Announcement Could Come This Week

It wasn't too long ago a number of pilots expressed concern at the buyout of XM Satellite Radio, provider of the invaluable XM WX satellite weather service, by rival Sirius.

Fliers were concerned their inflight weather displays would go blank if Sirius opted to discontinue providing that service to a relatively small subscriber base... fears that proved to be unfounded, as the sale was completed in November 2007 without any disruptions.

Alas, there's now a new problem... one that could be much, much worse. The New York Times reports the company now known as Sirius XM Radio is talking with advisers about a possible bankruptcy filing, due to a faltering subscriber base and absence of new credit sources. The company has $175 million in debt payments due at the end of February, that few expect it will be able to pay.

The bread-and-butter market for Sirius -- which has yet to make a profit, either independently or with XM -- is the automobile industry. Sirius XM radio systems installed in new vehicles make up the largest customer base among the roughly 20 million subscribers, who each pay a monthly fee to listen to hundreds of channels of entertainment and news programming.

Sizable as that revenue pool may seem, those monthly fees have come nowhere close to matching the millions of dollars spent by Sirius to send new transmission satellites into orbit... or, what Sirius has paid to retain popular talent for its programming, such as the $100 million paid to shock jock Howard Stern. Once touted as the next big thing in radio programming, Sirius has been outflanked by other, cheaper alternatives, such as Internet-based radio stations and MP3 players.

The Times says Sirius has survived so far by refinancing its roughly $3.25 billion in debt at low rates, payable when the company finally turns a profit. The viability of that business plan has evaporated in the global credit crisis.

In addition to talks with bankruptcy experts, Sirius CEO Mel Karmazin is also reportedly in negotiations with business rival Charles Ergen, chief executive of EchoStar, about a possible takeover. It could be a hostile one; Echostar holds a significant chunk of Sirius' debt, and could seek court approval to take over Sirius if a bankruptcy filing does indeed occur.

An announcement could come within days, according to the Times. What that may mean for XM WX remains to be seen. Stay tuned.

FMI: www.sirius.com/