The Takeaway: Sirius Headed for Bankruptcy?

NY Times: Andrew Ross Sorkin and Zachery Kouwe broke the news yesterday that Sirius XM Radio, staggering under a $3.25 billion debt load, had hired bankruptcy advisers in anticipation of a possible Chapter 11 filing. "Service is unlikely to be interrupted, but the company might have to terminate contracts with high-priced talent like [Howard] Stern or Martha Stewart."

WSJ: It's not as though Sirius doesn't have other options. Satellite TV mogul Charles Ergen is offering to pitch in "several hundred million dollars" in exchange for control of the company, an offer that's been on the table since last year. "Sirius's management and board would likely expose themselves to litigation if they filed for bankruptcy in the face of an offer that would preserve at least some of investors' equity in the company," says the Journal.

NYP: And yet the Post's Peter Lauria says Sirius chief Mel Karmazin "is favoring a Chapter 11 filing" over a deal that would involve handing over the keys to Ergen. Or is he? Hedges Lauria, "news of a potential bankruptcy filing could be nothing more than brinkmanship on Karmazin's part in order to negotiate with Ergen."

BusinessWeek: One potential silver lining of going the Chapter 11 route: "Sirius XM may be able to renegotiate contracts with automakers, which install its radios in cars and receive a portion of subscription fees. Some analysts believe those revenue-sharing deals could be halved, particularly since auto sales have plummeted.". □

---