# What if XM/Sirius fails?



## Davenlr (Sep 16, 2006)

Assuming for a second that Xm/Sirius fails, what are the chances that Directv (which accounts fior millions of in home XM listeners) would just buy up the company and keep it running? Maybe even offer Directv subs a "mobile discount" to add a radio like they do to add a sat tv receiver? Im sure they have the capitol, and thay would be saving whatever they are paying XM now, for each subscriber. Just a thought.


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## Lee L (Aug 15, 2002)

I would say it is more likely that some one would come in and buy the freed up spectrum from the FCC or SIriusXM at fire sale prices and try to make a go at it again. This time, they could complain that all the extra conditions made Sirisu and XM fail and maybe get a better deal in terms of restrictions and PI programming.


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## Stuart Sweet (Jun 19, 2006)

I don't see it being likely that DIRECTV would buy SiriusXM. If anyone did, I suspect it would be a company like Music Choice or Muzak.


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## djlong (Jul 8, 2002)

Freed up spectrum?

Think a minute - think it through.

If S/XM defaults, they basically file for bankruptcy. This means either restructuring or liquidation.

Restructuring: Shareholders are toast. Creditors get back some fraction of what they're owed and debt is reduced/restructured.

Liquidation: Everything is sold. HOWEVER - considering that this is a service with nearly 20 million paying customers, a fleet of satellites, a string of studios and infrastructure - SOMEONE can pick it up and continue to operate the service. Why? Because if someone buys it for a dollar without all that debt, it's a license to print money (remember TWENTY MILLION SUBSCRIBERS). So the question only remains - who would the high bidder be and for how much?


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## Dolly (Jan 30, 2007)

But with the record of Sat. Radio (no profit even with that number of subs) would someone come in and even try to make a go of it? But I think the number of subs isn't even correct because I've seen in all kinds of places that Sirius counted cars that hadn't been sold as subs :eek2: You don't get money from subs like that  I don't know if they are still doing that or not? It will be interesting to see what figures they put out next because if the XM people posting on Forums are really cancelling they would have had to have taken a hit. However, there is no way to even have a clue as to what people that don't post on Forums are doing.


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## SDizzle (Jan 1, 2007)

If someone buys them after bankruptcy, they CAN turn a profit from the 20 Million subs....as they are not operating with all the debt that the current company has. The financial reports right now take a full P&L into account with current debt and outgoing money.


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## Dolly (Jan 30, 2007)

You know I saw the first part of a story some time ago that stated Sirius XM was cutting money from their Ad budget. Well I can see that one company would be cheaper to do Ads for than 2, but where were they doing Ads anyway? I had never heard of Sat. Radio, Sirius, or XM until I got my car last year that had an XM Radio in it :eek2: How can people buy something they have never heard of


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## James Long (Apr 17, 2003)

I can see a company like DISH buying it ... they seem to like to do more than offer satellite TV service (buying Sling Media, having Echostar designed and built receivers for many years, branching out into DTV boxes with the DTVPal).

The value for DISH would be the bandwidth ... TV anywhere. But the competition is the new Qualicom driven services for live TV (Verizon sells it as VCAST TV - other companies have similar services). Imagine small screen TV that works everywhere your Sirius XM radio works.


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## Dolly (Jan 30, 2007)

James Long said:


> I can see a company like DISH buying it ... they seem to like to do more than offer satellite TV service (buying Sling Media, having Echostar designed and built receivers for many years, branching out into DTV boxes with the DTVPal).
> 
> The value for DISH would be the bandwidth ... TV anywhere. But the competition is the new Qualicom driven services for live TV (Verizon sells it as VCAST TV - other companies have similar services). Imagine small screen TV that works everywhere your Sirius XM radio works.


I guess this is a problem with being older than dirt. I don't understand why people want to watch TV on a small screen


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## tcusta00 (Dec 31, 2007)

You guys are assuming that they will still have assets after a bankruptcy. It's not as simple as declaring bankruptcy, writing off the debt, and someone buys it free of debt. Assets will be sold, contracts terminated, financials fully vetted, etc. What's left will be a fraction of the stated subscribers, who are now pissed off more than ever because Stern isn't there anymore, the NFL contract is gone, etc etc.


