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Sirius XM chief executive Mel Karmazin is praying that his company survives a possible bankruptcy filing and can fight takeover efforts from EchoStar.  (Source: OrbitCast)

A possible bankruptcy filing by Sirius XM radio could send high profile broadcaster like Howard Stern out on the streets looking for a new job.  (Source: Delaware Online)
Satellite radio may be latest victim of economy; bankruptcy would likely force high profile stars to be cut

Ever since Sirius and XM Radio merged to form Sirius XM last summer thanks to federal approval, the pair has been talking big and dreaming of a bright future together.  However, thanks to a slumping economy, its future is looking rocky and the company is preparing for a possible bankruptcy.

Just months ago the outlook was much better.  Headed by chief executive Mel Karmazin, the pair was cutting close to $400M USD in costs while enjoying a growing subscriber base of millions.  Their chief lauded the affordability of their service, stating, "Forty-three cents a day — it’s not even vending machine coffee."

Sources are stating that the company is hiring bankruptcy advisors as it braces itself to try to weather the storm.

For customers, their service as a whole would likely not be terminated by a bankruptcy say experts.  However, popular high profile broadcasters like Howard Stern and Martha Stewart would likely have to be cut, something which might cause a spiral of even more canceled subscriptions.  Capital IQ states that if the company indeed files, with $5B USD in assets it would be the second largest Chapter 11 filing of the year, second only to the filing of Smurfit-Stone, which had $7B USD in assets.

Part of Sirius XM's misfortune is thanks to slumping auto sales.  The company relied heavily on new cars for new subscriptions.  Of its 20 million subscribers, recently purchased vehicles accounted for the largest percentage.  Many vehicles come with short term packages, thanks to deals with automakers.  However, many of those subscriptions will expire and not be renewed and with few new vehicles sold, that means the company may see a drop in total subscriptions.

Furthermore, it owes $175M USD in debt payments to creditors, which are due at the end of February.  Unless the company conjures up some money out of thin air, a bankruptcy filing seems likely. 

Another possibility is that EchoStar, the TV satellite company which has bought up Sirius XM’s debt, may try to take over the company.  EchoStar’s chief executive, Charles W. Ergen, is reportedly trying to convince Sirius XM to accept a takeover, but Mel Karmazin is resisting these efforts.  Instead, Sirius XM hired Joseph A. Bondi of Alvarez & Marsal and Mark J. Thompson, a bankruptcy lawyer with Simpson, Thacher & Bartlett to prepare a Chapter 11 filing.

A filing could come within days, say sources.  However, some believe that the filing is Mr. Karmazin's attempt to play financial hardball with EchoStar and milk a better deal out of them, possibly to convert the debt to equity, to avoid repayment.  Sirius XM also owes EchoStar $400M USD in debt, due in December.

If Sirius XM files bankruptcy, EchoStar can try to take it to court to win a takeover.  Another possibility is Mr. Ergen could convert his shares before bankruptcy to gain a controlling interest and secure a hostile takeover of the company.

Mr. Karmazin has much to lose, as he spent over $100M USD on Sirius XM stock (since devalued to around $2M USD).  He said in December, "I’m not trying to paint the rosy picture, because we have challenges connected to our liquidity and certainly our stock price is dreadful.  But, you know, our revenues are growing double digits. We’re growing subscribers. We’re not losing subscribers."

If Sirius XM indeed folds or is taken over, satellite radio will be left in a quandary, with its two former greatest members greatly diminished.  With no clear challenger in sight, it appears that satellite radio may become the latest victim of the poor economy.

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Satellite Radio
By Laker12 on 2/11/2009 12:08:35 PM , Rating: 1
I am a former XM subscriber. The main reason I did not keep it is because there is no international coverage. I am currently in South America and would use it if the service existed here but it does not.

RE: Satellite Radio
By strikeback03 on 2/11/2009 1:21:47 PM , Rating: 2
Would need more satellites most likely. The question is would they get enough subscribers in other areas to warrant the cost of the satellites. IIRC Europe already has a satellite radio service.

