Interesting clip but it's not as if the satellites will be falling from orbit just yet. Echostar will eventually absorb them. If they are a monopoly, they will try and raise rates, but it's not like there aren't any alternatives are there?
Cheers, Peter -----Original Message----- From: pc-audio-boun...@pc-audio.org [mailto:pc-audio-boun...@pc-audio.org] On Behalf Of Norma A. Boge Sent: Wednesday, February 11, 2009 10:22 PM To: djbigred2...@hotmail.com; pc-audio@pc-audio.org Subject: Sirius XM Prepares for Possible Bankruptcy >The New York Times >February 11, 2009 Wednesday >Late Edition - Final >Section B; Column 0; Business/Financial Desk; Pg. 1 780 words Satellite >Radio Company Sirius XM Prepares for Possible Bankruptcy By ANDREW ROSS >SORKIN and ZACHERY KOUWE > >Last summer, Mel Karmazin was rattling off his trademark one-liners to >talk up the future of SiriusXM Radio, the combined company he ran that >had just been blessed by regulators. > >He was planning to cut costs and expand a business that was already a >fixture in the lives of millions of Americans. ''Forty-three cents a >day -- it's not even vending machine coffee,'' he said at the time, >parrying a question about whether the softening economy might hurt >subscriptions. > >But now Sirius XM, the satellite radio company, has problems with much >bigger price tags. It has hired advisers to prepare for a possible >bankruptcy filing, people involved in the process said. > >That would, of course, be a grim turn of events for the normally upbeat >Mr. Karmazin, Sirius XM's chief executive, who had hoped to create a >mobile entertainment juggernaut with stars like Howard Stern. > >It is unclear how a bankruptcy would affect customers. Service is >unlikely to be interrupted, but the company might have to terminate >contracts with high-priced talent like Mr. Stern or Martha Stewart. > >A bankruptcy would make Sirius XM one of the largest casualties of the >credit squeeze. With over $5 billion in assets, it would be the >second-largest Chapter 11 filing so far this year, according to Capital >IQ. The filing by Smurfit-Stone, with assets of $7 billion, has been >the year's biggest to date. > >Sirius XM, which never turned a profit when both companies were >independent, is laden with $3.25 billion in debt. Its business model >has been dependent, in part, on the ability to roll over its enormous >debts -- used to finance sending satellites into space and attract >talent like Mr. Stern (who was paid $100 million a year) -- at low >rates for the foreseeable future until it could turn a profit. > >The company's success and failure are also tied to the faltering >fortunes of the automobile industry, which sells vehicles with its >radio technology installed and represented the largest customer base >among Sirius XM's 20 million subscribers. > >Sirius XM owes about $175 million in debt payments at the end of >February that it is unlikely to be able to pay. > >Sirius XM's problems could pave the way for a takeover by EchoStar, the >TV satellite company, which has bought up Sirius XM's debt. > >Mr. Karmazin has been locked in talks with EchoStar's chief executive, >Charles W. Ergen, over Sirius XM's options, people involved in the >talks said. The men are said not to get along, these people said, and >Mr. Karmazin had rebuffed Mr. Ergen's takeover advances before. > >Sirius XM hired Joseph A. Bondi of Alvarez & Marsal and Mark J. >Thompson, a bankruptcy lawyer with Simpson, Thacher & Bartlett, to help >prepare a Chapter 11 filing, these people said. > >Documents and analysis are close to completion and a filing could come >in days, according to a person familiar with the matter. > >The threat of bankruptcy could also be part of a negotiating dance with >Mr. Ergen, who could decide to convert his debt into equity instead of >demanding payment. > >In addition to the $175 million due in February, EchoStar also owns >$400 million of Sirius XM's debt due in December. If Sirius XM files >for bankruptcy, EchoStar could seek in court to take over the company. >Mr. Ergen, however, may be able to negotiate to convert his shares >before bankruptcy at an attractive rate and gain control of the >company, these people said. > >For Mr. Karmazin, the sale or bankruptcy of Sirius XM would be one of >his first failures. He founded Infinity Broadcasting, sold it to CBS >and later merged the combined companies into Viacom, where he had a >notoriously difficult relationship with Sumner M. Redstone, the >chairman, before being ousted. > >Mr. Karmazin bought two million shares of Sirius XM at $1.37 a share in >August. Before that, he had bought 20 million shares at an average >price of $5 each. On Tuesday, Sirius closed at 11.4 cents a share. > >Since the summer, the company's prospects have dimmed. > >''I'm not trying to paint the rosy picture, because we have challenges >connected to our liquidity and certainly our stock price is dreadful,'' >Mr. Karmazin said in December. ''But, you know, our revenues are >growing double digits. We're growing subscribers. We're not losing >subscribers.'' > >A spokeswoman for Mr. Karmazin declined to comment. A spokesman for >EchoStar could not be reached. > >Mr. Karmazin staked the success of the merger on nearly $400 million in >annual cost savings and the potential to gain subscribers through deals >with auto companies to put satellite radios into cars. > >But satellite radio failed to win over many younger listeners, and >competition from other sources slowed subscriber growth. ### Jonathan Mosen List Founder Audio List Help, Guidelines, Archives and more... http://www.pc-audio.org To unsubscribe from this list, send a blank email to: pc-audio-unsubscr...@pc-audio.org Jonathan Mosen List Founder Audio List Help, Guidelines, Archives and more... http://www.pc-audio.org To unsubscribe from this list, send a blank email to: pc-audio-unsubscr...@pc-audio.org
