Report: Sirius XM on the ropes, EchoStar ready to pounce
The satellite radio company could file for bankruptcy within days, according to the New York Times. Waiting in the wings? EchoStar, which has already taken on much of Sirius XM's mounting debt. So, is satellite radio about to go silent?
Well … not quite yet. I doubt that the service would go dark overnight were Sirius XM to file for bankruptcy protection, but as the Times points out, the company might have to cut some of its pricier shows—I'm looking at you, Howard Stern—during a restructuring.
Another scenario: A takeover by EchoStar, the satellite TV company that's circling Sirius XM like a vulture.
So, how did Sirius XM get into this mess? Chalk it up to a mountain of debt: $3.25 billion, give or take, about $175 million of which the cash-strapped company owes this month.
As Bloomberg reports, Sirius XM turned down a takeover bid from EchoStar back in December; since then, EchoStar has been buying up chunks of Sirius XM's debt.
Neither Sirius XM nor EchoStar are talking, but sources tell the New York Times that the two respective CEOs—who are "said not to get along"—are "locked" in negotiations. (That must be a fun meeting.)
Negotiations over … what? Well, the Wall Street Journal (via Tech Trader Daily) reports that EchoStar is offering to bail out Sirius XM by restructuring its debt and pumping in some much-needed cash—in exchange for total control, of course. If that happens, say hello to "Sirius XM: An EchoStar service."
The alternative: Sirius XM files for bankruptcy, leaving EchoStar to pick over the remains in bankruptcy court.
Either way, I'm pretty sure we're looking at the end of Sirius XM as we know it. The best scenario for subscribers, I'm guessing, is a takeover by the well-funded EchoStar, which could probably keep the satellite radio service afloat without skipping a beat.
But bankruptcy … well, if that happens, prepare for Howard Stern to be replaced by Crazy Chuck, broadcasting live from his mobile home in West Sacramento.