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Sirius XM Saved, but Static Continues

The last minute drama between Liberty Media and its satellite rivals, EchoStar and Dish, fails to fully address Sirius' ongoing saga.

Updated from 4:14 p.m. EST

Sirius XM Radio

(SIRI) - Get Report

avoided bankruptcy Tuesday, but satellite radio is still in a difficult orbit.

An 11th hour, $530 million

financing deal


Liberty Media


kept Sirius XM from defaulting on a $171.6 million loan due Tuesday, giving John Malone and company a 40% stake in Sirius.

The pact also kept Sirius XM out of the hands of

Dish Network

(DISH) - Get Report

CEO Charles Ergen, who had purchased Sirius debt in an attempt to pick up the company's assets cheaply if it had failed.

But all the last minute drama between Liberty Media, which controls



, and its satellite rivals, Ergen's


(SATS) - Get Report

and Dish, fails to fully address Sirius'

ongoing saga


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Earlier this decade, when subscriber growth was soaring and credit markets were more freewheeling, Sirius and XM took on $3.4 billion in total debt. The combined Sirius XM expects to spend $1.3 billion in loans and interest toward payments this year.

And then there are the programming costs. Programming is the second highest expense for Sirius XM and eats about 23% of its revenue.

Take these arrangements, among others: A five-year $500 million contract with Howard Stern that expires next year, a $650 million 11-year pact with Major League Baseball, a seven-year $220 million deal with the National Football League and a five-year $107.5 million contract with Nascar.

These programming deals were a legacy from a heady growth period, when Sirius and XM fought to outbid each other for the best radio talent and contracts. Liberty Media's last minute save preserves those contracts, which would likely have been torn up in a bankruptcy restructuring effort.

Now, these overgrown contracts loom large in a new era where Sirius XM is a satellite radio monopoly and subscriber growth is flattening.

Sirius XM has said it expects to cut about $60 million from its programming costs this year, largely through the reduction of duplicate radio channels. The company has also been working with its contract partners to ease the terms of some of the pricey deals.

Investors expect to hear an update on those talks from the company when it reports earnings in the coming weeks. Sirius XM may also offer another prediction on when it might reach an adjusted break-even point on cash flow.

A Sirius XM representative had no comment on contract talks. A Major League Baseball rep was not immediately available for comment Tuesday.

Meanwhile, car sales, the primary source of new satellite radio subscribers, have dropped dramatically. Auto partners such as


(GM) - Get Report



have their own set of problems and are looking for

government aid

to keep their operations intact. And radios at stores like

Best Buy

(BBY) - Get Report



(WMT) - Get Report

haven't exactly been flying off the shelves amid a consumer spending slump.

Sirius XM may have dodged delinquency today, but there could be even more last minute rescues ahead. For now, shareholders were feeling a little more secure. Sirius rose 6 cents, or 52.5%, to 16 cents.