Sirius/XM Considers Bankruptcy

[Ruidoso Ron]

Forecast Again Cloudy For XM WX, As Sirius Considers Bankruptcy
Wed, 11 Feb '09

Announcement Could Come This Week
It wasn't too long ago a number of pilots expressed concern at the buyout of XM Satellite Radio, provider of the invaluable XM WX satellite weather service, by rival Sirius.

Fliers were concerned their inflight weather displays would go blank if Sirius opted to discontinue providing that service to a relatively small subscriber base... fears that proved to be unfounded, as the sale was completed in November 2007 without any disruptions.

Alas, there's now a new problem... one that could be much, much worse. The New York Times reports the company now known as Sirius XM Radio is talking with advisers about a possible bankruptcy filing, due to a faltering subscriber base and absence of new credit sources. The company has $175 million in debt payments due at the end of February, that few expect it will be able to pay.

The bread-and-butter market for Sirius -- which has yet to make a profit, either independently or with XM -- is the automobile industry. Sirius XM radio systems installed in new vehicles make up the largest customer base among the roughly 20 million subscribers, who each pay a monthly fee to listen to hundreds of channels of entertainment and news programming.

Sizable as that revenue pool may seem, those monthly fees have come nowhere close to matching the millions of dollars spent by Sirius to send new transmission satellites into orbit... or, what Sirius has paid to retain popular talent for its programming, such as the $100 million paid to shock jock Howard Stern. Once touted as the next big thing in radio programming, Sirius has been outflanked by other, cheaper alternatives, such as Internet-based radio stations and MP3 players.

The Times says Sirius has survived so far by refinancing its roughly $3.25 billion in debt at low rates, payable when the company finally turns a profit. The viability of that business plan has evaporated in the global credit crisis.

In addition to talks with bankruptcy experts, Sirius CEO Mel Karmazin is also reportedly in negotiations with business rival Charles Ergen, chief executive of EchoStar, about a possible takeover. It could be a hostile one; Echostar holds a significant chunk of Sirius' debt, and could seek court approval to take over Sirius if a bankruptcy filing does indeed occur.



An announcement could come within days, according to the Times. What that may mean for XM WX remains to be seen. Stay tuned.

FMI: www.sirius.com/

 

[Chuck-Fairfax]

Driving to work today I heard on Serius (Stern - don't laugh) that the bankruptcy was to provide some protection from the hostile take over, while they reorganize. I don't really understand this stuff, and Howard is hardly a disinterested party. We have Serius in both our cars, and my wife and I listen mostly to the classic radio channel, which helps keep me awake on my 50 mile drive to work near Baltimore every day.

Let's hope that valuable weather service continues.
Chuck Shaw

 

[two-12sfernow]

Bought my wife a new car within the last year with XM installed. If they know what is good for them, they won't quit the programming. She would tear someone a new outflow valve and I would lay low to be sure it is not me. She is so addicted that therapy will be needed if they pull the plug.

As for XM Weather, who would have guessed that Cub folks and Cirrus folks would end up with so much in common from an electronics view.

 

[CraigH]

Hope they don't file BK. That would give them an out on any pre-existing contracts; such as the lifetime subscription plan that I purchased a couple years ago.

 

[Mush]

If it makes you feel any better to have someone share your pain. I still own Sirius stock that I I could have sold a couple years back for around $6k. If I sold it tomorrow I might be able to buy a bowl of soup.

 

[Ruidoso Ron]

They paid Howard Stern $100 Million. No wonder they're broke!

 

[sj]

First, let me say that I have Sirius in my car and XM WX & Radio in the plane.

In my most humble opinion they made a HUGE strategic error when they merged. They should have allowed me to put both radios on one plan - the expensive WX plan plus a little bit, let's say another $6.95 per month or something, but NOOOOOO They still act like two companies and I would still have to pay a premium. I love sirius, but when my 6 MO free expired in the car, they could not give me a compelling option to renew - in fact, I got a little frustrated with their attitude. In these economic times, folks are not going to continue to tolerate spending good money for crappy service as we have been (no need to start ranting an raving, you can blame it on whomever you like - but just do it in your head, OK?).

NOT TO MENTION the fact that I am paying a subscription, and still listening to a LOT of commercials on some of the channels - like the comedy channels. What the Heck? I think their rates and service are due for an adjustment. It will be sad if they have to collapse first.

On another note, have you played with any of the new Garmin auto-GPS's with FM traffic? I just got a 755T which has FREE traffic - and it even does the traffic in KC. It shows you how long you will be slowed down by traffic, which roads are busy, etc. Very cool gadget.

I have some Garmin stock... ok it used to be a LOT of Garmin stock (dollar wise) now it is just "some". Much like XM / Sirius stock... So buy some Garmin products, would ya?

sj

 

[RedEye]

On another note, have you played with any of the new Garmin auto-GPS's with FM traffic? I just got a 755T which has FREE traffic - and it even does the traffic in KC. It shows you how long you will be slowed down by traffic, which roads are busy, etc.

sj

Let me know if its got Side Lake traffic, I might be interested !

 

[sj]

The Side Lake version needs to point out the most un-obscured route from the Riverside Inn to your house.

sj

 

[Iflylower]

I hope Sirius rebounds, I own some stock and I use the service. If they don't rebound, they are like to be picked up cents on the dollar for their satellites and networks and subscribers.

So...maybe we'll be listening to Echostar Radio soon. Who knows? But, I think the service will continue. Once another company can pick up the assets with no debt, the work will have been done, a steady subscription base that will pour steady revenue into the new company and into the WX creators that use XM now to operate their service.

Same thing kind of happened with all the Fiber-optic layed in 1999

DJ, they could help traffic in side lake for fishing opener and deer opener.

 

[moneyburner]

Howard Stern should give the money back and fade into obscurity in a small cabin in the woods where no one would have to listen to him. Maybe get a job driving a tow truck. Then, he might be able to provide some sort of value to society. He sure doesn't now. I find him to be entirely repulsive and can't fathom why anyone would listen to him for more than a few moments. Just my .22 rimfire's worth.

My sister got talked into a pile of that SIRI stock and then got pep talks from me encouraging her to hold it until it recovered for several years - hope that wasn't a compete waste. Her boyfriend day trader sure was.

 

[sjohnson]

Sirius Liberty

Sirius got a reprieve today, a loan from Liberty Media, which owns Dish Networks and QVC. WSJ article here. Doesn't look like a permanent arrangement.

 

[garyh]

No matter what the outcome is, get a grip on your pocketbook for surely rates will soon be headed skyward.

 

[Bassackwards]

Moneyburner,
I agree with you about Howie, but lets not waste a good cabin in the woods. When this whole economy thing shakes out, I sure hope there will still be XM weather.

 

[moneyburner]

I read an interesting article today about nationalizing it; it would save the taxpayers a bunch because of tax credits SIRI has (from their staggering losses) that could be acquired by another company by buying them. If it's nationalized, the tax credits would disappear. Isn't likely to happen, though.

The Big Three have some skin in this game also - they get a revenue stream for providing customers. I love the stuff - wouldn't go without, if I could help it, but my selections are extremely limited.