S&P: Despite star deals, satellite radio companies far from investment grade

Standard & Poor's said in a report that as stellar talent deals for satellite radio attract media attention, it is helpful to remember that competing providers XM Satellite Radio Holdings Inc. (CCC+/stable) and Sirius Satellite Radio Inc. (CCC/stable) still have a long way to go to achieve even high speculative-grade credit ratings.

"It remains uncertain whether exclusive big-name talent deals will boost the appeal of satellite radio to potential subscribers and if the incremental subscriber gains will be sufficient to cover the costs of these deals," said S&P credit analyst Alyse Michaelson Kelly.

Continued high-profile signings may even preclude the companies from generating positive EBITDA, a key driver of any upside rating potential, the report said.

Meanwhile, increasing competition from the iPod and the rollout of terrestrial radio's high-definition radio could slow satellite radio subscriber growth, the agency added.

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