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You would think that Sirius XM Radio (Nasdaq: SIRI  ) would be shedding critics as quickly as it's been shedding short-sellers.

The company pulled off its unlikely merger last year. It managed to skirt filing for bankruptcy protection two months ago. And it's also seen its stock pop sevenfold since bottoming out seven weeks ago, as of last night's close. Sirius XM clearly isn't perfect, but one would expect at least a temporary truce from its media foes.

No such luck. BusinessWeek became the latest financial publication to take aim at Sirius XM, with this week's "Serious Threats to Sirius Radio" article.

Disrupting the disruptor
The BusinessWeek article details the gadgets -- both real and forthcoming -- that could put a dent in Sirius XM's subscriber base. Let's go over some of the contenders for ear time:

  • Slacker G2 is a portable media device that uses Wi-Fi to load up on custom-tailored music that can be played back even when an owner is away from the cloud. The music is stored in four- and eight-gigabyte models. The free ad-supported model spits out just an ad or two every hour, or users can pay $47.88 annually for no commercials and the ability to skip through tunes, request songs, and see complete lyrics. The G2 is now on the market, with heavies like (Nasdaq: AMZN  ) and Best Buy (NYSE: BBY  ) selling the four-gig model for less than $200.
  • Major League Baseball, a premium content partner for XM subscribers, now has a deal in place to stream every baseball game this season to iPhone and Wi-Fi-tethered iPod touch owners. At Bat 2009 is just $9.99 for the entire season.
  • Abbee is a $250 device, still in the works, that records music from FM stations, strips out commercials, and stores it on the gadget's hard drive. Is it legal? Won't the wafer-thin playlists on terrestrial radio pose a problem? We'll see, I guess, if Abbee hits the market.
  • On the talk-radio front, Stitcher packages free online podcasts into custom news and talk radio channels. Foneshow delivers streaming audio through an ad-supported model.

BusinessWeek has compiled a collection of gadgets and apps with varying degrees of impressiveness. Of course, it's no easy feat for a single person to carry and use all of them at once. Do you want to carry around an iPhone and a Slacker G2? How quickly do you want to wear down your smartphone's battery, and are you prepared for the entertainment void if you don't have a charge? Is your car wired to play all of these gadgets, or is it down to just you and your earbuds?

There is no denying that the future will throw plenty of challenges at Sirius XM. But it's premature at best -- and immature at worst -- to assume that consumers' migration to digital music will leave no room for a transitionary medium like satellite radio.

Be the Netflix
If there is a model that Sirius XM should be studying, it's none other than Netflix (Nasdaq: NFLX  ) . Critics have been suggesting for years that a shift away from DVDs as a way to watch movies will kill Netflix.

It hasn't yet, has it? Netflix continues to grow, topping 10 million subscribers earlier this year. DVDs are still the company's flagship media rentals, but it is also sleeping with the enemy by aggressively pursuing the digital distribution platform that once posed its biggest threat for obsolescence.

Sirius XM is doing that, too, offering up Web streaming and an iPhone app (due out later this quarter). My only concern here is that Sirius XM is approaching online streaming and smartphone streaming as upcharge opportunities, even for existing subscribers. Meanwhile, Internet radio heavies like Time Warner (NYSE: TWX  ) , CBS (NYSE: CBS  ) , and Pandora are giving such things away.

That's a sharp contrast to the Netflix digital model. The company offers a growing selection of titles at no additional cost to active subscribers, defying the pay-as-you-go approach to digital media pursued by companies such as Amazon and Blockbuster (NYSE: BBI  ) .

Hopefully, Sirius XM will be able to correct this quickly if it sees an uptick in churn and a downtick in subscribers over the next few quarters. It has a longer window to get things right than the market thinks, though it can't ignore the sheer power of the booming smartphone market (which has the critical mass that non-iPod devices lack).

The market doesn't have to cut Sirius XM some slack -- or even some Slacker. But it would be nice to give satellite radio the benefit of the doubt from time to time.

More news than static on Sirius XM:

Best Buy is a Motley Fool Inside Value recommendation., Best Buy, and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Best Buy. Try any of our Foolish newsletters today, free for 30 days.

Longtime Fool contributor Rick Munarriz does not own shares in any of the companies in this story, save for Netflix. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.

Read/Post Comments (15) | Recommend This Article (49)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 01, 2009, at 2:32 PM, BeagleBrigade wrote:

    Please get your facts right. IPOD app is already out.

    You fail to mention the court pending royalty crush that send many if not all of these slacker pandora competitors running to bankruptcy. SiriusXM is the only lot of the bunch with a proven and protected subscription base. Bash away haters.

  • Report this Comment On April 01, 2009, at 3:09 PM, Paco30 wrote:

    About time you guys put something out that didnt slam sirius, I know this must have been hard for the Fool.

  • Report this Comment On April 01, 2009, at 4:04 PM, Cool700 wrote:

    Nice article. I still see no mention of Royalty Fees that devices like Slacker also others must pay. Pandora also will subject to royalty fees.

    I see no mention of Clear Channel 18 Billion in debt and may file bankruptcy.

    SIRIUS XM has a much brighter future than previously thought.

