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Sirius XM close to bankruptcy?

updated 08:25 pm EST, Tue February 10, 2009

Sirius XM Near Bankruptcy

People aware of the situation have told the New York Times that satellite radio provider Sirius XM is readying itself for the possibility it may declare Chapter 11 bankruptcy. Although still solvent, the company is believed talking with experts in bankruptcy cases and restructuring and has made enough progress in the necessary documents that it could make its declaration "within days." No official signals have been given regarding a potential collapse.

The move is prompted by the broadcaster's outstanding debt. Although EchoStar chief Charles Ergen recently bought up $300 million in debt from Sirius XM that was about to come due, about $625 million will be owed this year and would likely sink the company without a reorganization and a way to defer debt payments.

Speculation has surfaced that the debt relief given by EchoStar is the first step towards a buyout of Sirius XM and that the new risk of bankruptcy may force Ergen to move more quickly, either making a takeover bid quickly or else using the debt purchase as a bargaining tool to gain a large stake in Sirius XM and let EchoStar help dictate Sirius XM's future.

Sirius XM has routinely and unsuccessfully fought to turn a profit and is widely understood to have been hindered by the roughly 18-month delay in the US government's merger between Sirius and XM as well as by competition from alternative sources: the subscription-only service has had both immediate competition from free HD Radio stations as well as from portable media players like iPods. Many cars sold in the US now have built-in or optional iPod interfaces while satellite radio is still less common and often tied to just one of Sirius XM's two networks.

The service's most direct sign of difficulty has been a rare price hike in January that began charging for Internet radio as well as boosting the rates for some of its key satellite plans.




by MacNN Staff

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Comments

  1. RiquiScott

    Joined: Dec 1969

    +8

    Wonder why?

    So maybe that $500 million dollar contract for Howard Stern wasn't such a good idea after all?

  1. Avatar0001

    Joined: Dec 1969

    -3

    Gotta prevent this

    Perhaps they should charge a few dollars more per month, I DON'T want to go back to terrestrial radio!

  1. LtCarter47

    Joined: Dec 1969

    -4

    A agree with Avatar

    I don't wanna lose Opie & Anthony. That's 20 hours a week of entertainment at work and in the car.

  1. rodvera

    Joined: Dec 1969

    -6

    Howar Stern

    Don't blame the deal made with Stern.

  1. PocketRadio

    Joined: Dec 1969

    0

    HD Radio is a farce!

    "the subscription-only service has had both immediate competition from free HD Radio stations as well as from portable media players like iPods"

    "Now on HD Radio: Subscriptions, Pay Per Hear, and More"

    "A new 'conditional broadcasting' feature for HD Radio called RadioGuard from NDS, will allow owners of compatible HD radios to pay for premium content via a subscription, a one-time charge, or as part of a sponsored deal... They're primarily looking at home and car use right now because it's hard to design a device like this to consume so little power that it can be carried away from a power source."

    http://blog.wired.com/music/2007/04/nowonhd_radio.html

    Although advertised as free, HD Radio won't be free for long.

  1. LouZer

    Joined: Dec 1969

    +3

    XM

    Gee, and we heard that the merger with sirius was done to make them stronger...

    And o&a is about as entertaining as watching some drunks at a bar tell each other 'jokes'.

  1. thebiggfrogg

    Joined: Dec 1969

    +3

    $500 million. . .

    for Stern? They got what they deserved. Siriusly.

  1. b9robot

    Joined: Dec 1969

    +3

    Paying for radio is dumb

    Paying for radio is dumb. HD radio is free so why pay for it.
    If you want to listen to only one kind of music or one artist use an iPod, CD, or tape if you have to. But to pay monthly for radio is just dumb. Just like subscription based online music services which are also going out of business. Paying over and over again for something that you could have payed for once and owned isn't very smart. The only ones to benefit from this is the GREEDY record labels and I'm not going to just give away my money to them.

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