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Sirius XM, the remaining satellite radio broadcaster in the USA, is reportedly considering filing for chapter 11 protection from creditors as it becomes unable to service its huge debt.

Unable to make debt repayments of $175m, due at the end of the month, the New York Times reports, Sirius XM has taken on advisers to help consider the second largest bankruptcy filing of the credit crunch - $5bn of assets and millions of customers, but enough debt to run a small country.

The $3.25bn debt isn't a surprise. Launching satellites is hugely expensive and long-term debt was part of the business plan. But that debt was expected to be serviceable thanks to the cheap credit that has now all but disappeared from the financial markets - leading to the collapse of the Sirius XM share price, which stood at 11.4 cents on Tuesday.

The credit crunch has also slowed sales of new cars, some of which are fitted with a Sirius XM radio on a revenue-sharing deal with the manufacturers. Even where people are buying new cars they are selecting their options with care - and satellite radio isn't a priority.

Sirius XM has gained some listeners and has a big enough customer base to mean that bankruptcy won't lead to dead air. After all, the satellites are already up there. But those customers were gained by recruiting star talent, at star-talent rates: $100m a year for Howard Stern over 5 years, $30m to Martha Stewart, and $55m to Oprah Winfrey's Harpo Radio Inc. Bankruptcy would negate those deals, allowing Sirius XM to renegotiate or walk away, assuming their listeners would hang around for the ambiance.

The company could end up in the hands of EchoStar, who already own much of Sirius XM's debt, or could refinance through other means. ®

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