Charlie Ergen, EchoStar Seeking Control Of Sirius XM Radio

The Wall Street Journal reports (subscription) that Sirius XM chief Mel Karmazin is "scrambling to raise about $175 million" to fend off a takeover threat from Charlie Ergen's EchoStar Corp.

Ergen, ranked by Forbes as the #35 richest man in America (net worth $8.1 billion), has been buying up Sirius XM's debt, to the tune of $400 million, since late summer, the Journal reports:

Sirius XM Radio Inc. Chief Executive Mel Karmazin is scrambling to raise about $175 million by Feb. 17 to fend off the company's bankruptcy and a possible takeover threat from EchoStar Corp.

Sirius has been in talks for several weeks with EchoStar, which holds around $400 million of the satellite-radio company's debt, people familiar with the matter said.

EchoStar Chairman and Chief Executive Charles Ergen, who is believed to be seeking control of Sirius, has been accumulating Sirius debt since late summer, the people said. EchoStar holds most of the $175 million in Sirius debt expiring in February and owns more than half of a $400 million tranche coming due in December. Both stakes were purchased from hedge funds. Sirius's total debt load is $3.25 billion. Sirius didn't respond to a request for comment.

The Journal describes the process of takeover by acquiring debt as "an unorthodox strategy" and one that "could backfire."

Karmazin successfully merged Sirius with XM Satellite radio in July 2008. Ergen was ranked the #1 richest media mogul in Forbes' recent breakdown of billionaires by industry.

Comments

[olderdem]

Further to previous post:

Remember the drama Congress produced on protecting the consumer from the merger -- how would they feel about someone wanting to abandon them completely?), Even if Ergen could convince the FCC and Congress to abandon satellite radio it is more than likely the FCC and Congress would demand the bandwidth be put up for action -- Ergen would not necessarily get any of it in a BK procedure. Sirius XM and any successor company owns that bandwidth for one purpose and if they want to use it for something else, it doesn't necessary belong to them any longer. Any change of control, as with the merger, requires FCC approval

What Ergen really wants a piece of satellite radio, for the purpose of making money from his investment in satellite radio. So far Sirius hasn't been willing to give him as big a share of the equity as he wants for his debt, so he's trying to negotiate in public, by suggesting Sirius really can't survive and he doesn't want it to. He is trying to talk down his investment even as he is trying to buy more -- he wants it on the cheap, but he does want it for satellite radio, none of this other BS the MSM and uninformed analysts talk about.

[olderdem]

Ergen liquidating Sirius is a ploy by Ergen. Most of the reports that discuss this somehow miss the point that the satellites, repeaters and more importantly the bandwidth are dedicated to satellite radio. If Ergen wanted to use for a different purpose it would require at least FCC approval, if not Congressional approval to reallocate that bandwidth for a different purpose. The satellites themselves are single purpose -- the XM satellites can't even be converted for use with the Sirius signal. All the repeaters require permission from the FCC and the locations themselves are leased -- t he value of them as an "asset" is minimal.

[alanposting]

I had dish (Echostar) for 4 years and I can't begin to tell you how awful that company is managed. I would have no TV before I would EVER deal with them again. Their billing department I thought was set up with such incompetence that it must be on purpose...­..it just did not make sense that it was that BAD. Two years after my cancellation , a bill from them pops up on my credit card. After finally getting someone in their "fraud" department they determined indeed it was not my bill. My Visa advised me to get a new CC number and Dish said they would reverse the charge....­..of course which they did not. If you ever thought that you have had trouble with XM, fasten you seat belts if that Ergen gets it, cause you ain't
seen nothing yet.

[OneLiberalLady]

I had DISH and now have Direct satelite which I much prefer. And I absolutely love the XM/Sirius stations that I have with my Direct package and would be very sad to have anyone mess with them. Long live "The Bridge" (one of the stations)!

[bbbtmenw]

ECHOSTAR is just as bad as SIRIUS when it comes to GAY issues. Sirius helped to block some liberal programming in my area and Echostar own DISH which does not carry a Gay network, as do other cable services.

I would like to see at least one liberal station on the REGULAR RADIO (AM) and one gay station available on each cable network. Prejudice shouldn't be a means to monopolize the airwaves with only one view.

DON'T GET ME STARTED ON DIGITAL TV and how it affects low income families more than anyone. I was glad to see that there was at least some measure taken to delay this.

WHAT HAPPENED TO AIRWAVES BEING PUBLIC DOMAIN and PROTECTED? I am just feeling that if I (or anyone) don't pay for my cable access and I don't subscribe to pay radio soon, I will eventually be cut off from every source of news and entertainment available on the ONCE PUBLIC AIRWAVES.

[olderdem]

Sirius has a channel dedicated to Gay interests.

http://www.sirius.com/outq

[bbbtmenw]

I would not be unhappy to see Sirius go. BUT there is a bigger issue that I would like to discuss.

MONOPOLY and AM I GETTING THE REAL STORY.

Only on one point do I agree with GOP, When Reagan became President, I thought it was great. Well, until he avoided AIDS, got rid of the FAIRNESS DOCTRINE, and set a new stage for the horrible mess we are in now.

When Reagan started there were over 200 OWNERS of NEWSPAPERS, TV STATIONS, and Radio STATIONS and there was a limit to how many of these could be owned in one area. Also, the Fairness Doctrine forced each to provide the opposing view (News Integrity was higher as well) and you felt a little better that you might be getting the REAL STORY.

NOW, about 7 PEOPLE (Companies) own just about every broadcast network, major newspaper, and radio stations. THESE 7, CONTROL MOST OF WHAT WE HEAR and what programming is available.

