For the quarter ended Dec. 31, Sirius XM reported a profit of $156.2 million, or two cents a share, up from $71.3 million, or one cent a share, a year earlier.

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The Federal Communications Commission unanimously approved a technical plan Wednesday that would allow AT&T to use some spectrum it acquired years ago but was unable to use because of concerns it would knock out Sirius’s satellite radio service. The plan would allow AT&T to use some of the so-called WCS spectrum licenses.

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The good: The satellite radio company posted one of its strongest third quarters ever, reporting $104 million in net income, or 2 cents a share, on revenue of $763 million — up 6 percent from last year. And that was a penny better than Wall Street predictions.

The bad: Sirius added just 334,000 new subscribers in the third quarter, well below analyst’s expectations of as many as 400,000.

So, a significant shortfall. That said, it doesn’t seem to have caused Sirius to alter its subscriber guidance at all. During the last quarter, it raised it to 1.6 million net adds, and during a conference call Tuesday, CEO Mel Karmazin said that forecast still holds.

“We’ve added 1.16 million new net subscribers so far this year compared to 1.09 million in the first 9 months of 2010, a 6 percent increase over last year,” Karmazin said. “And our second quarter — on our second quarter earnings call, we raised our subscriber guidance for the year to 1.6 million net adds, which we expect to meet. This means, we anticipate adding about 440,000 net subscribers in the fourth quarter, up about 34 percent from subscriber growth in the fourth quarter of 2010.”

In other words, subscribership remains at an all-time high and the growth trend is strong enough that Karmazin feels the company can still hit its target.

The company’s satellite radio service is pre-installed in about 60 percent of cars sold in the United States, and historically its take rate has been upward of 44 percent. So when J.D Power says that light-vehicle sales for January will hit 794,500 units, 14 percent higher than January 2010, that’s good news for Sirius. Even better is this: The research firm is raising its retail sales forecast for the entire year. Not by much–just to 10.5 million units from 10.4 million units.

But the trend is upward, and J.D. Power and Associates’ Jeff Schuster says there’s room for even more upside. “Optimism is increasing for the auto industry following a stronger outlook for the economy,” he explained. “GDP growth is expected to be in the 3 percent to 3.2 percent range for 2011. As the macro drivers continue to improve and credit availability increases, further upside potential remains.”

In other words, 2011 is shaping up to be a good year for Sirius XM.

Shares in the satellite radio broadcaster hit a new 52-week high Wednesday–$1.44. And while that’s a fraction of their all-time high, it still means they’re up more than 130 percent for the year.

Which is damn impressive for a company that was slapped with a Nasdaq minimum-bid notice a little over a year ago.

And there’s more good news on the way. Sirius (SIRI) said Wednesday that it added more than 334,000 Net subscribers in its third quarter. That’s more than triple its gain of a year ago. Sirius now has about 19.9 million subscribers and hopes to end the year with approximately 20.1 million.

Amazing what a recovery in consumer spending and auto sales can do, isn’t it?

Just about this time a year ago, Sirius XM Radio was up a certain creek with nary a paddle in sight. Its shares were trading at around 35 cents, it was hemorrhaging money, and anemic car sales had just led it to post its first-ever decline in net subscriber additions. The company ended its June 2009 quarter with 18.6 million subscribers–up 3.5 percent from a year earlier but down 404,000 subscribers from the preceding quarter. And though it added 1,338,961 new customers, Sirius lost 1,743,383.

Which makes the satellite-radio operator’s announcement of a nice spike in subscribership today all the more sweet.

Sirius (SIRI) said this morning that it added 583,000 net subscribers in the second quarter, bringing total subscribership to 19,524,448–a new record. And with that as a backdrop, the company raised its forecast for net subscriber additions for the third time, boosting this year’s projected growth to 1.1 million subscribers from 750,000.

