Sirius XM Satellite Radio has hired advisers to arrange a possible bankruptcy filing which may pressure satellite television company EchoStar Corp., which harbors a considerable amount of Sirius XM debt. The filing could come within days as the documents and analyses are nearly completed, a source told The New York Times on Tuesday. Sirius, which is home to popular shock jock Howard Stern, has been struggling to refinance its debt as it faces payments of about $1 billion this year.
Charles Ergen, the co-founder and CEO of EchoStar – the former parent company of the Dish Network Corporation – took on the bulk of a $300 million portion of Sirius debt that matures Tuesday. Ergen made an offer to take control of Sirius XM last year which was rejected, the Wall Street Journal reported Monday . The looming potential bankruptcy may have an effect on Ergen – it could propel him to make an official offer for Sirius XM to avoid an auction in bankruptcy court or he might change his debt into an ownership stake in the company at a higher rate than first considered.
If it files for Chapter 11, Sirius XM would be the second-largest company to seek bankruptcy protection this year after the Smurfit-Stone Container Corporation.