Satellite radio operators XM and Sirius face a 20 percent decline in fourth-quarter retail sales that is likely to put pressure on their respective stock prices, according to a Bank of America investment note.

On Monday, their stocks started declined in reaction to the note, shedding most of the gains notched in November following third-quarter earnings reports. XM shares fell 80 cents, or 5.3 percent, to $14.47 on the Nasdaq, where it has ranged from $9.63 to $30.99 in the past year. Sirius shed 14 cents, or 3.3 percent, to $4.12 on the Nasdaq. Its 52-week range is $3.60 to $7.98.

iPods and podcasting threaten the future of satellite radio. A large portion of both companies subscribers has come from people that purchase cars with pre-installed satellite radio. More and more cars have iPod support, which cuts into XM and Sirius subscriber growth. Internet audio in the form of podcasts and streaming audio also offers a free alternative to the services.

Earlier in the year, Bridge Ratings questioned the long-term viability of satellite radio.

Satellite radio subscription growth has slumped recently, after XM and Sirius had two years of expensive growth in their subscriber bases.

“Our proprietary channel checks with leading retail buyers seem to support our view that the (retail) industry gross additions will decline about 20 percent in the fourth quarter,” according to analyst Jonathan Jacoby.

Jacoby expects slowing retail sales will scare off investors.

“The transitionary period may be difficult for the stocks as investors could view weak retail trends as a key indicator in determining longer-term industry metrics,” he said.

via BusinessWeek