When Sirius Satellite Radio was growing subscriber numbers and its stock price, despite also growing losses, CEO Mel Karmazin was a darling of TheStreet.com. But the editors turned on him when things went south and now the financial website has named the merged Sirius XM to its list of “The Worst-Run Companies of 2009.”
Scott Rothbort, who began the annual corporate critique in 2006, bashed Sirius XM as the merger of two poorly managed and capitalized companies. “That this company hasn’t made my list in the past is a major oversight on my part,” he declared. Rothbort assailed the satellite radio company for spending too much to lock up big name talent and relying on the auto industry to handle its sales. “Its date with destiny will be in bankruptcy court,” he declared.
The other two companies making the list this year are Advanced Micro Devices and Jamba Juice.
RBR-TVBR observation: We would have agreed with much of Rothbort’s analysis a year ago, but Sirius XM is a very different company today, following the recapitalization that Karmazin pulled off in February.
With the investment from Liberty Media, Sirius XM avoided a Chapter 11 filing and cleaned up its balance sheet considerably. It’s been producing positive cash flow and, despite declining subscriber numbers in the face of falling auto sales, is on solid financial footing.
We still don’t think subscription satellite radio is ever going to be more than a niche business, but Karmazin deserves lots of credit for making the company viable. Sirius XM hardly deserves the label of one of the “worst run companies” of the year.