Sneak Peek at the Sirius XM Radio Report Card

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In one of the market's first glimpses into Sirius XM Radio (Nasdaq: SIRI) since the completion of the colossal satellite radio merger, it appears as if the deal will clean up nicely:

• The company should close out the year with 19.5 million subscribers, with a target of 21.5 million for the end of next year.
• Pro forma revenue should clock in at roughly $2.4 billion this year and $2.7 billion in 2009.
• Adjusted EBITDA is projected to move from a loss of $350 million in 2008 to a gain of $300 million next year.
• The realized synergies, showing improvement in every line item, will amount to $425 million in savings next year.

The company will also begin offering the anxiously anticipated "Best of Both" programming packages next month. For $4 more than the stand-alone monthly rate, XM subscribers will be able to check up on select Sirius-exclusive content served up by the likes of Howard Stern, Playboy (NYSE: PLA), and Martha Stewart Living (NYSE: MSO). Sirius users will have access to Oprah Winfrey, Bob Edwards, and Opie & Anthony. The "Best of Both" deal also includes offering up live sports programming -- like XM's NBA and baseball and Sirius' NFL and NASCAR -- to the other side.

If this sounds so good -- apart from the rather meager top-line growth -- why are shares taking another hit today? Well, despite the encouraging outlook, Sirius XM Radio still has a good chunk of debt that needs to be repaid by next year. Under normal circumstances, the rosy cash flow outlook would have creditors chomping at the bit to refinance Sirius XM at attractive rates, but this is 2008 and credit isn't as loose as the lips on the Stern show.

In short, there's a pot of gold at the end of the rainbow, but bailing investors fear that menacing storm clouds will hurt the company's chances of getting there.

I disagree. As risky as Sirius may be at this point, the potential is too great to ignore. The stock may have hit a new five-year low today, but if Sirius XM Radio can navigate the stormy obstacles of 2009 debt repayments, shiny good stuff awaits at the 2010 finish line.

Here are some other Sirius XM Radio programming notes:

• Sirius in 2010
• This is How Sirius Can Quadruple
• Here's Your Shot to Score Big