RE: Satellite Radio
By afkrotch on 2/11/2009 1:43:33 PM , Rating: 2
Add in the fact that they'd also have to get a license to have a business in these other countries.

RE: Satellite Radio
By AlexWade on 2/11/2009 2:41:31 PM , Rating: 4
I am now a former XM subscriber too. But I still live state side. I am a former subscriber because Sirius destroyed everything good about XM. I bought a XM radio the first month they went on sale. I have had it a while, but it won't be missed because of Sirius did to XM. In the good days, there were no annoying DJ's spewing some asinine stuff. Today, there are DJ's. I was not paying for that junk. I told the outsourced call center that I was canceling because of the annoying DJ's. If the call center was American, I would have told them to tell the DJ's to shut up.

To add insult to injury, the annoying useless DJ's don't play as much good music as was played pre-merger. The quality of music went in the toilet post-merger.

Still, even without the DJ's, I would have canceled. Anytime you charge more for the same level of service, it is a rate hike. Well, Sirius-XM is now going to charge to listen to music on-line. They already merged radio stations to reduce cost, and now they are RAISING costs? I swore that I would cancel post-merger if they raised rates. I made good on that promise.

My Blackberry Bold and radio support Bluetooth audio. I'm getting internet radio for my phone. Along with my iPod, I won't miss XM. Years from now, we will be studying this merger as to how not to merge companies. Good riddance to bad rubbish. I am not going to miss Sirius-XM.

RE: Satellite Radio
By tallcool1 on 2/12/2009 9:30:32 AM , Rating: 4
It's the other way around for me.
I have Sirius in my car, and XM at work. I think Siruis was better, but after the merger with XM, I think the music selection is not as good as it used to be.
Also, I have no interest in these high profile and co$t radio hosts, like Stern and Martha, drop them already and save some doe.

Sat radio is still by far better than local radio for my area, therefore I hope they can keep their business going.

RE: Satellite Radio
By x86 64 on 2/16/2009 10:12:10 AM , Rating: 2
My mom has it and loves it. Me, well I thought it was a gimmick. Commercial free? Yeah right. There are tons of commercials.

I used it a few times to listen to a couple of Baseball games while in her car. Other than that the music selection is poor and there are still commercials!

so what?
By TechIsGr8 on 2/11/2009 12:34:43 PM , Rating: 2
who gives a hell about Stern or Stewart, or even Oprah for that matter? Strip the garbage down, just give me good service and few commercial interruptions, without the glam tv "celebrities".

RE: so what?
By Gyres01 on 2/11/2009 12:51:41 PM , Rating: 2
I do listen to Howard once or twice a week but the rest of the crap talk radio should be dissolved.....I mean who in the target demographic listens to that crap anyway....and now with them raising the price on my 2nd subscription, I am thinking about my ipod again and maybe going to cancel ??!!

RE: so what?
By afkrotch on 2/11/2009 2:13:10 PM , Rating: 2
If the talk show was like the one in GTA3, I'd listen to it. That crap was hilarious.

At least they aren't in Washington with a tin cup
By Bateluer on 2/11/2009 1:09:38 PM , Rating: 3
Filing for Bankruptcy is the proper way to attempt to salvage a failing business, rather than what so many businesses these days are trying: Begging from the Federal government(Taxpayers).

By steven975 on 2/11/2009 2:39:23 PM , Rating: 1
Disgree. If I were an owner of this company (a shareholder), Echostar is the only chance of not losing my investment.

Of course management never works in the interest of shareholders. This clown just wants to save his job.

could wait for that internet radio pitch to work :)
By The0ne on 2/11/2009 1:15:32 PM , Rating: 2
Was advertised with a car on TV the other day. Why need SM when you can have thousands of radio channels...for FREE :) That's their slogan I guess.

