BREAKING: Sirius XM Radio and Liberty Media reach $530 million agreement

[Reephdweller]

Orbitcast is reporting...

BREAKING: Sirius XM Radio and Liberty Media reach $530 million agreement (http://www.orbitcast.com/archives/breaking-sirius-xm-radio-and-liberty-media-reach-530-million-agreement.html)



Sirius XM Radio Inc. and Liberty Media Corporation have reached an agreement in which Liberty would invest an aggregate amount of $530 million into Sirius XM, in return for an equity stake in the company.

Developing...
The investment will be provided in two separate phases:


Liberty will loan Sirius XM Radio $280 million; $250 million of which will be funded today. The loan will bear an interest radio of 15% and come due in December 2012. This loan will save Sirius XM Radio from bankruptcy.
The 2nd phase will be a loan of $150 million to XM Satellite Radio (Sirius XM's wholly owned subsidiary). Liberty has also agreed to offer to purchase up to $100 million of the loans outstanding under XM Satellite Radio's existing credit facilities.

Upon completion of the second phase of the Liberty investments, Sirius XM will give Liberty a total of 12.5 million shares of preferred stock convertible into 40% of the common stock of SIRI.

Additionally, Liberty will receive seats on the Board of Directors. It's expected that John C. Malone (pictured, left) and Greg Maffei will be seated.

[hammersavage]

Sweet!

[DOHO@HOME]

That's great what the hell would we do with these stupid radios if they didn't pull this off?

[epo]

That's great what the hell would we do with these stupid radios if they didn't pull this off?

I'd probably record myself smashing the radio and posting the video to YouTube due to my great ANGER.

[brettmojo]

I'd probably record myself smashing the radio and posting the video to YouTube due to my great ANGER.
It's been done.

[Freitag]

I would have a PROTEST!

About what, I'm not sure. But I'd still PROTEST!



...then wait for CBS to flip K-rock again with Howard in the morning, O&A afternoons, R&F nights, and Nick Dip mid-days.

[epo]

It's been done.

Only then will they understand my RAGE!

[ToiletCrusher]

The only reason Liberty is moving in like this is because I only had 300 million in my wallet to contribute.

[Tallman388]

Thank you, John Malone!

[Freitag]

Gotta be honest.


If this doesn't save the company, then it falls squarely on Mel. Merger was his idea. he's been running the company for a while. He didn't want to give up control to Ergen. If this goes south, it's all on Mel.

[Freitag]

SIRI stock up.. a DIME!

[MisterSmith]

Gotta be honest.


If this doesn't save the company, then it falls squarely on Mel. Merger was his idea. he's been running the company for a while. He didn't want to give up control to Ergen. If this goes south, it's all on Mel.

I completely agree. I hope dodging this bullet will bring them to their senses.

SiriusXM really needs to break away from traditional radio sensibilities and give the satellite radio audience what they are looking for.

[NewYorkDragons80]

Gotta be honest.


If this doesn't save the company, then it falls squarely on Mel. Merger was his idea. he's been running the company for a while. He didn't want to give up control to Ergen. If this goes south, it's all on Mel.

You think they're gonna keep Mel around? At best, he'll get demoted.

[beachbum]

I assume that this prevents the hostie takeover by Echostar?

[NewYorkDragons80]

I assume that this prevents the hostie takeover by Echostar?

Nothing would prevent Echostar from buying up shares at this point, although it'd be double the price it was Monday. If you read into the backstory of the CEOs of Echostar and Liberty, they really are a couple of kids fighting in a playground. This was nothing but a power-grab in their broader communications struggle. Ergen looks kinda foolish after buying all that debt, but I guess Mel must feel pretty good about forcing 2 narcissists to eat up all his debt AND save his company, all without losing the controlling interest---yet. Still, the reason we're not seeing his SIRI stock skyrocket is because even with this shot in the arm, they're still in the hole big time and there's still an incredibly low demand for automobiles, which is a huge source of subscribers. It looks like Satellite Radio has bought itself another 2 years.

