Sirius XM radio is preparing to file for a possible bankruptcy, the New York Times reports. Despite the merger that brought together the two satellite-radio businesses in July 2008, the joint company remains in a $3.25 billion debt, thanks to the credit squeeze, high-price talent and the expense of sending satellites into space. While a bankruptcy announcement wouldn't likely cause any service interruption for customers, the NYT reports that the company could be forced to terminate the contracts of their marquee talent, namely Howard Stern, Martha Stewart and others — that's right, Artie Lang fans, this could affect you.
Sirius XM owes a $175 million payment on its massive debt by the end of this month, which the company likely will be unable to pay. The financial pinch has opened the door for satellite TV company Echostar to take over Sirius XM — Echostar already bought up $400 million of Sirius XM's debt that was due in December 2008 and Sirius chief executive Mel Karmazin and Echostar chief executive Charles W. Ergen are reportedly in talks to consider Sirius XM's options. An Echostar takeover could be in the works before Sirius XM ever files for bankruptcy.
It's worth noting that Sirius XM's stock was at 11 cents per share after trading yesterday. Sirius XM isn't entirely to blame: while subscribers have grown, less people are buying automobiles, and thus less people are installing Sirius XM into their car. Plus, attempts to lure a younger audience have so far been rebuffed. Sirius XM recently announced that there would be rate increases for new customers as the satellite radio company scrounged for more revenue.