I have free XM service is running out soon and I haven't been using it much. I was at first but then living in S.Cal and going under bridges or what seems like anything (trees, garbage cans flying over, etc.) the connection gets cut for several seconds.

I think it was a good idea to have it but I would like option above instead. Give me satellite internet service and the ability to easily play music from any of the number of online radios. This is nice because then people like me can continue to enjoy non-us music :)

For simplicity I'm thinking satellite service with internet with any of the wi-fi capable devices...phones, netbooks, notebooks, laptops, dedicated devices, multimedia players, etc. :)

By strikeback03 on 2/11/2009 1:24:01 PM , Rating: 2
Considering that there are large parts of the US still lacking cell coverage, I'm not holding my breath on any form of wireless internet there anytime soon.

By TomZ on 2/11/2009 11:28:36 AM , Rating: 2
A possible bankruptcy filing by Sirius XM radio could send high profile broadcaster like Howard Stern out on the streets looking for a new job

By strikeback03 on 2/11/2009 11:57:29 AM , Rating: 2
..Were just hitting baseball season, the primary reason I keep XM after the takeover. Thanks to MLB's crappy blackout rules, it is the only decent option for baseball.

Was worth it, but not anymore.
By BPB on 2/11/2009 2:49:56 PM , Rating: 2
When I got my one year for $70+ last time around I was happy. $6 a month was reasonable. Now it's more than twice that, may reach triple. Drop the dopes like Howard and lower the price. Then I'll re-up. Otherwise, it ain't worth it. Don't get me wrong, I like the service, but not for that much money. Though, if all the stations were commercial free I would consider it. I'm lucky, where I live the AM and FM bands are full of stations.

I wish there was a way to tell my radio that I am not using XM so it could just skip those bands, having them there unusable is a pain.

By Murloc on 2/11/09, Rating: -1
RE: wtf?
By Pneumothorax on 2/11/2009 11:29:40 AM , Rating: 5
It's worth it for some of us who drive around in Timbuktu where the only radio choice is Right wing radio shows and bluegrass.

RE: wtf?
By quiksilvr on 2/11/2009 11:50:37 AM , Rating: 1
I give Sirius XM an A for effort but they were fighting a losing battle. MP3 players rule the car stereo system.

RE: wtf?
By DEredita on 2/11/2009 11:56:03 AM , Rating: 3
I don't get why. How many times can you listen to the same MP3s over and over. I grow tired after just a few listens of my 8GB MP3 player.

RE: wtf?
By theapparition on 2/11/2009 12:07:29 PM , Rating: 4
And how do you listen to Howard Stern, MLB, NFL, O&A and the myriad of other programming options with an MP3 Player? Sure you can store songs, but XM Sirius delivers a lot more content than just music.

RE: wtf?
By Lord 666 on 2/11/2009 12:13:49 PM , Rating: 1
Hence the reason why we should start a petition for Apple to purchase Sirius! Forget Echostar... get someone who is actually in the music business already and would be empowered to boost sales by purchasing over sat radio.

Anyway - shooting for either 777 or 999 now.

RE: wtf?
By zerocool84 on 2/11/2009 12:48:24 PM , Rating: 3
Ha Apple yea sure they'd make you buy an Apple branded car, Apple branded satellite radio, and only be able to download them to your iPod and only in AAC. They would shut-down anyone else tying to make 3rd party players and would get a patent on satellite radio. Yea sounds great.

RE: wtf?
By bigboxes on 2/11/2009 9:34:38 PM , Rating: 2
Yay iCar!

RE: wtf?
By tallcool1 on 2/12/2009 9:36:39 AM , Rating: 2
Anyway - shooting for either 777 or 999 now.
I don't think anybody really cares...

RE: wtf?
By Jimbo1234 on 2/11/2009 1:33:50 PM , Rating: 3
And how can you listen to Howard Stern over and over and over?

