Just before Christmas, I wrote a controversial column called "10 things that won't survive the recession." Thing #10 was satellite radio, which dozens of readers disagreed with in passionate e-mails and comments. Now, it appears, the sole satellite radio company, Sirius XM, is about to file for bankruptcy.
Readers who subscribe to Sirius XM (I subscribe too, by the way) claim that satellite radio is just too wonderful to die, that somehow its sheer awesomeness will pull it through the hard times.
But the world doesn't work that way, unfortunately. The company was in dire trouble before the recession, and now the economic downturn will kill Sirius XM off and bury satellite radio forever.
In fact, even last year, the company's survival depended entirely on an enormous uptake in new subscribers. The company entered into 2009 with $3.4 billion of debt, some $300 million of which comes due on Tuesday. The company gets a huge percentage of its new subscribers from new-car buyers who choose the satellite radio option. Thanks to the recession, there has been an enormous drop in new car sales. And among those who are buying cars, a smaller percentage are choosing satellite subscriptions.
The bottom line is that there's simply no way Sirius XM can pay its bills. That's why, according to the New York Times, the company is preparing to file for Chapter 11.