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## djlong (Jul 8, 2002)

What happens in liquidation is that people bid on the assets. All those assets are geared towards one thing - satellite radio and SOMEBODY should be able to figure out how to make a profit with over $200M/month coming in. The shareholders and creditors take a bath. there's too much "there" there for it to completely go away. You're talking BILLIONS in subscriber fees alone coming in every year.

A judge would decide which bid (liquidation) would be best for the ongoing concern. for reorganization, a judge has to sign off on a neogtiated deal.


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## Ken S (Feb 13, 2007)

I haven't looked at the licensing deal they have the FCC...if they fail that spectrum may revert back. Certainly any sale of spectrum would have to have FCC approval.


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## djlong (Jul 8, 2002)

As far as I know, XM/S now owns that badwidth. If the company failed then that spectrum would be considered an asset to the bankruptcy court and, as such, could NOT be simply taken back by the government as that is unconstitutional. The government would have to buy it back.

But, again, we're looking at a company that has over 200 MILLION DOLLARS A MONTH in paying customers, plus advertising.

This is like the idiocy of the GM executive saying the other day that at 10 million units sold per year, there cannot be a viable auto industry in this country. That's complete bullfeces. If you can't figure out how to make a profit selling 10 million of something each year, you don't deserve to be in business - I don't care if you used to sell 17 million units in previous years.


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## wilbur_the_goose (Aug 16, 2006)

I for one think that if SIRI makes it thru the recession, they'll end up doing well long-term.

I really love their product, but it's probably one of the first things to go if I were to be laid off.


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## Cap'n Preshoot (Jul 16, 2006)

Their stock (NASDAQ: SIRI) has certainly been circling the drain lately, hovering around 15 ¢ a share. How much longer will it be before they are de-listed from NASDAQ and become an OTC stock? 

They're also prostituting themselves in the marketplace right now, offering 1-year subscriptions for $77 (prepaid) and offering to knock $100 off a lifetime subscription. However, with the company obviously in peril, subscribing for anything other than a month-to-month or quarterly plan could be as risky as investing in their stock.


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## Cap'n Preshoot (Jul 16, 2006)

In reference to the bandwidth/spectrum comments, aren't they simply leasing some transponder timeslots from one of the major satellite providers? If so, that would not be seen as an asset in bankruptcy, would it? Granted it's spectrum, but in the grand scheme of things it's only a sliver and is being provided to them for fee on a contractual basis. They may own their uplink equipment but they surely don't own the bird.


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## James Long (Apr 17, 2003)

XM and Sirius launched their own satellites ... there is hardware behind their licenses.


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## djlong (Jul 8, 2002)

Sirius had 3 initial satellites, XM had two (XM-1 "Rock" and XM-2 "Roll") and has since put up two more (XM-3 "Rhythm" and XM-4 "Blues"). Sirius has their satellites in an inclined orbit that looks like it does a figure-8 in the sky so they have 2 of their 3 satellites in the northern hemisphere at any one time. This is one reason that Sirius was in worse financial shape. They started spending money earlier, built and launched more satellites with more technically complex and expensive infrastucture (since their satellites were not at a fixed point in the sky, they have to be tracked for uplinking) and didn't get any paying customers until AFTER XM went live (due to technology problems that delayed the production of radios for the market). I can't remember if Sirius put up any more birds.


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## Dolly (Jan 30, 2007)

Hey people let's not go there. Think positive that Sirius XM will make it.
I know the stock is in trouble and it is a really bad time for stocks in general. I personally wonder if something I heard isn't right that certain stocks are getting beat down? And Sirius XM was a stock I did hear mentioned.


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## mercator1 (Sep 11, 2008)

If it fails, then I will have to listen to terrestrial radio for the first time in 7 years, and I'm likely to kill some random person that day.


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## cb7214 (Jan 25, 2007)

another thing to consider, and alot of people may not know is that part of the bandwidth owned and used by XM is used by OnStar also to provide part of their service

from XM's wikipedia page 

"The XM signal uses 12.5 MHz of the S band: 2332.5 to 2345.0 MHz. XM provides 128 kilobits per second of its bandwidth to OnStar Corporation for use with XM-enabled GM vehicles, regardless of whether their owners are XM subscribers"

also they are in a contract with OnStar to provide the equipment in GM vehicles until 2013

also from XM's wikipedia page

"June 7 1999 : with GM's investment in XM, they enter into a 12-year "Distribution Agreement" between XM and GM subsdiary, OnStar Corporation. The agreement calls for exclusive installation of XM Satellite Radio into GM vehicles from November 12, 2001 until November 2013. OnStar must meet specific escalating installation rates each year, while XM must make extensive payments to OnStar for the installation and sale of XM in their vehicles, while sharing revenue earned from these radios with OnStar – as well as payments on the exclusivity agreement. "


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## Dolly (Jan 30, 2007)

mercator1 said:


> If it fails, then I will have to listen to terrestrial radio for the first time in 7 years, and I'm likely to kill some random person that day.