[brettmojo]

SIRI stock up.. a DIME!
SHIT! IT TRIPLED!

[MisterSmith]

I assume that this prevents the hostie takeover by Echostar?

Nothing would prevent Echostar from buying up shares at this point, although it'd be double the price it was Monday.

Echostar wasn't buying shares, they were purchasing Debt. That was putting them in a position to take control of the company (either in part or completely) if SiriusXM declared bankruptcy.

So yes, this did save them from a takeover by Echostar via bankruptcy - assuming that was Echostar's intention.

[Freitag]

You think they're gonna keep Mel around? At best, he'll get demoted.

The reason why Mel pushed off on the Echostar deal is begcause Ergen wanted to dump him. That's why the creditors flipped out.

There is a chance he gets demoted, but I don't think he's completely out of power yet. If the company falters or gets into the danger zone again, then he's screwed.

[NewYorkDragons80]

Echostar wasn't buying shares, they were purchasing Debt.

I didn't say they were. I said they could take over the company by purchasing stock.

[OGC]

So I guess it is safe for me to extend the subscriptions for my 2 radios that are dues to expire next month. I wonder if they will still offer me the $77 deal.

[Heather 8]

SIRI stock up.. a DIME!

http://www.wwagallery.com/images/CJG/CJGIITM.jpg

Oh boy! I’m rich! I’m wealthy! I’m socially independent! I’m secure! I’m rich! I’m rich!

[KnoxHarrington]

I can't see how Sirius can pay this loan when it comes due in the summer either, especially at 15% interest. You might as well have had Howie put it on his AMEX Black for that rate.

I think bankruptcy is only delayed, and Liberty is putting themselves at the front of the line when it happens.

[epo]

I can't see how Sirius can pay this loan when it comes due in the summer either, especially at 15% interest. You might as well have had Howie put it on his AMEX Black for that rate.

I think bankruptcy is only delayed, and Liberty is putting themselves at the front of the line when it happens.

Its essentially the same deal that Warren Buffett offers corporations in need. If you can't pay, then he owns your company, fixes it and sells it off.

[Hottub]

Its essentially the same deal that Warren Buffett offers corporations in need. If you can't pay, then he owns your company, fixes it and sells it off.

It's not a question of enough, pal. It's a zero sum game, somebody wins, somebody loses. Money itself isn't lost or made, it's simply transferred from one perception to another.


http://www.bannerblog.com.au/news/images/GordonGecko-740537.jpg

[Recyclerz]

Nothing would prevent Echostar from buying up shares at this point, although it'd be double the price it was Monday. If you read into the backstory of the CEOs of Echostar and Liberty, they really are a couple of kids fighting in a playground. This was nothing but a power-grab in their broader communications struggle. Ergen looks kinda foolish after buying all that debt, but I guess Mel must feel pretty good about forcing 2 narcissists to eat up all his debt AND save his company, all without losing the controlling interest---yet. Still, the reason we're not seeing his SIRI stock skyrocket is because even with this shot in the arm, they're still in the hole big time and there's still an incredibly low demand for automobiles, which is a huge source of subscribers. It looks like Satellite Radio has bought itself another 2 years.

I haven't looked at the details yet but I suspect that Echostar comes out of this deal with a tidy profit, assuming they bought the SIRI debt at a discount and are now getting paid back at par. I think Mel K has bought himself some time but that these kinds of deals are what he does best so I wouldn't bet against him.

I think satellite radio actually belongs as an operating division of some big media company in that it will be in the "cash cow" box of that matrix once the big debts get settled or written down. The industry turned out not to be the paradigm shift that everybody was buying into on the way up but 18 million paying customers is not a bad bidness to be in once you get past the overpaid contracts (Howie, Martha, Oprah, etc.).

I suspect we'll be getting more commercials on R&F and O&A though. Hopefully, the live reads will get to keep the "Bennington touch".

[ChrisTheCop]

This is all because Liberty holds her father, Sirius, accountable for the death of her husband, Terrestrial Radio.

http://img59.imageshack.us/img59/8164/Lost-sun.jpg

[NewYorkDragons80]

I can't see how Sirius can pay this loan when it comes due in the summer either, especially at 15% interest. You might as well have had Howie put it on his AMEX Black for that rate.

