Jonathan Takiff: Is satellite sunk? What may happen to Howard Stern & others if Sirius XM goes belly-up

SATELLITE RADIO was one of the highest fliers of the high-tech boom. Now Sirius XM Radio appears on the verge of crashing.

A bankruptcy filing is likely this week. Worst still - for all you Howard Stern fanatics, music freaks and Major League Baseball game listeners out there - a breakup of the business seems a very real possibility.

But all that Sirius XM satellite technology - not to mention those great music programs - won't go to waste. The infrastructure is likely to be repurposed for other media, and the programming might move to new outlets.

20 MILLION LISTENERS CAN BE WRONG: That recently completed merger of rivals XM and Sirius was supposed to strengthen satellite radio. The combined operation claims 20 million subscribers (or more accurately, 20 million activated radios), each generating $7 to $17 a month for 100-plus channels of mostly commercial-free music, news, talk and sports radio.

But in this tough economy, good cash flow isn't enough. Like the rest of over-extended America, Sirius XM is drowning in debt, about $3.25 billion. And lenders have lost faith in the operation, citing its high overhead and the rapidly growing competition for listeners' ears.

Even those casual investors whose emotions led them to buy satellite stock when their pal Stern came on board ain't gonna rally to his cause again.

While XM shares once sold in the high $30s, and Sirius in the teens, the combined brand stock was selling last week for 6 cents a share.

SAVIOUR OR SALVAGER? There is a deep-pocket investor hovering over this bloody business - media mogul Charles Ergen.

Charlie, as he likes to be called, runs Echostar Media Holdings and put the Dish Network satellite TV service in orbit. Over the past few months, this seemingly folksy but seriously steel-eyed guy has been buying up large chunks of Sirius XM debt, including a majority of the $175 million that comes due tomorrow.

Industry watchers say recent reports about Ergen battling to "take over Sirius XM" are missing the big picture and his true agenda.

"I think Charlie doesn't have any desire to be in the satellite radio business," Kaufman Brothers analyst Todd Mitchell told Consumer Electronics Daily last week.

"It's not a good business. It has too high a fixed cost and subscriber acquisition cost, too much churn [subscribers coming and going] and too many close substitutes." (Think 10,000-plus free Internet radio stations, plus Pandora, Slacker, the Rhapsody music subscription service and streaming music channels on the i Phone.)

"There are minimal synergies between the two [satellite radio and TV] and minimal desire on his part to operate and own the service," said Mitchell. "In my mind, he is going after assets on the cheap."

THE BIG PICTURE: That's to say, Ergen hankers for the satellite "birds" and elaborate ground repeater system that deliver Sirius XM signals nationwide.

This hardware (and hard-won operating licenses) is cumulatively worth billions but likely to go for far less in a bankruptcy distress sale.

Ergen's no stranger to this sort of thing. In 2005, he bought the satellite that had beamed the short-lived Voom HD TV service and repurposed the bird to deliver more Dish TV channels - including, for a spell, some Voom HD programming.

If he can grab the Sirius XM satellites, which include a couple (XM-3 and XM-4) that are in very good positions to blanket the 48 contiguous states plus populous chunks of Canada, he could reconfigure the system to carry more local high-definition TV channels to Dish customers.

That's something satellite TV providers have promised the Federal Communications Commission they'd deliver in a few years. He also could up the count of Dish's national HD channels, a boasting point that has proven very important in winning over pay TV subscribers of late. (Just ask DirecTV and Verizon FiOS, which currently have the highest number of full-time HD channels.)

There's also been speculation that Ergen might like to extend on the family-friendly, three-channel Backseat TV Sirius offers for mobile viewing but which is soon to be outflanked by 15 to 20 or more channel services from new rivals AT&T Cruisecast and Qualcomm's MediaFlo.

Or, Echostar's talented engineers might come up with a way (if they haven't already) to repurpose those satellites and ground repeaters to deliver broadband Internet services at very competitive prices.

That project might even get some government funding, as more than $6 billion in broadband technology grants is part of the federal $790 billion economic stimulus bill.

A FRIENDLIER FIRE SALE: Fearing imminent demise with an Echo-star takeover, Sirius XM chief Mel Karmazin (once my general manager at WMMR!) has been in hot pursuit of the only other possible suitor who'd appreciate his operation's assets.

That's John C. Malone, head of the Liberty Media conglomerate that owns the controlling interest in DirecTV and knows how to calculate the true "worth" (several hundred bucks) of each hard-won customer, as well as the value of all that cool technology.

Archrivals Malone and Ergen have fought bidding wars before. They seem to enjoy driving up the price that the other has to pay.

This time it looks like Ergen is holding the better cards - all that discounted Sirius XM debt he'd make Malone pay dearly to wipe out.

CAN THE SHOWS GO ON? So what happens to Stern, NASCAR Radio, Major League Baseball games, the Bob Dylan and Tom Petty shows, Siriusly Sinatra, Margaritaville Radio and all the other Sirius XM Radio goodies ?

If Sirius XM goes into bankruptcy and somehow holds Ergen at bay, it might get its expensive talent (like $80-million-a-year-man Stern) and sports franchises to renegotiate contracts. And carmakers might reduce the hefty chunk of subscription money they now claim for putting satellite radios into their vehicles.

Another scenario suggests Stern might quit the talk-show business, as he's threatened to do. Or, he might be lured back to commercial broadcast radio. He couldn't curse, but let's face it, he had much greater impact on the general populace there.

Radio industry analyst Sean Ross of Edison Research argues that the national satellite radio channels listeners have learned to love will still exist five years from now, delivered by another means - maybe via the "Infinite Dial" Internet or as digitally broadcast HD Radio channels.

"Some Sirius XM brands have national equity, and smart broadcasters would find a way to either buy the intellectual property or at least provide a successor to Coffee House or Faction - the most durable experiment in rap and rock together," opined Ross.

"For that matter, there's still not a CHR [contemporary hits radio] in America like Sirius Hits 1, and I, for one, would want them represented somewhere on the Infinite Dial."

As for Stern, Ross argued, "Any Stern solution would have to include an angle for listeners who were used to hearing him at 6 p.m., or in a market where he hadn't been on the radio before." *

Send e-mail to takiffj@phillynews.com.