Satellite radio company Sirius XM (SIRI) is preparing for a potential bankruptcy filing, the New York Times reports. The documents are almost done and Sirius could file for Chapter 11 within days, the Times reports.
What does this mean?
- EchoStar’s Charlie Ergen, who’s been building up a large swath of Sirius XM debt, might have to make a formal bid for Sirius XM now. He made an unsolicited offer for the company last year and was shot down, the WSJ reported yesterday.
- Sirius XM’s equity would get wiped. Shares dropped 30% after hours to 8 cents, tying an all-time low.
- Sirius XM could get a chance to renegotiate or kill expensive contracts, many of which were inflated based on bidding wars between Sirius and XM. This includes deals with Howard Stern, Major League Baseball, etc.
- The FCC really, really blew it, waiting for more than a year before approving the Sirius XM merger.