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Low media noise and high thermal stability are required to achieve high density magnetic recording. Reduction of magnetic grain size is required in order to minimize transition jitter. However, very small grains become unstable and spontaneously reverse their magnetization due to thermal fluctuations. Future high density (>20 Gbit/in2) recording systems are likely to operate in a media noise dominated environment and could exhibit a certain amount of signal decay. Recording performance degradation caused by media noise and thermal decay is evaluated. Density-dependent amplitude decay is caused by the presence of demagnetization fields and results in increasing level of nonlinear distortions and overwrite degradation. Magnetization decay is accompanied by changes in media noise in an unstable media as determined by the relative contributions of the transition and particulate noises. Experimental measurements suggest, that channel bit error rate degradation in an unstable medium is determined by signal and noise evolution, as well as by pattern-dependent distortions.