“Our subscriber results mark the best quarter of gross additions, deactivations and net additions since the merger of Sirius and XM in July 2008,” CEO Mel Karmazin said in a statement. “The strong execution in both adding subscribers and retaining them resulted in our record-high 19.5 million subscriber milestone, despite continued economic uncertainty. The further improvement in our guidance reflects the attractiveness of satellite radio but maintains a cautious outlook for continued improvement in the economy.”

Analysts polled by Thomson Reuters had expected the company to break even on revenue of $671 million. Sirius added 171,441 net subscribers during the period and reiterated its view that it expects to add more than 500,000 subscribers this year.

With quarterly net subscriber additions of 171,441, Sirius (SIRI) ended March with 18,944,199 subscribers. Quite an improvement over the year-ago quarter, when it lost 404,422 subscribers.

“Continued positive subscriber growth, double-digit growth in revenue, and a sharp focus on costs resulted in the highest quarterly adjusted operating income in the company’s history,” Sirius CEO Mel Karmazin said in a statement. “The continuing recovery of the automotive sector and expanding signs of increased consumer spending are encouraging signs for the company’s growth prospects.”

Still more good news for the company, which last week avoided delisting from Nasdaq. That said, at $1.14, Sirius shares are trading down 7.32 percent this morning. Evidently, the revenue miss didn’t go over too well with investors.

The FCC is proposing to make it easier for the winners of a 1997 airwaves auction to use those airwaves for mobile wireless Internet and phone use. Until now, a dispute about power levels and potential interference has meant the companies were limited in how they could use the airwaves they own.

The FCC is scheduled to vote on the proposal in May as part of a broader effort to devote more airwaves for wireless Internet services. A FCC spokeswoman declined to comment on the specifics of the proposal.

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An ominous threat, but one not likely to be carried out. Sirius said back in February that it would appeal such a delisting notice and seek an extension from Nasdaq, and that’s exactly what the company is doing.

In a press release announcing the notice, Sirius said it will request a hearing before a Nasdaq Listing Qualifications Panel and petition it for a continued listing pending its return to compliance (SatWaves has a good overview of how this will play out). And the company seems quite confident it will get the hearing.

“SIRIUS XM is one of the most liquid securities on The NASDAQ Global Select Market,” Sirius CEO Mel Karmazin said in a statement. “We have a large investor base consisting of both individual and prominent institutional stockholders; and our equity capitalization is greater than approximately 92 percent of the companies listed on The NASDAQ Global Select Market. We are committed to remaining listed on The NASDAQ Global Select Market.”

Frankly, with over 3.7 billion shares outstanding, there’s little reason to fear Sirius will be booted from Nasdaq. And if you do harbor such fears, consider this: A few days ago the exchange added Sirius to its Nasdaq Q-50 Index, which, according to the release announcing it, “is designed to track the performance of the 50 securities that are next in line to replace the securities currently included in the NASDAQ-100 Index.” If Nasdaq were truly preparing to delist Sirius, why would it bother adding the company to the Q-50?

Why? Well, sentiment about the company and its prospects are clearly improving now that it has its finances in order. The unexpected increase in subscriber growth the company recently reported is obviously helping as well. Also presumably fueling the rally is increasing confidence that Howard Stern will stick with Sirius, rather than bail for terrestrial radio when his contract expires next year. Beyond that, I’m not entirely sure.

In any event, it seems there’s no longer a need for a reverse stock split to push Sirius above the $1 per share minimum for Nasdaq trading.

At a roundtable event this morning at The Paley Center for Media, Sirius (SIRI) CEO Mel Karmazin was asked that very question. Does he worry about Stern leaving for an outfit–like Pandora–looking to avail itself of the same “Stern Effect” that spiked Sirius’s subscriber rolls?

Karmazin acknowledged that while it’s a possibility, he’s dubious. “I think it’s great to be content today,” he said. “In this world of fragmentation, great content prevails. Howard Stern is great content. Howard would be sought after by anyone. He’s a great talent. Having said that, we would like him to stay with us and we are optimistic that he will continue to do so.”