  • Report this Comment On April 01, 2009, at 4:19 PM, cloudofjoy wrote:

    The focus is not just music. I listen to world news, CNN, and Fox. I love the comedy channel on the weekends, and the holiday music during every major holiday season. With all those other systems, they need to be contantly tweaked. With XM, I just change channels. I think that the deal with Howard Stern is a bad one, but they say that they make money form it. I would like to see Sirius stop paying the big bucks to the likes like Howard and concentrate on talk from important people through the world, and live music. Both are not easily dupolicated through anything but a live system. I love the stock ticker on my XM, and I 'm sure there are many who love the sports ticker. let's hope that XM/Sirius has big enough pockets to get past all the bashing and be realized for the jewel they are. I am a paying customer, and have been a paying customer for over 8 years. The stock for SIRI is at bargain basement prices right now because of all the bashing, and short selling. GM deserves some of what it's getting in the stock exchange for not dancing to the new tune. They too might be a bargain price if the latest boot of Wagner scares the rest of the staff onto the path.

  • Report this Comment On April 01, 2009, at 6:57 PM, geoslv wrote:

    A few years from now after trying to cover every square mile of the US with wifi transmitters, they will be saying "satellite is the answer".

  • Report this Comment On April 01, 2009, at 7:21 PM, rsafunding wrote:

    Those other alternatives don't offer the King Of All Media. Enough said.

  • Report this Comment On April 01, 2009, at 10:55 PM, siriradio wrote:

    they are so worried that the people who had the guts to stick it out with sirius will get rich from this stock they are actually posting anything to knock this stock.

  • Report this Comment On April 02, 2009, at 7:30 AM, RadioMikey wrote:

    Please.....Do all of us a favor....hire a "fool" who has at least walked by a mass comm 101 class....forget personal device trinkets and think about ONE giant signal reaching every auto in the US by 2020. Those toys are to siri what 8 tracks were to AM in the 70's. What if.....ONE TV network in the 60's....ONE FM nationwide station since 1970....ONE national cable system since 1980....ONE phone company!!!! Well...there was only one of those....I think it was called AT&'t forced break-up...early 80's...WHY? And who got rich? If I'm not mistaken, Mr. Buffet had a few shares.....

  • Report this Comment On April 02, 2009, at 12:19 PM, mikecart1 wrote:

    Oh wow another SIRI article on MF... z...zzz.....zz.....zzz...

    So much talk about a stock that is neither really good or really bad. Makes you wonder what real investors are even thinking.

  • Report this Comment On April 02, 2009, at 1:48 PM, marcepoo1 wrote:

    They still have ALL their debt to pay PLUS 15% interest on top of that and they only have 1 year to pay a major chunk of that and the rest in 2011. NOTHING has changed for the company-as a matter of fact it's going to get worse. Think about it,they only got 83,000 subs in the 4th qrtr as a COMBINED company. Sirius and XM use to bring in 350,000-400,000 EACH. The 4th qrtr is historically their biggest retail season-wait untill they actually have a net loss of subs in the 1st and 2nd qrtr of this year. How are they going to pay back this new debt to their "White Knight" when the lose subs for the first 2 qrtrs of this year? A lot of you need to draw the line between a good product and a failing company.

  • Report this Comment On April 02, 2009, at 9:06 PM, spanishhorns wrote:

    Motley you change your mind like underware!!!!!! Don't forget as the frist post of comment stated the law suit that will more than likely that knock out the compitition with a strock of a pin..Keep knocking down a good stock, your good at that!!!!

  • Report this Comment On April 03, 2009, at 11:01 AM, cantbefoolish wrote:

    Almost as much as Cramer changes his mind. A few weeks back, Jim Cramer said not to buy BAC when it

    got down to around $3. He said "the common shares are worthless". That's when I loaded up. Then after the shares nearly tripled, he said to buy. Just a bit late to

    the party. That's because he bought into the bank nationalization rumors and got scared. The Fools are no different with SIRI... they bought into the bankruptcy rumors, and now that they know it's not going bankrupt they are starting to change their tune. But better late than never. Howard, Bubba, Ferrall, live sports, news, music, video. Can you get that on the other "free" services?

  • Report this Comment On April 08, 2009, at 12:05 PM, TMFEldrehad wrote:

    The problem with SIRI is that it doesn't seem to realize what business it's in.

    Fundamentally, SIRI is in the distribution business.

    It neither creates, nor controls, the content that it delivers - but rather simply delivers it to its subscribers in a different way (e.g. satellite).

    And as a distribution business, it is horribly inefficient. Satellites are *expensive*!! Wal-mart, a great example of a successful distribution business, is as successful as it is because it delivers products more effeciently than its competitors.

    Yes, SIRI may still be able to muscle its way in to whatever replaces satellite, but its core business, satellite radio, is, in my opinion, doomed. Doomed because, as one commercial for natural gas once noted, "The future belongs to the effecient."

    Something that satellite radio clearly isn't.

  • Report this Comment On April 28, 2009, at 2:37 PM, DiscoFinance wrote:

    Great point! This issue is exposed in a new movie ( FYI: I used coupon code: FREESHIP for free shipping of the DVD.

  • Report this Comment On April 28, 2009, at 2:37 PM, DiscoFinance wrote:

    Great point! This issue is exposed in a new movie ( FYI: I used coupon code: FREESHIP for free shipping of the DVD.

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