As The New York Times reported this morning, satellite radio’s Sirius XM might be planning to file for bankruptcy, as it owes a $175 million payment by the end of the month and is in a total of $3.25 billion of debt. There are many reasons the company has been failing to make a profit (less people buying cars equals less people having satellite radios installed for possible subscription, etc.), but one big problem has been the cost of their high-priced talent, such as Howard Stern, Martha Stewart, and Bob Dylan.
Stern’s $100 million per year contract alone would cover more than half of that $175 million payment Sirius XM owes this month. Although Stern undoubtedly drives many costumers to sign up for the service, his 9-figure price tag might just be too much. The likely huge salaries for Martha Stewart, the host of Living Radio, and Bob Dylan, the host of Theme Time Radio Hour, have not been released to the public, but many people are wondering if satellite radio will need to make employment cutbacks just like any other company.
A TV company called Echostar is rumored to be possibly taking over Sirius XM, so the airwaves aren’t going to go silent anytime soon. The Wall Street Journal notes, “It does not matter if Sirius (SIRI) goes bankrupt now. Creditors and bondholders may care. It probably will not be noticed by customers. In that way, it will be like an airline bankruptcy.”
Even if a corporate takeover keeps Sirius XM on the air, hopefully they can also keep Howard Stern and Bob Dylan on as well, or else a lot of people will probably notice.