Commercial-free satellite radio may be coming to an end. The New York Times is reporting that Sirius XM Radio is preparing for a possible Chapter 11 bankruptcy.That would make the company one of the largest casualties of the credit squeeze. With over $5 billion in assets, it would be the second-largest Chapter 11 filing so far this year, according to Capital IQ.
Sirius XM, which never turned a profit when both companies were independent, is laden with $3.25 billion in debt. In the month of February alone, they owe $175 million in debt payments that they are unlikely to be able to pay.
What's to blame for this? Apparently, satellite radio is failing to win over many younger listeners, and competition from other sources (such as Internet radio stations and iPod/iPhone radio stations) have slowed their subscriber growth.
In my opinion, Sirius XM offers a service that is too easy to duplicate and provide for free. Nowadays, anyone can launch a radio show. Even worse, I think they overestimated how many people would pay a monthly fee to not hear commercials. It never bothered me all that bad.
I will only be mildly disappointed if this happens. Satellite radio always struck me as a service without an audience. Yes the technology was cool, but there was not enough demand for the product.
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