It’s worth noting that Karmazin, while he does view Internet radio as a competitor, doesn’t seem too worried by it. “There are a lot of choices for audio content,” he remarked. “And obviously, the Internet is one of them. But the question is who’s going to the the largest player? And I think that’s our spot to lose. I believe we will be the most profitable of audio content choices.”

Further Notes From the Event

On Amazon’s Kindle:
I am addicted to my Kindle. I saw Jeff Bezos in Sun Valley recently [and] I told him I have personally bought a dozen to give as gifts.

On Comcast/NBC Universal:
I dont’ see anything anticompetitive about what Comcast is doing–the review should take a few weeks. Either you accept the fact that there’s a lot of competition out there, or you don’t….But I do think this thing is going to drag out like it did for us. So far there are only two congressional hearings on Comcast/NBC. We had four–there were fewer for the Exxon Valdez.

On In-Car Internet and the Apple iPod:
I think the Internet will absolutely be in the car and we think it will be a good competitor. You know we’ve been competing with iPods for a long time. And we look at how sat radio performs in the vehicles where people have the ability to put an iPod jack in and we don’t see much of a difference. We believe them to be complementary.

Stern said today that he has been approached by several “regular” radio execs about returning to his original turf when his five-year $500 million contract with Sirius XM (SIRI) expires.

“I actually have an offer,” Stern said, according to a report on The Wrap. “Well, not a bona fide offer, but people have been making them.”

Stern’s remarks today follow a public call-and-response negotiation with Sirius CEO Mel Karmazin that began last fall. “It will start with Howard feeling that he is working too hard and doing too many shows and not making enough money,” Karmazin told attendees of the Reuters Media Summit in November. “Our side would say, ‘We want you to do more, and get less money.’ The hope would be that we would come out with Howard staying with our service.”

Stern, of course, is angling for the exact opposite. “I don’t think I’m going to be re-signing. I know exactly what I want to do here,” he said last year, referring to a less busy schedule. “And I don’t know if it would interest [Sirius.]“

Given the size of Stern’s audience and the availability of much of Sirius’s other content on the Internet, my guess is that it would.

Consider this: For the satellite radio company’s current quarter, RBC Capital Markets expected Sirius (SIRI) to add 49,000 new subscribers. At the time it was issued, that projection was described as “cautiously optimistic.” And it was…far too cautious. Because after market close Tuesday, Sirius said it added 257,028 net new subscribers in the fourth quarter–the most since the third quarter of 2008.

The company ended the year with 18,772,758 subscribers. Now that’s not the 20.6 million for which CEO Mel Karmazin had been hoping, but it’s impressive nonetheless and suggests that Sirius may indeed be turning the corner. Further evidence: The company also said it will report more than $100 million in free cash flow for the full year. This, after posting negative free cash flow of $552 million in 2008.

Karmazin credits some of his sales success to a new ad campaign. I guess he has to say that inasmuch as he approved the campaign, but I have a hard time believing it. I’ve seen this ad several times, but until I read this interview, I had no idea it was for Sirius (SIRI):

Meanwhile, maybe it’s just self-interest/projection, but I was struck by the fact that Karmazin seemed to go out of his way to tell the Reuters staff how little he thought of it.

Or maybe he was talking about journalists in general: After being greeted by a dozen Reuters reporters at the company’s Global Media Summit,” Karmazin declared that if he was running the news service, only one of them would be employed.

Here’s Reuters media reporter Robert MacMillan’s account of the exchange, via Twitter:

But will they actually pay up? Here, the conventional wisdom is not so helpful. Nor are studies predicting consumer behavior. To wit:

• Nearly 50 percent of U.S. Web users are willing to pay for online news, says the Boston Consulting Group.
• Not a chance, says Forrester (FORR): Try 20 percent.

For what it’s worth, my money’s on the Forrester number, or one that’s even lower. My gut says people love consuming news, but only in the broadest sense–Obama doesn’t really Twitter! What was Belichick thinking?–and that sort of stuff, which appeals to a very large audience, will always be free, and you’ll get it from Google (GOOG) or something like Yahoo (YHOO). Which leaves you with a small audience willing to pay for everything else.

