Chapter 11 = 11 Cents Per Share for Sirius XM

They aren’t the only ones filing for bankruptcy lately, but it’s interesting that even a “new media” company like Sirius XM satellite radio is contemplating seeking relief from creditors:

 Sirius XM Radio Inc. has hired advisers to prepare for a possible bankruptcy filing, which could come in days, according to a news report. 

The New York Times said late Tuesday documents and analysis of a potential Chapter 11 filing are nearly complete, say people close to the company. 

Sirius, whose radio personalities include shock jock Howard Stern, has struggled to refinance its debt load at a time when banks are skittish about lending. About $1 billion worth of debt comes due in 2009. 

One of the supposed Sirius advantages was commercial-free music, available anywhere. But with Pandora available on the Web providing the same service (and customized channels that fit individual interests), and also with an iPhone application, that seems like a less distinct advantage for Sirius XM.
I’ve enjoyed the rare occasions when I’ve had a rental car with satellite radio, but can’t see paying a monthly fee for the service.
Apparently I’m not alone.

Bankrupt Star Tribune


Last night, the Star Tribune of Minneapolis, Minn. reported on its Web site that it was filing for bankruptcy:

The filing, which was made with the U.S. Bankruptcy Court in the southern district of New York, had been expected for months. It follows several missed payments to the paper’s lenders, and it comes less than two years after a private equity group, New York-based Avista Capital Partners, bought the paper for $530 million.

In its filing, the newspaper listed assets of $493.2 million and liabilities of $661.1 million.

Like most newspapers, the Star Tribune has experienced a sharp decline in print advertising. Its earnings before interest, taxes and debt payments were about $26 million in 2008, down from about $59 million in 2007 and $115 million in 2004.

I’ve written several times previously about the immense economic challenges facing traditional media, especially newspapers. The Star Tribune case is of particular interest to me as a life-long Minnesota resident. McClatchy bought the paper for $1.2 billion in 1998 and sold it two years ago for $530 million. So the current economic climate has something to do with the bankruptcy filing, but the economic decline for mainstream media isn’t of recent origin.  Other newspaper companies, include Chicago’s Tribune Company, also have filed for bankruptcy.

I think there will always be a Star Tribune in some form, but clearly we’ll be seeing major changes as it tries to find a way to operate profitably.

All the more reason for anyone involved in communications to devote time to learning about social media. A couple of decades ago you could reach a mass “audience” through just a few big media hits, whether via PR or advertising. No more. The so-called “audience” has dispersed to millions of alternatives, mainly on the Web, and its members don’t just want to passively consume. We want to interact.

Newspapers are going to need to take this into account as they go through their Chapter 11 experiences. Many if not most have offered interaction and the ability to comment on their Web sites for quite some time, so simple interactivity isn’t going to be enough. To survive and thrive, I think they’re going to need to find ways to make their communities contributors instead of just commenters on what the “professionals” produce.
What do you think? Can newspapers survive? How do they need to change?