Sirius XM Radio Expected To File For Bankruptcy

They touted it as radio from the sky, without all those annoying commercials.

But while the satellites flew, there were always questions about whether the actual business would be able to stay in orbit.

And it now appears the answer could be “no.”

Published reports warn that Sirius XM Radio, the service that delivers a wide variety of exclusive radio stations from the sky, could be heading for bankruptcy. The two firms – Sirius and XM Radio -merged in the U.S. last February, when neither seemed able to stand on its own.

The technology eventually came to Canada, although both entities remain separately owned here.

The companies got off to a huge start in 1997, when Sirius spirited away popular shock jock Howard Stern for an eye popping salary of $100 million.

But despite having an estimated 18 million subscribers in the U.S. and eking out a customer base in the Great White North, the business reception for this radio entity has never been static free in the marketplace.

The parent service down south was losing fistfuls of money, even as it tried to cut costs and offerings after the merger was approved by American regulators last July.

But a softening of the economy, the availability of free ‘no-commercials’ stations over the Internet and the downturn in car sales – where an abundance of radio listening takes place – has hit the company hard.

When it’s a choice between satellite delivered music and groceries or school supplies, the latter will always win out.

Sirius XM is seen by many as a frill in a time when frills simply aren’t affordable.

Sources at the company have told advisers to prepare for a bankruptcy filing that could place the future of the service in serious – and Sirius – doubt.

The company has a billion dollars U.S. worth of debt coming due this year alone and there’s no real way to cover it. And the firm has never turned a profit in its existence. 

It’s not year clear what bankruptcy would mean for current subscribers or whether its high priced talent like Stern or Martha Stewart could be kept on the air. And things are even murkier on this side of the border, where two separate companies own XM and its competitor.

While both have Canadian content mandated under CRTC rules, they also depend heavily on their American originator for programming.  And if that source disappeared, it’s not clear if the service could continue here.

There are reports that EchoStar, the company that owns the DISH Network, a satellite TV service in the U.S., may make a play for the merged creation, potentially letting the music, talk, comedy, sports and other channels play on.

But neither of the big players in the deal like each other very much and published reports indicate they’ve been locked in bitter negotiations for a long time – without getting anywhere.

If you’re a satellite radio listener, what does it mean to you and the equipment you bought for the purpose? It’s impossible to say for sure.

If the company is taken over, it’s likely the music will keep playing. But there could be cutbacks in the channels available. And Stern’s ongoing presence, a key audience draw, is far from certain.

The same may go for any bankruptcy proceedings, at least in the weeks and months ahead.

So is there a future for radio from the sky? Stay tuned. While you still can.

Photo credit: Robert Sullivan/AFP/Getty Images