But! We should note that people are indeed paying for “content” right now. In fact, they’re paying for a lot of it: $115 a month, up seven percent from last year, says NPD Group. The breakdown:

As of August 2009, 81 percent of U.S. households subscribed to a television service (satellite TV, basic/premium cable, or fiber-optic television service). A similar percentage of households (76 percent) paid for Internet subscriptions. Seventeen percent subscribed to an online music service or satellite radio; and 14 percent subscribed to online gaming subscription services.

More traditional forms of entertainment subscriptions, however, did not fare so well. The number of people subscribing to newspapers fell by 2 percentage points to reach 29 percent in August 2009. Forty-one percent of consumers subscribed to magazines this year, compared to 43 percent who did so last year.

According to NPD, an influx of new smartphone owners has led to an increase in mobile data-plan subscriptions: 9 percent of U.S. consumers had mobile data subscriptions this year, versus just 6 percent last year. Fourteen percent of consumers subscribed to a home-video subscription service, like Netflix, this year, which is 2 percentage points higher than last year.

Ah, see? Problem solved: If you want Americans to pony up for stuff on the Web, just link it to something they’re already paying for, like their cable or Internet subscription.

This is what smart guys like John Malone have been talking about for a while, and it’s also the core of the strategy behind the Time Warner (TWX)/Comcast (CMCSA)/everyone else “TV Everywhere” gambit. But it’s also what many people have been trying to do for a very long time–ask the music industry–with limited success.

The Open Book Alliance formally launched the manifesto this past week with which it’s challenging Google’s settlement with authors and publishers. The organization now has a Web site and quite an array of allies–which include, of course, Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN). And as if Google doesn’t have enough on its plate, turns out that all along, Microsoft has been holding regular “Screw Google” meetings, the bastards. Uh, I thought that’s what people pay good money to learn in Business School. On a happier note, Howard Stern fans everywhere were happy to learn that Sirius XM (SIRI) has debuted a device that can turn an iPhone or iPod touch into a full-fledged satellite radio.

Over in Personal Technology, Walt reviewed Snow Leopard and found it to be an improvement on its predecessor, but with a lot of the upgrades under the hood invisible to most users. Not the typical object of desire we’re trained to expect out of Apple. In Mossberg’s Mailbox, Walt answers reader email about choosing a vendor to buy a computer online and setting parental controls in Firefox. In The Mossberg Solution, Katie Boehret explores the trials and tribulations of BlackBerry and iPhone users switching one for the other.

More next week.

The Open Book Alliance formally launched the manifesto this past week with which it’s challenging Google’s settlement with authors and publishers. The organization now has a Web site and quite an array of allies–which include, of course, Microsoft (MSFT), Yahoo (YHOO) and Amazon (AMZN). And as if Google doesn’t have enough on its plate, turns out that all along, Microsoft has been holding regular “Screw Google” meetings, the bastards. Uh, I thought that’s what people pay good money to learn in Business School. On a happier note, Howard Stern fans everywhere were happy to learn that Sirius XM (SIRI) has debuted a device that can turn an iPhone or iPod touch into a full-fledged satellite radio.

Over in Personal Technology, Walt reviewed Snow Leopard and found it to be an improvement on its predecessor, but with a lot of the upgrades under the hood invisible to most users. Not the typical object of desire we’re trained to expect out of Apple. In Mossberg’s Mailbox, Walt answers reader email about choosing a vendor to buy a computer online and setting parental controls in Firefox. In The Mossberg Solution, Katie Boehret explores the trials and tribulations of BlackBerry and iPhone users switching one for the other.

More next week.

Dubbed SkyDock, the $119.99 peripheral uses iPhone OS 3′s support for third-party hardware to transform Apple (AAPL) handsets into full-fledged satellite radios. Designed to run off a car’s cigarette power adapter, the SkyDock charges your iPhone while you listen to it. It works in concert with the Sirius/XM iPhone app and supports the ability to tag songs for download from iTunes. Better yet, it gives users access to all XM and”The Best of SIRIUS” channels, even those the company infamously excludes from its online feed, like Howard Stern, MLB Play-by-Play and NFL Play-by-Play.

