How Sirius Can Survive

Like anything else in this economy, most discretionary spending came to an abrupt halt. The slowdown in car sales, particularly high-end sales with Sirius XM(SIRI Quote) radios practically a standard item, also came to an abrupt halt.

The Cash for Clunkers program offered lower-end cars where Sirius was an option with their radios. My Lincoln Navigator not only came with the radio, but also six months free.

When my free subscription ran out, I "sacrificed" to pay $10 per month to keep it, because after having it for six months, I realized there was nothing better. My teenage son downloaded Sirius to his iPhone.

However, the economic problems persist for those who are unemployed, fear unemployment, lost their nest egg with property devaluations, and fear the other shoe will drop.

This hurt Sirius in the past year, as it lost 600,000 subscribers in the first half of 2009. We expect it to add 600,000 new subscribers by the end of 2010, essentially back to the end of 2008 levels.

Adding to the positives are branding programs by Apple(AAPL Quote), Best Buy(BBY Quote) and RadioShack(RSH Quote), which Jim Cramer referred to.

The porting to BlackBerry as well as iPhone/iPod will help. However, the proviso in the handheld space is incorporating key content programs and coming up with a strategy to compete with forward-thinking companies such as Pandora.

Car sales will rebound in 2010, and satellite radio advertising actually grew slightly on 2009, much better than network TV and terrestrial radio, which dropped more than 10%. Although satellite radio's actual spending numbers are significantly smaller in comparison.

Sirius needs to add some incentives to attract and keep subscribers. I don't see any promo packages out there, just a flat fee, and that business strategy doesn't work in this current economic climate.