Faced with a possible acquisition by another company, Sirius XM has reportedly hired advisers to consider filing for bankruptcy.
The New York Times reports that the satellite radio service is saddled with $3.25 billion in debt. Furthermore, the economy hasn't been kind to the company that invested heavily in satellites and big-name talent like Howard Stern in hopes of eventually turning a profit. Even before Sirius and XM merged last summer, the two companies never got out of the red on their own.
The general consensus among bloggers and analysts is that a bankruptcy filing will have little impact on consumers, at least for now. Media mogul Charlie Ergen, chairman of the Dish Network and owner of the set-top box maker EchoStar, reportedly has interest in snatching up Sirius XM. He already owns $475 million of the company's debt, between the amount that's due now and in December. However, the Times reports that Ergen and Sirius XM Chief Executive Mel Karmazin don't get along, so the outcome is still pretty murky.
Most customers also won't have to worry about an increase in cost, as a condition of last year's merger includes a three-year price freeze. However, Sirius XM already announced plans last month for a $2 increase in family plans and a new fee of $3 for Internet streaming.
Even Sirius XM's big-time contracts, such as Stern, Chris Russo and Major League Baseball, don't seem to be in jeopardy at the moment. Wired notes that those contracts could be renegotiated in the event of a takeover, but it's too early to say whether any of them will cease to exist.
Still, the news brings discussion on whether the concept of satellite radio can survive among similar options on the Internet. From a business perspective alone, beaming information through space will always be costlier than sending it through cyberspace.
