Radio: Sirius XM – What may save you may also kill you.

Welcome to Mel’s Hell.

Did you ever – even in your wildest dreams - imagine seeing Mel Karmazin, hat in hand, pitching and wooing his own Sirius XM stable, asking for their loyalty at his time of need?

Money changes everything.

For the past couple of weeks, Mel’s been entreating for concessions and pecuniary breaks from Oprah, Martha Stewart, Major League Baseball, and the NFL, just to name a few. The MLB deal runs $60 million per year; Oprah’s at $55 mil, the NFL’s $23 mil, and Martha weighs in at $7.5 mil.

The pro sports teams offer subscription on-line audio and video alternatives in addition to their satellite broadcasts.

Mel already stuck out in his first time at bat with MLB last week. MLB COO Tim Bronsan, who’s responsible for all media negotiations told Business Week, “We have a binding agreement that we intend to honor.” The MLB deal runs through 2015.

There was a time when Mel’s casino dice eyes dared you to trust them. They told you straight out, play me long enough and you’ll lose. His smile was always more for him than it was for you. To Mel, the meek would never inherit the earth; only the small piece they fertilized.

That’s why it's so odd to see him painted as a victim.

Oprah, whose Sirius XM deal is up this fall, could take her channel and move to an on-line subscription service, which would provide Internet radio the break it needs to develop into a major player and move stand-alone Internet radio from its 33-million listener cult status to hundreds-of-millions critical mass. Most likely she would form her own syndication company for independent terrestrial radio distribution with Internet radio options.

There is, of course, Howard Stern’s five year $100 mil per year contract. Signing Howard put a new face on Sirius debt. It was the stimulus package Sirius needed to gain ground from its poor number two to XM showing.

Sirius even got a year’s supply of free plugs from his former company, CBS Radio – known as Infinity while Mel was there – when Howard did his daily rant on evils of CBS and other terrestrial radio chains, while promoting his future-cast on Sirius.

And what a coincidence - Mel ended up at Sirius, too. Who would’ve (or wouldn’t have) thought?

2006 was the year Sirius shelled out that $500 million for Howard in an effort to lure a large share of his 10 to 12 million predominantly adult male terrestrial audience to satellite. In 2007, A Bridge Ratings research study estimated that 2.5 million of that 10 to 12 million were Stern’s most loyal listeners. Of that 2.5 million, it’s estimated that Howard brought in 1.3 million new subscribers to Sirius.

Be assured that Howard leaving Sirius is not one of Mel’s problems. Unlike the rest of Sirius XM stable, there’s a tight, deep, multi-decade business connection with Howard and agent Don Buchwald. Wherever Mel goes, Howard will be there, too – unless he decides to retire and that’s an option that can’t be ignored.

Being Mel Karmazin today is like working for Mel Karmazin yesterday.

Bob Dylan could rewrite “Gotta Serve Somebody” with Mel lyrics.

Then again, there’s only one Mel Karmazin.

Just ask Farid Suleman. Just ask Lew Dickey.

It’s really not Mel’s fault that Sirius XM is a penny stock.

In their most primitive days, both Sirius and XM over paid for everything. When money was no object and IPOs were being announced daily, XM ran a series of pricey spots featuring pianos and violins crashing to Earth – and paid David Bowie millions for his endorsement. Sirius burned through multi-millions years before its first broadcast on the physical plant and its gold-brick per square inch lease.

It must be said that Sirius XM was the outcome of merging two bad business models. Before the merger, both companies were stuck with debt they couldn’t get out of. The merger changed nothing. Now, the combined company is stuck with debt it can’t get out of.

Though Sirius XM managed to exchange $172.5 million of debt maturing in December for new debt due in 2011, it still has roughly $175 mil and change, which was due yesterday.

So the news about Sirius XM’s potentially impending bankruptcy, which I wrote about on December 29, should be a surprise to absolutely no one. The first time I mentioned it was back in October. Look it up.

But it doesn’t end here.

Meet Charlie Ergen, the CEO of Dish Network and EchoStar. He tried unsuccessfully to take control of Sirius – but was rejected by Mel. Now he’s bought up $300 million of discounted Sirius Bonds that come due next week and he’d like nothing better than to take Mel out.

Don’t look for a whole lotta love between Charlie and Mel. When Mel was at Viacom, he pulled its cable channels off Dish Network. Charlie responded by posting the Mel’s home phone number for viewer complaints.

And guess who’s on EchoStar’s Board? Joe Clayton.

Name doesn’t ring a bell?

Let me introduce you to former Sirius CEO and Chairman Joe Clayton. Mel came to the decision that Sirius was not big enough for the both of them.

The question has to be asked. Is Joe Clayton to Mel Karmazin what Mel Karmazin was to Roscoe Mercer? Just asking.

Both the Wall Street Journal and New York Times identify Mel’s white knight as one of Ergen’s rivals, Liberty Media CEO John Malone. But it must also be said that white knights come with a price.

So, come Tuesday, when the debt is due, we’ll see if Sirius XM makes it, breaks it, or does an all-bets-are-off, all-contracts-are dead bankruptcy filing.

There’s one of two endings. One of them has Sirius XM fading into the memory vault along side 8-tracks, New Coke, the Edsel, and Pauly Shore.
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