Sirius Teeters On Bankruptcy
Apparently, the firm is having a difficult time negotiating with the holders of its debt, and while that in and of itself isn't surprising, a failure to work things out could leave it little option but to wave the white flag. Reportedly, it has exchanged $172.5 million of debt maturing in December for new debt due in 2011, but that doesn't help the $175 million that's coming due on Sunday. Curiously, Sirius is said to be battling against attempts for control by DISH Network CEO Charlie Ergen; Mr. Ergen purchased much of a $300 million swatch of discounted Sirius bonds that come due next week, though Sirius has rejected a previous offer by him for control of the entire company.
Should the entity file for bankruptcy, it would then have the right to cancel contracts with Martha Stewart and Howard Stern, both of which are currently siphoning money away from it at an alarming rate. As it stands, the outfit has around 20 million listeners, and it has announced price hikes that'll go into effect shortly. Obviously, having a millstone such as Chapter 11 around your neck isn't exactly the best solution to bring on even more subscribers. The company is said to be in discussions with Liberty Media Corp. (related to DirecTV, interestingly enough) about saving it from filing, though all parties are remaining mum officially.
It's hard to tell what will happen with Sirius after all of this is over, though it doesn't seem that rescue is close enough to save it from the inevitable. Maybe if it actually delivered commercial free radio on every one of its stations, it could convince users that it really is worth the premium over FM -- but then again, it's also fighting cheap digital downloads, which weren't even worth recognizing as competition back when this whole thing began.