- Sirius Founder Says Company Won't Be Able To Compete

Rory Maher
Monday, March 16, 2009; 5:07 PM

Few would argue that Sirius (NSDQ: SIRI) is in good shape?the company has massive debt obligations and is struggling with a drop in new subscribers?but its founder is more pessimistic than most about the company's future. In a long interview with Fortune Magazine, Martine Rothblatt, who started the company in 1990, said she thinks it won't be able to compete with online services like internet radio once the latter become available in cars and other devices.

Rothblatt told the magazine "there's going to be ever more bandwidth available to distribute content totally via terrestrial cellular infrastructure. And that will leave fewer and fewer unique market attributes to satellite radio." She believes as cellular networks evolve, there will be more room for streaming services like Pandora Radio or AOL (NYSE: TWX) Radio, and that people will be able to hear them, too, on car stereos and cellphones.

Rothblatt (she was a male when she founded Sirius; 'Martin' underwent a sex change in 1994) believes satellite radio missed the ideal window of opportunity when drawn-out discussions with the FCC over broadcasting licenses caused the service's launch to be delayed until 2002?she had anticipated the launch happening in the mid-to-late nineties. Sirius CEO Mel Karmazin, of course, sees the company's prospects differently. In the same Fortune story, he says that despite the increased competition from internet radio, Sirius will be fine because it introduces listeners to new music that may not be in their iPod libraries and has exclusive content from sources like Howard Stern and CNN.

Sirius has been a fixture in the news the last couple months, with the drama surrounding Karmazin's attempts to deal with its debt and Liberty's John Malone decision to throw the company a lifeline by investing in the company. Last week, Sirius announced it had narrowed its net loss in the fourth quarter of 2008 but added many fewer subscribers than the previous year's quarter, raising concerns about its vulnerability to the weak economy. In a telling move, particularly in light of Rothblatt's comments, Sirius announced last week that it would be including its service as an application on the iPhone, which will allow iPhone users to stream Sirius or XM via 3G wireless.


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