The plan for Sirius XM may wait another two weeks

Sirius XM shareholders may already have reached a boiling point in their efforts to learn how it is working through a mountain of financing debt, the first stage of which came due at the end of last month. Now they will have to wait at least another two weeks, as the satellite radio broadcaster let the US government know this morning that its annual report for last year will be delayed until then, at least.

Sirius XM spokesperson indicated to Betanews this morning that the sole reason for the filing delay is to give the company more time to examine its refinancing plan. "The Company noted that senior management has been focused on the recent refinancing transactions and needs additional time to complete its Form 10-K," reads a corporate statement this morning. Sirius XM has filed the necessary 12b-25 forms for both the company and its XM Satellite Radio divisions, it says, so it's following the rules.

Two weeks ago, Sirius XM reached a deal with John Malone's Liberty Media, which apparently enabled the broadcaster to meet its immediate debt commitments. This came on the very day that some $300 million in notes came due, but it meant that Malone's group received a significant share of the company.

The merger deal between XM and Sirius came just before the collapse of the credit markets in the US, and may not have even happened had Sirius CEO Mel Karmazin completed negotiating deal even one day later. Speculation has centered around whether Sirius XM would have to file for Chapter 11 protection; but an independent news service specializing on just Sirius XM has hypothesized as to whether the company could simply file for protection for its XM holdings and radio divisions, leaving Sirius fully financed.

The Sirius Buzz hypothesis (published prior to the Liberty deal) notes the existence of a US patent, issued in April 2008, for a multi-tier satellite broadcasting system. This patent was issued to Agere Systems, a principal provider of systems-on-a-chip to Sirius. Though the description of the patent clearly describes it as enabling two tiers of programming -- one commercial-free, as Sirius has always been, and a separate tier for commercials -- the blog hypothesizes that the same technology could be used to broadcast XM's current channels through the Sirius satellite.

After such a transfer were made, hypothetically speaking, subscribers to both services could still keep their existing radios; and Sirius would no longer need XM to maintain technology infrastructure it no longer uses. This, of course, is a bit of a stretch; it assumes that the secondary audio channel designed for the playback of "audio clips" -- i.e., radio ads -- could also play back clips that run about 24 hours per day, consisting of XM shows.

Sirius XM, of course, has issued no comment on this hypothesis, although even if it's not technically possible to broadcast both services' schedules through a single satellite, just the thought of separating the two services' infrastructures to some degree while merging the programming, may point the way to a potential financial solution for the merged entity.

Not that Sirius XM needs any more bad news, but another truckload of it came on Friday from an unexpected source: The US Copyright Royalty Board, which sets the royalty rates broadcasters must pay for use of commercial music, announced that it's granting a request by SoundExchange -- the performance rights organization -- made three weeks ago, to audit both Sirius' and XM's revenue statements for 2007 and 2008. The intent, evidently, is to see whether the merged entity owes the PRO back royalties, perhaps with interest and penalty, for the past two years. Sirius XM's Reilly indicated to us this morning that this latest incident did not play into the company's decision to delay its 10-K.

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