RE: wtf?
By callmeroy on 2/11/2009 4:28:50 PM , Rating: 2
I can't stand Howard's show, but its not because of its offensive nature -- its because its just not that funny to me. You can say what you want and be offensive but rule #1 is --MAKE SURE ITS FUNNY!

RE: wtf?
By Roy2001 on 2/11/2009 11:52:35 AM , Rating: 2
But how many people really need that? and how many among them would subscribe?

RE: wtf?
By Spuke on 2/11/2009 12:00:16 PM , Rating: 2
But how many people really need that? and how many among them would subscribe?
Most everyone I know has a XM subscription. Because of our location, big city radio stations don't come in very well and certain types of music aren't played on the local stations. If I lived in the city and never left it, then I wouldn't have a XM subscription.

RE: wtf?
By tastyratz on 2/11/2009 12:15:17 PM , Rating: 2
how many? according to the article 20 million.

Many people pursue several avenues whether its mp3, terrestrial, cd, etc. I personally fill 32gb on a usb stick for my radio's usb port, and mix it with some local stations. If I had less access to mp3, was into sports broadcasts, or had poor reception of my favorite stations in my area my priorities would change.

The beautiful thing is the world has given you the gift of consumer choice :-)

Different strokes for different folks.

RE: wtf?
By Oscarine on 2/11/2009 1:23:34 PM , Rating: 2
I live in a major metropolitan market (Philadelphia), my car is equipped with an iPod dock, HD Radio, and XM, and while I use all of them, XM gets the nod usually, plus it provides me with traffic updates through the garmin gps portion of the unit.

Really comes down to variety, sometimes I want to listen to more than what I have on my iPhone, and without commercials. besides the interface is really slick on my particular unit for being able to browse exactly whats playing.

RE: wtf?
By acase on 2/11/2009 11:30:35 AM , Rating: 5
uhhhh...have you listened to "normal" radio lately. You have more variety listening to a single CD over and over.

RE: wtf?
By Inkjammer on 2/11/2009 11:39:14 AM , Rating: 3
Ugh. Don't even get me started. It's like the local radio stations around here in D.C. just discovered Linkin Park and play their songs every five minutes (as they've done every five minutes for the past five years).

I know that's a total exaggeration, but it's closer to the truth than I wish to admit.

If only we had Three Dog. :(

RE: wtf?
By mofo3k on 2/11/2009 11:44:41 AM , Rating: 2
Wow, you should try the craphole stations here in Iowa. If you like country and 70's and 80's rock their you're ok, but if you have taste in music at all then you're screwed. I love my XM/Sirius.

RE: wtf?
By jimmynickers on 2/11/2009 11:31:12 AM , Rating: 1
The same people who pay for cable TV or Satellite TV when there is "free" over the air broadcasts!

RE: wtf?
By Spuke on 2/11/2009 11:58:11 AM , Rating: 2
Here we go again with the "it works for me why doesn't it work for you teenager world view". I barely watch OTA TV shows. Most of my viewing is on shows you can't get OTA. I'm am also a XM subscriber and being able to listen to any music I want out in the middle of BFE is a Godsend. Where I work, I get none of the LA stations unless you consider hissing music. XM works well for me (us).

RE: wtf?
By matt0401 on 2/11/2009 12:10:50 PM , Rating: 2
His post was satirical.

RE: wtf?
By shaw on 2/11/2009 11:31:15 AM , Rating: 3
Yeah bit Sirus's quality is better and they have tons of stations to listen to a lot of muisc. Plus too many stations these days are all commercials (even though I understand that's how they make their money).

I feel thing like Sirus can only thrive when the economy is good because it's a luxury and definately not a necessity.

RE: wtf?
By Chris Peredun on 2/11/2009 11:34:05 AM , Rating: 3
Well, here's 151 reasons. 130, if you live in Canada.

I have a pretty good radio in my car, but I'm not picking up that many stations on FM.

