For the longest time Sirius XM Radio has suffered in the media. From merger speculation, merger delay’s, financing issues, and poor auto sales, the company was in a difficult position. Even positive news often seemed to get swamped by various clouds hanging over the company.

The investment by Liberty Media into Sirius XM was the beginning of a more positive cycle for the company. The cash infusion did not remove debt, but did get the company some needed breathing room. In addition, Liberty spoke positively about their investment into the sector, as well as the prospects for the company. It was no longer Mel Karmazin saying that success was in the cards, but Liberty as well.

The positive news continued today with an Fortune article. The piece addresses current challenges, but also outlines great prospects. Quoting Mel Karmazin as well as Liberty’s Greg Maffei, Fortune painted a far better picture of the satellite radio future than we have seen in quite some time.

“In the fourth quarter of 2008, a devastating one for most companies, Sirius XM recorded its first operating profit ever (measured by Ebitda, or earnings before interest, taxes, depreciation, and amortization), as well as its first significant slug of free cash flow. Operating profit, which, like free cash flow, is a barometer of how much money is moving in and out of company coffers, was $32 million in the fourth quarter, vs. the equivalent of a $224 operating loss in 2007 (which was pre-merger). Free cash flow stood at $29 million, vs. $5 million. The company’s net loss narrowed to $249 million from $405 million.

Within a few years Sirius XM won’t just be profitable, Karmazin insists, “but very profitable.” In an SEC filing from last December, Sirius XM said it expected operating earnings to rise from $300 million this year to $1.3 billion in 2012. (Wow!)”

Of course, there are always issues that can be negative as well:

“Asked about that guidance, Karmazin says, “Nothing has changed.” After our interview, however, Sirius XM announced that it is suspending guidance beyond 2009, citing the weak economy and cratering new-car sales. (Uh-oh.)”

The tenor of the article can be summed up with the statement regarding Liberty Media’s fourth-quarter conference call with analysts.

“Maffei spoke excitedly of the possibility of turning Sirius XM’s excess spectrum into a mobile video platform for DirecTV:

“The great dream, perhaps, is that you have … 150 audio channels on one consolidated Sirius XM platform that only consumed [half] of the spectrum, and [the other half] becomes therefore available for mobile video. That would be a great intersection of where the skills of Sirius XM and DirecTV reside.”

“Asked about Maffei’s musings, Karmazin doesn’t want to be pinned down. “We could also have 130 more audio channels,” Karmazin says. “We could go to Wal-Mart (WMT, Fortune 500) and say, ‘Hey, Wal-Mart, how would you like to have a channel that’s just for you?’ We could say, ‘Hey, Mormon Church. How would you like to have a channel?”

“There’s just a lot of opportunities, and it’s so refreshing to finally be able to think about them. Because for the last three months, all I’ve been thinking about is liquidity, liquidity, liquidity.”

This all seems to boil down to people starting to think about satellite radio in the longer term, rather than the immediate crisis at hand. With liquidity and continued growth, the potential of satellite radio is now becoming a focal point once again. Of course, there are thousands of investors who have been betting on potential for years. The difference now is that the merger has happened, and it appears that Sirius XM Radio can begin the steps that will get it to profits even in a poor economic environment.

There is still a ways to go, but positive press can go a long way in helping the process along.

[Fortune]

Position: Long Sirius XM Radio