For those who've invested their money in the future fortunes of Sirius Satellite Radio, John Heilemann's piece, headlined "Lost in Space," is going to seriously interfere with digestion for a couple
of days. Heilemann's not a fan. Not that he thinks Sirius is headed into the tank or that it's been misplayed by its hard-charging executive team. To the contrary: He believes Mel Karmazin, the
company's CEO, is sort of a genius. He's done what he was brought in to do--turn Sirius into a legitimate competitor to XM, which was the first big entrant into the commercial satellite radio arena.
The problem for Karmazin--and those who've invested in Sirius--is something called high-definition radio. A comparatively inexpensive (vs. satellite tech) means of delivering digital radio signals to
specially outfitted receivers, HD radio is currently ramping up at stations all across the country. And when it's fully deployed, says Heilemann, it'll give Sirius a run for its money. Sirius will do
fine, but its talent overhead, especially the cost of Howard Stern's five-year contract, is an enormous burden. The share price will therefore not attain the heights Karmazin and crew are hoping for.
HD radio will prove to be a powerful competitor, and the Howard Stern deal will make it difficult for Sirius stock to gain altitude over the long term. (Curiously, Heilemann spends almost no time
discussing the fortunes of XM radio here.) "That would hardly be a disastrous outcome," says Heilemann, "except for the shareholders who've bid up Sirius to its current market value.
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