I think bankruptcy is only delayed, and Liberty is putting themselves at the front of the line when it happens.

The thing is that aside from the mismanagement, the product has proven itself popular. 18 million people is a significant achievement, and it's only growing. As it stands, most people who bought satellite got it for the music and don't want to fork over an additional $7-10 per month for one or two stations they *might* listen to on the other side. As a means of increasing revenue, I can't see how these "Best of" packages were even remotely successful. They should've offered the a la carte service as promised. If Howard 101 or the Virus or the NFL was available for $1 or $2 per month alongside the best of package, people not only would've gone with the inexpensive one or two channels, but many others would've purchased a "Best of" with the impression that they'd saved money. Instead you have the current situation, where I'll bet you that Sirius 197 has a listener base in the four figure range.

[STC-Dub]

Cool, I can renew my subscription. Hopefully they will resign Ron and Fez for a couple more years. I do think some of the big contract will go away but I am pretty sure that R&F are not among the higher priced talent -- not that they shouldn't be...

[K.C.]

I'm disappointed. I was hoping for Dish Network to purchase it.

[Gvac]

I bet The Bandit is fucking a bag of money as we speak.

[boosterp]

I'm disappointed. I was hoping for Dish Network to purchase it.

You and I both.

[STC-Dub]

The guy from Dish Network wanted control of the company and Mel is not going to give that up; I actually think he would let the company fail before he would give up control.

[Recyclerz]

Interesting analysis from the NY Times economics blog

Dealbook (http://dealbook.blogs.nytimes.com/2009/02/18/parsing-sirius-xms-form-8-k-siriuss-last-chance/#more-32255)

[STC-Dub]

Very intersting. In theory Echostar could still be in play, at least for a little while.

[Freitag]

SIRI is now at 0.40 cents.

[Snoogans]

SIRI is now at 0.40 cents.

anthony said he bought a whole bunch of it at like 12 cents

[pittphantoms]

Ant bought 100000 shares... so basically every penny it goes up - he makes a grand...

This stock is being slowed by the shorts - $0.40 is a battleground right now... I still think it goes above $1.00 in the next couple months - but this stock is shorted so badly that its hard to fight it off.

[NewYorkDragons80]

Can you believe that SIRI is the only thing in my portfolio in the black?

[NewYorkDragons80]

Now it's down to $.31 on a 2-day loss

[K.C.]

I still think it goes above $1.00 in the next couple months

Based on what??

They have ridiculous debt, stagnant subscriber growth, huge operating costs, and even spec won't run it up, because of how timid the market is.

This Liberty Media thing was a stay of execution.

The only thing that would really move the stock in the immediate future would be if Karmazin gets the boot...and even as badly as he's done with the company, it'd still probably drop off that news (despite it being the best news that could possible happen for SiriusXM at this point).

I thought there was a chance a few weeks ago that it could creep up to this 30-40 cent range based on the fact that they did dodge bankrupcty, but I think this is its plateau. I would be surprised if it didn't sink back down into the 20s or high teen over the next few weeks.

[NewYorkDragons80]

Damn. It crossed the $.40 and $.50 thresholds in 3 days

[Recyclerz]

Bumpity bump bump.

Mel Karmazin to step down in February 2013 (http://www.bloomberg.com/news/2012-10-23/siriusxm-chief-mel-karmazin-to-step-down-in-february.html?cmpid=yhoo)

So Sirius XM gets a new boss and the management paralysis over who is going to be in charge ends. What do you think the odds are that the mid-day melodrama on the Opie & Anthony channel escapes the notice of some new go-getter brought in to maximize profits?

[Dan 'Hampton]

O and a mentioned that Sirius was much more giving this negotiation considering someone else would have to deal with them.

[foodcourtdruide]

Things like this used to freak me out because I'd be afraid of losing my favorite show. However, I think if R&F left SiriusXM they'd simply do a for-pay podcast.