A wise move for Sirius and one that will no doubt go over quite well with folks who are interested in listening to its programming, but unwilling to pay for a full sat-radio upgrade to do so. No word yet on a firm release date. The device has, however, been granted preliminary approval by the FCC which is still evaluating it.

Below, the official release:

SIRIUS XM RADIO INTRODUCES THE FIRST DEVICE TO RECEIVE LIVE SATELLITE RADIO CONTROLLED BY THE iPOD TOUCH AND iPHONE

XM SkyDock™ allows customers to enjoy live XM and “The Best of SIRIUS” in their vehicles using the iPod touch or iPhone

NEW YORK–August 26, 2009–SIRIUS XM Radio (NASDAQ: SIRI) today introduced XM SkyDock, the first satellite radio controlled by an iPod touch or iPhone. The XM SkyDock is also one of the first products to take advantage of the new hardware control capabilities of iPhone OS 3.0.

Designed for easy use through the existing vehicle audio system, SkyDock has a built-in XM tuner controlled by a free App that users download from the App Store. The App allows control of the XM tuner using the capabilities of the iPod touch or iPhone Multi-Touch user interface. SkyDock will also charge iPod touch and iPhone devices while listening to live satellite radio.

“XM SkyDock will allow millions of users to add live SIRIUS XM Radio capability to their iPod touch or iPhone while in their vehicle,” said Bob Law, Group Vice President and General Manager, After Market Division, SIRIUS XM Radio. “XM SkyDock makes their favorite programming from XM and ‘The Best of SIRIUS’ available to iPod touch and iPhone users anywhere they drive, coast to coast.”

Listeners can use their iPod touch and iPhone to listen to all their favorite sports, talk, news, entertainment and commercial-free music programming, including Oprah Radio, MLB Home Plate, the PGA TOUR Network, Opie & Anthony, Bob Edwards, Jamie Foxx and Blue Collar Comedy. For the first time, subscribers can also listen to the complete “Best of SIRIUS” package, including Howard Stern and his two 24/7 channels, Martha Stewart Living Radio, SIRIUS NASCAR Radio, sports play-by-play and the Playboy Radio channel, all controlled by the iPod touch and iPhone.

Listeners can also tag songs they hear on XM’s music channels for later purchase from the iTunes Store–including songs on XM’s 24/7 artist branded commercial-free channels such as Jimmy Buffett’s Radio Margaritaville, Elvis Radio, Eminem’s Shade 45, The Grateful Dead Channel, B.B. King’s Bluesville, Willie Nelson’s Willie’s Place, Siriusly Sinatra and Bruce Springsteen’s E Street Radio. Other features include game alerts and sports ticker, artist and song alerts as well as a stock ticker.

The XM SkyDock is a perfect companion to the SIRIUS XM Premium Online App, which allows subscribers to receive SIRIUS XM’s Premium Internet service on their iPhone and iPod touch when they are out of the vehicle and on-the-go, at home, or at the office.

XM SkyDock comes with SIRIUS XM’s patent-pending PowerConnect™ technology, which simplifies Do-It-Yourself vehicle installation, working through the existing vehicle radio and making it easy to move from vehicle to vehicle. An Aux In Cable is a standard in-box accessory to facilitate Aux In connections in vehicles with Aux In capability. SkyDock’s flexible stalk optimizes the iPod touch or iPhone placement in the vehicle. Customers can view the touch-screen interface in portrait or landscape modes. Accessories include Magnetic Mount Antenna and spacers to accommodate the various iPod touch and iPhone product generations.

XM SkyDock is compatible with iPod touch (1st generation), iPod touch (2nd generation), iPhone, iPhone 3G and iPhone 3GS. All models require iPhone OS 3.0 or later.

XM SkyDock will be sold in stores and will also be available at www.shop.xmradio.com with an MSRP $119.99 in fall 2009. The XM SkyDock App will be available at the same time.