RE: wtf?
By afkrotch on 2/11/2009 12:46:11 PM , Rating: 3
My main complaint is over the air crap is just that. crap. I remember my 2 weeks in Hawaii. Listening to Nelly Furtado's Promiscuous like 3-4 times every hour. I don't have much choice in audio equipment selection in a rental. While my car has radio/cd/dvd/md/usb capabilities. Ya, Japanese are a bit crazy with their car stereos, along with the damn price too.

RE: wtf?
By strikeback03 on 2/11/2009 1:18:26 PM , Rating: 2
MD has been supported sometime in the past 10 years? Why not cassette then?

RE: wtf?
By afkrotch on 2/11/2009 1:38:58 PM , Rating: 2
It was when I was living in Japan. MD is still pretty big there. Hell, I liked them too. Buy a CD, then rip it right to my MD. Less likely to skip, lot sturdier than a CD, and smaller.

I was using just a stereo/cd/md head unit before and bought the new one. I was too lazy to rip my old CDs to mp3 during the time.

Now with all the piracy, I just downloaded all my old CDs. I'm just using a stereo/cd/usb head unit now. Probably go with a new head unit with an aux port, since I have an 8 gb and 80 gig Zune. I've just been using a 4gb memory stick. I could go larger, but then the memory stick would also get larger. Right now the one I use is about the size of my thumbnail.

RE: wtf?
By mofo3k on 2/11/2009 11:39:09 AM , Rating: 2
The comedy channels, the huge variety of music genres(but no punk? wtf), the huge list of news/talk radio, all sorts of sports broadcasts, no static or overlapping signals. The list of benefits makes it worth it for me at least.

RE: wtf?
By repatch on 2/11/2009 11:39:12 AM , Rating: 2
Commercials. I can't stand them. Most radio stations have 20+ minutes of commercials per hour. For $0.40/day I get tons of commercial free music channels. Even the channels that do have commercials have very few (around 5min/hour I'd estimate).

Never mind the fact that the variety is FAR better, there's no inane bantering by retard DJs, and it works pretty much anywhere on the continent (lots of places not very far from where I live have only one or two radio stations available, and reception sucks).

RE: wtf?
By ccmfreak2 on 2/11/2009 12:02:20 PM , Rating: 2
Why would anyone pay $30 and up a month for cable or satelite when TV is free over normal airways? For the same reasons:

Better quality, more selection, no loss in signal (even digital tv isn't perfect as I'm finding out), and the channels don't have commercials (some don't on cable also). There are plenty of other reasons for satelite radio alone without the cable parrallel, but I'd say it's not too bad for under $15 a month

RE: wtf?
By Chudilo on 2/11/2009 1:17:16 PM , Rating: 2
Better quality? What better quality. It's a 48kbps stream for music (barely better then AM with no noise) and the bitrate is even less for talk radio.
Who was "brilliant" enough to decide to broadcast music with quality significantly less then FM ?

RE: wtf?
By strikeback03 on 2/11/2009 1:19:16 PM , Rating: 2
Anyone who says quality is worse than FM has obviously never listened.

RE: wtf?
By Jimbo1234 on 2/11/2009 1:40:07 PM , Rating: 2
Anyone who says that has obviously has poor hearing. I listened to it several times on vacations in my rental cars (last two were Audis so the radios were not junk) the sound quality was worse than FM. It was not even on par with a 128Kbps MP3.

RE: wtf?
By LRonaldHubbs on 2/11/2009 2:02:30 PM , Rating: 2
Right...and MP3s are as good as CDs, and Bose speakers are worth the premium price tag, and Comcast HD video looks as good as FiOS, etc, etc. Would you happen to have any factual backing for that opinion? Here's one source (out of many) that says you are wrong:

RE: wtf?
By Xirj on 2/11/2009 12:57:55 PM , Rating: 2
Especially when it is still junk quality.

Another quality mick article
By mjcutri on 2/11/09, Rating: -1
RE: Another quality mick article
By Funksultan on 2/11/2009 12:16:52 PM , Rating: 2
I prefer....

