I hadn’t intended to cover the Sirius XM (SIRI) pre-bankruptcy chatter, however a personal request over on Twitter has encouraged me to offer my two cents. As I tweeted, it’s no secret that the merged satellite radio company has a ton of debt coming due – owning/launching satellites and (perhaps) overpaying talent adds up.
Under “normal” economic conditions, Sirius XM might have been able to renegotiate the debt and/or secure additional investment given their solid subscriber numbers and supposed efficiencies in bringing the two companies together. However, as most of us know, the credit markets are tight, investors are skittish, and consumers are pinching pennies. Bankruptcy may be the best thing for XM Sirius subscribers – allowing the company to unload and restructure much of this debt.
The wild card in how things unfold over the next week appears to be DISH Network and EchoStar CEO Charlie Ergen. It seems Echo recently acquired a chunk of Sirius’ debt and may have even made an offer on the company. Which led me to speculate some of these public pre-bankruptcy disclosures are posturing for a better deal. Although Davis Freeberg, who’s much wiser in financial issues than I, doubts that particular point.
Regardless of how this plays out, I don’t see any immediate impact on subscribers. Satellite radio will carry on, for some time at least, regardless of who owns or runs the company.