This device has been granted preliminary approval by the Federal Communications Commission but is still undergoing evaluation by the Commission.

For more information on XM, please visit www.xmradio.com.

The company’s shares spiked, rising about 20 percent to 54 cents on news of the government’s expanded “Cash for Clunkers” program and the positive impact it should have on new car sales and, by extension, new Sirius subscriptions. That analysts had been predicting a second-quarter loss for the satellite radio company, along with the loss of thousands of subscribers, did little to temper enthusiasm. Though it seems to have done so today, now that those predictions have proven true.

Reporting second-quarter earnings this morning, Sirius posted a net loss of $157.3 million, or four cents a share on revenue that rose one percent to $590.8 million. Excluding one-time charges, though, Sirius lost only a penny a share, matching analyst estimates.

As analysts had foreseen, subscriber count slipped again. Sirius ended the quarter with 18.4 million subscribers–a one percent drop from a year ago. All told, the company lost 185,999 net subscribers during the period. And that’s prior to the addition of a $2 royalty fee.

Looking ahead, the satellite radio operator raised its outlook for the year, cautiously optimistic that the car sales that drive subscriptions will pick up in the second half of this year.

“Based on these results we are increasing guidance again and expect to exceed over $400 million in adjusted income from operations during 2009,” CEO Mel Karmazin said in an earnings release. “Growing our revenue in the face of broad declines in the advertising and automotive markets is a remarkable accomplishment, and we are well positioned for a rebound in auto sales.”

Shares in Sirius are trading down 7.41 percent at 50 cents as I write this, which is still 10 times their 52 week low. And, to be fair, they are up almost 10 cents in last 10 trading days and up about 320 percent year-to-date.

In a filing with the Securities and Exchange Commission, Sirius XM said it will raise Karmazin’s base salary to $1.5 million from $1.25 million beginning on Jan. 1, 2010, and grant him an option to purchase 120 million shares at an exercise price of 43 cents a share. His reward for steering the company clear of bankruptcy after driving it right up to its very edge, I suppose.

Sirius (SIRI) investors who’ve seen their stock plunge to 46 cents from $2 a share can be forgiven for questioning the wisdom of such a move and wondering if perhaps there wasn’t a better use for a quarter of a million dollars at a time when the company is buried in debt. But there’s nothing much to be done about it now. Suffice it to say, the odds of Karmazin being forced out at this point are likely pretty slim.

PREVIOUSLY:

• Fee Increase Coming for Sirius XM Subscribers [Internal Doc]
• Sirius Founder: You’re 10 Years Too Late, Karmazin
• Call Me Mel “Save-My-Own-Keister” Karmazin
• Sirius-EchoStar-Liberty: Ménage-à-Blah
• Sirius: Give Me Liberty or Give Me Ergen
• A Bankruptcy Filing, Mel? Surely You Can’t Be Sirius…
• Sirius Rolls Out New 24 Hour Investor Keening Channel
• Sirius Debt Problems? Call EchoStar! No Upfront Fees!
• Sirius XM: The Beginning of the End or the End of the Beginning?
• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”

But the same cannot be said for Martine Rothblatt, the entrepreneur who founded Sirius (SIRI) nearly 20 years ago. She feels Sirius’s chances for real success may have died years ago–dealt a mortal blow by the FCC, which delayed its launch, depriving it of the competitive advantage it might have had over MP3 players like the iPod and later free Internet radio services.

“There has been a huge growth in terrestrial alternatives,” Rothblatt told Fortune. “As we move from third-generation to fourth-generation cellular, 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. Technologies have their ideal times and places, and in my opinion the better time for satellite radio was 10 years ago.”

