Few CEOs watch their stocks crater by 95% in a calendar year and live to tell the tale, but Sirius XM Radio's (NASDAQ:SIRI) Mel Karmazin is still standing.

Karmazin has been spared the brunt of shareholder venom, since loyal investors don't necessarily blame him for the satellite radio provider's predicament. It's a whole lot easier to blame the FCC. Regulators took a year and a half to approve the merger between Sirius and XM, releasing the new company into the wild just months before the first of many costly debt-refinancing hurdles.

Unfortunately for Karmazin, he did blow last month's channel shakeup, and this time, there is no scapegoat.

Picking at last month's scab again
Killing off many niche music channels, and replacing them with somewhat similar content, may have been a shrewd cost-shaving move. But is it coming at a price?

"We've gotten hundreds of people who hated it and claimed they were going to cancel," Karmazin said at last week's Reuters Media Summit, as recounted in the Reuters MediaFile blog. "If we took the most aggressive number of people who cancelled, and we take that (away) the $120 a year (they pay) it doesn't get to a $1 million as compared to the significant amount of cost savings as a company that needs to make money."

That sounds to me like a flawed argument. For starters, cyberspace is littered with accounts from subscribers who called to cancel, but were offered three free months of service if they reconsidered. For a cash flow-hungry company like Sirius XM, that could be a significant loss. Where is the math on that? How many called and were swayed by a move that will cost the company on the top line?

More importantly, why do we assume that the knee-jerk reactionaries were the only customers irked by the move? Others who lost their favorite channels are probably just waiting until their subscriptions run out before bolting. We may never know the full impact of this move, but it's likely to be far more than the $1 million annually in immediate cancellations that Karmazin is reporting. If churn inches higher and conversion rates suffer over the next few quarters, will Karmazin simply blame the economy, or will he concede that last month's move played an alienating role?

Arrogance at the $0.15-a-share mark
There's a brash cockiness in Karmazin's tone that worries me. "We've analyzed all the cancellations since the rationalization," he explains. "It's hard for me to understand what they don't like. We're going to pick the best channels."

Karmazin is an old-school radio guy, with terrestrial-radio experience from when Viacom (NYSE:VIA) ran radio giant CBS (NYSE:CBS). At first, I assumed that was a blessing. After suffering through the endlessly identical playlists of commercial-laden FM and AM radio, I hoped Karmazin would relish the open-ended opportunity to program dozens of niche-specific stations.

However, instead of appreciating that different listeners have different tastes, even within the same genre of music, he's apparently assuming that the choice between XM and Sirius is basically down to picking between Howard Stern and Oprah Winfrey, or NFL vs. MLB. It's not. If Sirius and XM are identical in musical variety, where will the consumer turn?

There are certainly plenty of choices out there. Even automaker partners like Ford (NYSE:F) and General Motors (NYSE:GM) are stuffing CD-ripping hard drives into their latest models. Even more car manufacturers are including audio input jacks into their receivers, perfect for SanDisk (NASDAQ:SNDK) digital media players or the Internet radio-streaming prowess of Web-surfing phones like Apple's (NASDAQ:AAPL) iPhone.

In the end, the customers unhappy with Sirius XM's pared-down lineup are just another round of scapegoats for Karmazin to blame if the current quarter's numbers prove sloppy. Sooner or later, the Teflon will wear out, and there will be fewer forces to take the fall.

I don’t think Karmazin should go. Last month's mistake was his first real blunder. However, for a guy running a company with a sobering $3.4 billion in total debt, I doubt Mr. Market will give him too many more chances to slip up, with shareholders and creditors watching intently.

Ease up on the battering rams. Blow out the torches. Lay down the pitchforks. But don't stray too far from where you left them. Even though I predict that Sirius XM will make it through next year's challenges in one piece, Karmazin will have his hands full as he defends his company against creditors and critics.

More news than static on Sirius XM:

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.