He said in December, "I’m not trying to paint the rosy picture, because we have challenges connected to our liquidity and certainly our stock price is dreadful. I’m not trying to paint the rosy picture, because we have challenges connected to our liquidity and certainly our stock price is dreadful."

Mick FTL.

Apple should buy Sirius XM
By Lord 666 on 2/11/09, Rating: -1
RE: Apple should buy Sirius XM
By vapore0n on 2/11/2009 11:41:12 AM , Rating: 2
they reach more people over the internet than by a subscription based hardware specific radio

RE: Apple should buy Sirius XM
By Motoman on 2/11/2009 12:30:28 PM , Rating: 4
7. Lose massive numbers of subscribers because they inherently hate Apple.

RE: Apple should buy Sirius XM
By Jimbo1234 on 2/11/09, Rating: -1
RE: Apple should buy Sirius XM
By DuctTapeAvenger on 2/11/2009 1:53:59 PM , Rating: 2

RE: Apple should buy Sirius XM
By DuctTapeAvenger on 2/11/2009 1:55:42 PM , Rating: 5
10. Profit!!

RE: Apple should buy Sirius XM
By Lord 666 on 2/11/2009 2:18:51 PM , Rating: 2
11. The Beatles Channel aptly named "The Day Tripper" channel marketly smartly through iTunes for the entire catalog.

RE: Apple should buy Sirius XM
By S3anister on 2/12/2009 2:29:01 AM , Rating: 2
You just lost the game.

RE: Apple should buy Sirius XM
By Lord 666 on 2/11/2009 2:11:59 PM , Rating: 2
9. Compete with Microsoft for space in cars.

The 300 or so Zunes out there in Fords versus the high market pentration of XM/Sirius radios that have built-in iPod/iPhone functionality? Thats an easy slam dunk

RE: Apple should buy Sirius XM
By Motoman on 2/11/2009 2:29:17 PM , Rating: 2

...had to LOL a bit at the "300 or so Zunes in Fords"

RE: Apple should buy Sirius XM
By yomamafor1 on 2/11/2009 12:48:53 PM , Rating: 2
That would be the biggest blunder in Apple's history of operation if Apple indeed purchase Siruis XM. The infrastructure cost of Siruis XM is far too great compared to land based radio stations, and given the limited amount of users subscribed to this service, the revenue stream from advertisement alone wouldn't suffice.

RE: Apple should buy Sirius XM
By Integral9 on 2/11/2009 2:03:04 PM , Rating: 2
NOOOOOoooooooooo! Not Apple. DirecTV should be the ones to buy Sirius XM. They already have a partnership as DirecTV's exclusive provider of music channels. DirecTV also already has contracts with the Pro Sports Leagues (so maybe a buck saver there). DirecTV is already a satellite broadcasting company. So they (should) know wtf their doing.

also. #4 doesn't seem like a good thing to me. I pay for HBO, like I pay XM and as such, I don't want to see any commercials if at all possible. In fact, I was really pissed when the Sirius content merged into XM and I was forced to listen to commercials on stations that had once been commercial free.

RE: Apple should buy Sirius XM
By captchaos2 on 2/11/2009 4:24:07 PM , Rating: 2
Actually, I've been wanting to drop the service because their channels have sucked ever since they merged. Internet radio is better and free!

RE: Apple should buy Sirius XM
By tallcool1 on 2/12/2009 9:44:15 AM , Rating: 2
You listen to Internet radio in your car?

RE: Apple should buy Sirius XM
By jonmcc33 on 2/11/2009 5:15:13 PM , Rating: 2
Are you completely oblivious to this blog? If Sirius XM is in severe debt why would Apple take that on? No company is making acquisitions like that and I doubt Apple has that much money to throw away.

"Can anyone tell me what MobileMe is supposed to do?... So why the f*** doesn't it do that?" -- Steve Jobs
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