So much for that first-mover advantage…

A grim assessment for Sirius, which had just seemed to be getting an edge on its daunting troubles. But Rothblatt has a point. Internet radio is gaining traction and once cellular networks evolve to the point where they can deliver it to cars and other devices, how can satellite compete? Howard Stern’s going to retire sooner or later…

PREVIOUSLY:

• Sirius to Shareholders: Put Down the Mylanta
• Call Me Mel “Save-My-Own-Keister” Karmazin
• Sirius-EchoStar-Liberty: Ménage-à-Blah
• Sirius: Give Me Liberty or Give Me Ergen
• A Bankruptcy Filing, Mel? Surely You Can’t Be Sirius…
• Sirius Rolls Out New 24 Hour Investor Keening Channel
• Sirius Debt Problems? Call EchoStar! No Upfront Fees!
• Sirius XM: The Beginning of the End or the End of the Beginning?
• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”

But the same cannot be said for Martine Rothblatt, the entrepreneur who founded Sirius (SIRI) nearly 20 years ago. She feels Sirius’s chances for real success may have died years ago–dealt a mortal blow by the FCC, which delayed its launch, depriving it of the competitive advantage it might have had over MP3 players like the iPod and later free Internet radio services.

“There has been a huge growth in terrestrial alternatives,” Rothblatt told Fortune. “As we move from third-generation to fourth-generation cellular, 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. Technologies have their ideal times and places, and in my opinion the better time for satellite radio was 10 years ago.”

So much for that first-mover advantage…

A grim assessment for Sirius, which had just seemed to be getting an edge on its daunting troubles. But Rothblatt has a point. Internet radio is gaining traction and once cellular networks evolve to the point where they can deliver it to cars and other devices, how can satellite compete? Howard Stern’s going to retire sooner or later…

PREVIOUSLY:

• Sirius to Shareholders: Put Down the Mylanta
• Call Me Mel “Save-My-Own-Keister” Karmazin
• Sirius-EchoStar-Liberty: Ménage-à-Blah
• Sirius: Give Me Liberty or Give Me Ergen
• A Bankruptcy Filing, Mel? Surely You Can’t Be Sirius…
• Sirius Rolls Out New 24 Hour Investor Keening Channel
• Sirius Debt Problems? Call EchoStar! No Upfront Fees!
• Sirius XM: The Beginning of the End or the End of the Beginning?
• Your Report Card Is Your Stock Price? Guess Sirius Is Making Straight $.13’s…
• Trade You 77 shares of SIRI for 1 Month of “Sirius Everything”

A wise move, since Sirius needs to drive sales and consumers are cutting back on the purchase of new cars, one of the company’s main sources of new subscribers. Indeed, in its latest quarter, Sirius said net subscriber growth slowed markedly, falling to 82,900 from 1.1 million.

Good thing too, because that uncertainty was pretty worrisome. Buried in the company’s recent Notification of Late Filing with the SEC, along with the now standard warning about the souring economy’s effect on business, was this little disclosure:

Management has not yet completed its evaluation as to whether substantial doubt exists relative to the Company’s ability to continue as a going concern for a reasonable period of time. A significant element of that evaluation relates to uncertainties associated with funding of amounts stipulated in the aforementioned Investment Agreements. These uncertainties may not be resolved by the time the Company files its Form 10-K with the Securities and Exchange Commission. In the event such uncertainties remain unresolved, management anticipates that KPMG LLP’s auditors’ report relative to the Company’s 2008 consolidated financial statements will contain an explanatory paragraph indicating substantial doubt about the Company’s ability to continue as a going concern.

In addition to resulting in termination of further funding pursuant to the Investment Agreements, the inclusion of such a paragraph by KPMG LLP would result in a default under certain indebtedness of the Company, XM Holdings and XM Satellite Radio Inc. (“XM Inc.”) which defaults, if not cured or waived prior to the expiration of the applicable grace period, would result in an event of default under other indebtedness of the Company, XM Holdings and XM Inc. Such events of default, if they occur, provide the lenders the right to demand all amounts due under the respective agreements immediately due and payable.

What this means is that if KPMG’s assessment of the company is that it’s not able to continue as a “going concern” and the company had not at that time resolved its debt issues, it would automatically default. Presumably, now that Sirius (SIRI) has closed the Liberty (LINTA) deal, that’s no longer a possibility. Looming crisis averted.