot Pass for next season.
That move eliminated the only other TV option for fans who wanted to watch the races but avoid the Fox, TNT or ESPN announcers. Now, Sirius and the MRN and PRN radio broadcasts are the last resort. Unfortunately, the terrestrial radio is not carried in some areas while Sirius is available directly by satellite nationwide.
As fans know, the newly merged Sirius XM NASCAR group (click here) is still sorting things out. Gone are shows from several drivers and in limbo are pros like Claire B. Lang (click here) and other content formerly carried by XM. January should truly be a month of transition for the Sirius team.
The word bankruptcy is being tossed around (click here) should Sirius XM be unable to refinance the billion dollar debt. Financial experts have lots of opinions, but one big problem is the lack (click here) of new car sales. Sirius was originally an automotive-based service and still relies on that slice of the pie as the foundation of the business.
One popular opinion is for Sirius to drop the monthly fees and allow anyone to buy a portable receiver and enjoy the service. This would bring more advertising to the channels, but it is clear the alternative is not working. With HD radio and Internet audio streaming in full swing, one thing is for sure. Sirius XM must act now to avoid the end of satellite radio as we know it.
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