February 11, 2009 2:03 PM
Simpson Thacher Advising Sirius XM on Possible Bankruptcy Filing
Posted by Brian Baxter
It seems like only yesterday when everyone was talking about how satellite radio was going to wipe its terrestrial competitors from the face of the earth.
But unless you're Howard Stern or Chris Russo, satellite radio hasn't been the cash cow many expected. That's especially true for the architects of the $13 billion merger between Sirius and XM in February 2007.
The Justice Department approved the Sirius-XM nuptials in March 2008, but the prolonged economic crisis apparently now has New York-based Sirius XM Radio on the brink of bankruptcy.
Saddled with $3.25 billion in debt, The New York Times reports that the company has hired Simpson Thacher & Bartlett bankruptcy partner Mark Thompson to prepare a filing for Chapter 11 protection from creditors.
The hiring makes sense, being that the firm was retained along with Wiley Rein to advise on Sirius's merger with XM. (Thompson declined an Am Law Daily request for comment.)
Should Sirius XM file for Chapter 11, the NYT's Dealbook reports it would be the second-largest bankruptcy of 2009 after the January filing by Smurfit-Stone Container, the nation's largest manufacturer of cardboard boxes. (Sidley Austin corporate reorganization cochair James Conlan is serving as bankruptcy counsel to Chicago-based Smurfit-Stone.)
The Times reports that Sirius XM has been hobbled by dwindling auto sales--many vehicles are sold already installed with satellite radio technology--and the company's debt is being bought up by suburban Denver-based EchoStar, which could mount a takeover bid in bankruptcy court.
Should Sirius XM find itself in bankruptcy, the company might have to divest itself of its high-profile on-air talent like Stern.
You can be sure that FCC lawyers are standing by.