+1 That was funny !rolling But I agree and I haven't had Sat. radio anywhere near that long. But people are talking about assets being sold off, but K-Mart went belly up and continued to exist as a business. Plus later on they were even able to buy Sears--that I never have understood :nono:


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## tcusta00 (Dec 31, 2007)

Dolly said:


> but K-Mart went belly up and continued to exist as a business. Plus later on they were even able to buy Sears--that I never have understood :nono:


Bankruptcy ≠ "belly up" or discontinuation of operations.


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## Reggie3 (Feb 20, 2006)

djlong said:


> Sirius had 3 initial satellites, XM had two (XM-1 "Rock" and XM-2 "Roll") and has since put up two more (XM-3 "Rhythm" and XM-4 "Blues"). Sirius has their satellites in an inclined orbit that looks like it does a figure-8 in the sky so they have 2 of their 3 satellites in the northern hemisphere at any one time. This is one reason that Sirius was in worse financial shape. They started spending money earlier, built and launched more satellites with more technically complex and expensive infrastucture (since their satellites were not at a fixed point in the sky, they have to be tracked for uplinking) and didn't get any paying customers until AFTER XM went live (due to technology problems that delayed the production of radios for the market). I can't remember if Sirius put up any more birds.


Thanks for your intelligent postings here. All you said about bankruptcy is correct. The other reason Sirius is underwater was the extreme spending spree (company policy) that they indulge in. They bought exclusive contracts with car manufacturers, Howard Stern (too obvious), and other exclusive contracts with retailers. XM was loosing money but was more restrained and saw that the market share that Sirius was gaining due to their spending made it impossible for them to turn a profit ever - and trying to equal spending would have lead to bankruptcy for them too.

Sadly XM had the best technology and programming (Howard not withstanding)

With management of Sirius running things - I doubt that they can starve off bankruptcy unless they can hold out till their existing contracts expire.


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## Dolly (Jan 30, 2007)

tcusta00 said:


> Bankruptcy ≠ "belly up" or discontinuation of operations.


What I meant was K-Mart filed for Bankruptcy, but they continued to have stores that were open and doing business. Then after they came out of Bankruptcy they were able to buy Sears--that is what I never was able to understand.


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## tcusta00 (Dec 31, 2007)

Dolly said:


> What I meant was K-Mart filed for Bankruptcy, but they continued to have stores that were open and doing business. Then after they came out of Bankruptcy they were able to buy Sears--that is what I never was able to understand.


You should read up on what bankruptcy actually _is_ and I think you'll better understand the Sears/Kmart merger. From the link above:

_The principal focus of modern insolvency legislation and business debt restructuring practices no longer rests on the liquidation and elimination of insolvent entities but on the remodeling of the financial and organizational structure of debtors experiencing financial distress so as to permit the rehabilitation and continuation of their business._

Bankruptcy isn't an exercise in how to kill a company; it's meant to save it. They restructure the debts, clean management out and completely reorganize the company. It worked in the case of Kmart and they turned a profit and were able to strike the deal with Sears a year after emerging from bankruptcy (AKA: they were deemed as a financially viable concern).

You can read a little more about it in this article:

http://www.msnbc.msn.com/id/6509683/


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## Dolly (Jan 30, 2007)

Thanks so very much for the information :sunsmile: It is amazing to me that you can put so many different questions in this Forum and someone can always supply an answer


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## James Long (Apr 17, 2003)

Dolly said:


> It is amazing to me that you can put so many different questions in this Forum and someone can always supply an answer


Sometimes the answers are accurate too! :lol:


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## Dolly (Jan 30, 2007)

James Long said:


> Sometimes the answers are accurate too! :lol:


!rolling But seriously this Forum is loaded with people that are very smart and have information on many subjects. I guess that is one reason DBSTalk is a great Forum :sunsmile:


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