From The Daily Swarm: Sirius / XM – R.I.P.
New York Times:
It is unclear how a bankruptcy would affect customers. Service is unlikely to be interrupted, but the company might have to terminate contracts with high-priced talent like Mr. Stern or Martha Stewart.
Sirius XM, which never turned a profit when both companies were independent, is laden with $3.25 billion in debt. Its business model has been dependent, in part, on the ability to roll over its enormous debts — used to finance sending satellites into space and attract talent like Mr. Stern (who was paid $100 million a year) — at low rates for the foreseeable future until it could turn a profit.
Sirius XM’s problems could pave the way for a takeover by EchoStar, the TV satellite company, which has bought up Sirius XM’s debt.
Motley Fool:
It remains to be seen what Echostar’s (Nasdaq: SATS) debt-acquiring stunt will ultimately accomplish. With capital-raising sources dwindling for Sirius, it’s left with little choice but to negotiate with Ergen. It can also naturally file for Chapter 11 bankruptcy protection, but that would be a bigger betrayal of its fiduciary responsibility to its shareholders.
Bloomberg:
It took 1 1/2 years for Sirius XM Radio Inc. Chief Executive Officer Mel Karmazin to complete the merger of the only two U.S. satellite-radio broadcasters. He may lose control of the company in half that time.
24/7 Wall Street:
It does not matter if Sirius (SIRI) goes bankrupt now. Creditors and bondholders may care. It probably will not be noticed by customers. In that way, it will be like an airline bankruptcy.
Given what a high flier the company was just a few years ago, a Sirius bankruptcy will be a spectacular media event. But, from a financial standpoint, it is old news.
Flashback to August 2002:
Sirius May Declare Bankruptcy from Techdirt:
Since I first heard about satellite radio, I found it hard to believe that they would find enough subscribers to cover their costs. It just didn’t seem worth it to me. However, plenty of people (sometimes here at Techdirt) told me I just didn’t understand, and that satellite radio was really “the next cable TV”. I think they almost convinced me… but I should have stuck with my instincts. Sirius, one of the two satellite radio players has announced that are probably going to have to declare bankruptcy after only offering their service for six weeks. In that month and a half they’ve signed up a grand total of (count ‘em) 6,510 customers (who helped them generate a whopping $70,000 in revenue). They say they need $600 million to keep going. $600 million? In this market? With 7,000 customers and $70,000 in revenue? Seems like a tough sell.
