Sirius on the Hiking Trail

The fact that satellite radio managed to attract 10 million users, if you include unsold cars at dealerships, proves there is a broad demand for the service. But at this point more than a few industry investors and even some insiders have gotten spending fatigue.

Satellite radio investors have started to get a little tuckered out watching billions of dollars go toward advertising and promotions in an effort to pump up subscriber growth. The spend-to-grow approach is common during a start-up phase. But with satellite radio, some camps have grown impatient waiting for a shift to a more financially conservative strategy.

Washington, D.C., radio peer XM was rocked in February with the abrupt resignation of director Jack Roberts, who grew frustrated over the company's cash-burning growth obsession.

For its part, Sirius has racked up an accumulated loss of $2.7 billion since it started operating in 1990. The company had $762 million in cash as of Dec. 31, and faces $358 million in bills this year for expenses like interest, leases, programming and marketing.

With the launch of a new satellite scheduled for sometime before 2010 and plans for a beefed-up U.S. antenna network to handle TV and other services, Sirius seems headed for another record loss. To avoid a red-ink drenching, the company could postpone expansion or try to pull in more revenue.

Some observers see an obvious answer.

"If they do go down that path," says one investor who is considering taking a stake in Sirius after sitting out for the past year, "they should certainly raise prices."

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