Wall Street is hailing its old friend Mel Karmazin as the guy who can crank up the dial on advertising revenue at Sirius (SIRI) - Get Report.

Sirius fans say that with Chairman Joe Clayton having crafted a series of big financing and programming deals, now is the right time to bring in a big gun to lead the charge into the media big leagues. Karmazin, the former

Viacom

(VIA) - Get Report

chief, struck many investors as the right choice -- and not just because of his famous facility in handling his once and future colleague Howard Stern.

Sirius shares were up 10% Friday to $5.19.

Sure, Karmazin can take a whack at Sirius' soaring costs and instill some hard-hitting enthusiasm into the sales force. But the big bat in his arsenal, according to analysts, is advertising.

Though Sirius and its rival

XM

(XMSR)

bill themselves as the commercial-free alternative to conventional radio, the companies haven't exactly gone cold turkey on the advertising hooch. Their music channels remain ad free, but advertising has been a growing component of the news, talk and sports broadcasts.

So the debate, it seems, is just how much advertising will Karmazin use to repair some of the staggering losses from the pay radio business model?

To win customers and get them to pay $10 to $13 a month for the service, Sirius and XM have remained committed, at least on the music channels, to keeping advertising off the air.

"Commercial-free has been the differentiating factor for satellite radio," says Stifel Nicolaus analyst Kit Spring, referring to the saturation of advertising on conventional radio stations. That probably won't change anytime soon, says Spring, who has a buy on Sirius. Stifel Nicolaus has no financing ties to Sirius.

But for nonmusic channels, the advertising opportunities are wide open, say analysts.

"Karmazin brings a lot of advertising relationships to the table," says Janco Partners analyst April Horace. "There are plenty of places advertising can go without hurting the core programming." Horace has a buy on the stock, and Janco has no financing ties to Sirius.

For example, says Horace, Sirius and XM can digitally insert ads into rebroadcasts of pregame and postgame shows -- Sirius has a deal to broadcast NFL games, while XM recently signed Major League Baseball -- as well as into replays of news programs. And the talk radio format is particularly open to ads.

That is especially true now that Stern and Karmazin, once the dynamic duo at Viacom's Infinity radio unit, are to be reunited. Horace says Karmazin will be sure to give Stern "ad support."

Notably, Stern's contract with Sirius includes revenue sharing from advertising.

While investors are drawn to the growth appeal of satellite radio as it promises to become a mass market service, the concerns are mounting over the companies' growing financing needs.

Sirius posted $169 million in losses on $19 million in sales last quarter, illustrating a frightful misalignment of costs and revenue. Obviously, with all those losses, advertising represents an attractive lever that the satellite radio operators can pull when they need to bring in more money.

Spring of Stifel Nicolaus says it's too early for these companies to reach for that lever and sell ads on its music channels. "Once they hit critical mass," in terms of subscriber numbers, "then maybe they'll turn to advertising."

Karmazin said Friday during a

CNBC

interview that he'd be happy "with 5%" of the $22 billion or so advertising revenue generated annually in the conventional radio market.

Sirius investors may wonder if that's $1.1 billion that will fix or merely fuel the cash consuming engine.