Taking away the FAIRNESS DOCTRINE allowed for radio shows like Rush Limbaugh and FOX news from taking over the airwaves and spouting their lies with little rebuttal, and none on their stations.

END THE MONOPOLIES and THE HATE STATIONS Increased access. Now, it is happening to the banks; One using bailout money to buy another.

[nator]

I was all for the merger of Sirius and XM, but now I see how harmful to the consumer it has been. The elimination of Sirius Disorder all but eliminated free form radio from satellite, which was one of the best things it had going over terrestrial radio. The Loft is a poor substitute, playing mostly sleepy singer songwriter music-hardly eclectic. The music variety across all of the stations has taken a major nosedive. The number of commercials on the non-music stations has increased by a lot. Now they want to charge you for listening on the internet, which had previously been free. It is clear to anyone watching that listening to their customers is not at the top of Sirius/XM's priority list, no matter what they say to the contrary.

Mel took a great thing and mostly made it a lot worse, and has apparently run the company into the ground, with the stock price in the basement and insurmountable debt. I don't know much about the CEO of Echostar, but I think a change is now necessary.

BRING BACK SIRIUS DISORDER!!!!

http://www.facebook.com/home.php?#/group.php?gid=33348129081

[luke150]

One theory says that Echostar will take control of Sirius, liquidate the business and use their terrestrial network to provide wireless internet (Echostar tried unsuccessfully to build one). If that is the case, there won't be satellite radio any more. This will mean even fewer options for good radio, fewer options for uncensored talk (Howard Stern). So many of you may complain today, but tomorrow sadly may not have a reason to complain at all. My point is, be careful what you wish for.

[luke150]

That's really bad news. I am addicted to satellite radio, the coolest thing since hot water. Hopefully, it will remain in service.

[OneLiberalLady]

I'll drink to that! I only get some of the stations through my TV satellite but they are marvelous. We would miss it so much if satellite radio disappeared.

[RegularEinstein]

I have had Sirius since early '06, bought mostly for Howard Stern. While I admit some of the programming has declined in quality and the commercials on all but the music channels are increasing and becoming more annoying, I could never go back to crap terrestrial radio. Even on the Sirius-XM channels with ads the commercials last at most 5 minutes (compared with up to 30 minutes on terrestrial). And on Sirius-XM not only are the music channels still commercial-free but you would be hard pressed to hear the same song more than twice in a 24 hour period even on the "Top 40" channels (can't say that about the Clear-Channel owned cookie cutter terrestrial stations, which often only play the top 10 Britney Spears and Milie Cyrus wannabes all day).

[nancytheragingliberal]

Sirius deserves what it gets. Here I went out and bought a radio to listen Air America Radio and poof! Gone. I then had to pay for XM radio to listen to AAR. This week, XM dumped Cenk and TYT and boy, am I pi**ed, along with dumping of MSNBC, Sam Sedar, the list goes on and on. I wish the new owner success and hope he restores lost programs to my XM. I am NOT happy to pay for something, plus, all of the re-runs are maddening. At least have a guest host, when a person is not at work. Why am I paying $ for re-runs?

[bulfinch]

Mel and Howie sucked this company dry.

[nogimmicks]

Yep.. Quickly pocketed the money and let it die from excessive money bleeding.

[instarx]

I used to love XM, but since the merger with Sirius the quality has gone down. I think Sirius users are just as unhappy. Oh, and they raised the price.

So I've decided to cancel it. I can understand why they are in financial trouble - they don't really care about their customers. The switch-over was unannounced to users - you just went out one morning and 30% of your stations weren't there any more.

i just got an iPod Touch, so I'll spend that subscription money on albums. And Air America can be downloaded too. Bye bye, Sirius/XM.

[katyann]

I have had Sirius for five years. I have really enjoyed it when it works. I began because of Randi Rhodes, Thom Hartmann, Rachel Maddow, & Laura Flanders on Air America as well as BBC and the two channels of NPR Talk. Air American went away to XM, to my great disappointment, but I kept up my subscription because of BBC. The signal at my house was bad, and while it worked perfectly in my morning car commute, the late afternoon signal would break up with maddening regularity. My husband bought a car with XM included, forcing us to decide "Sirius or XM?" To get both, costs a surcharge despite the fact that it is the same company now. The complications of the menu and the added subscription fees got to be so annoying that we have decided to let it lapse. Why can't these guys be straightforward and not turn a radio subscription into a major waste of time and money? Answer: greed and mismanagement.

[MarthaCB]

Progressive radio is the only reason I have XM. The new line up is horrible. No more Young Turks,
only 1 hour or Rachel Maddow, 3 painful hours of Bill Prest and an annoying Alex Bennett. Ed Shultz? They are making an effort to have the worst in radio. I am hoping Randi will return. or i will just cancel my
subscription and sign up for podcasts elsewhere.
I do not have progressive terrestrial radio in my area. I hope it will change.

[johnbchap]

The Young Turks were the best. I can't bear to listen to some of the other progressives even if I agree with them! Lynn, Alex, Ed, Mark, et al. can just be insufferable! Just put on Cenk & Stepanie Miller at a decent time.

[Cinnamonape]

I'm wondering if the diversity will increase when the open up the "promised" non-commercial access on the Sirius after the merger. One plan I heard was that a consortium of college and independent non-com stations would get several channels and allocate different some of their best DJ's to playing world music, jazz, blues, reggae, alternative. That way one would have truly different specialists covering a genre. When I listen to Sirius today I hear the same alternative bands played all the time, same songs, repeatedly, often in the same order. Then you get the DJ going off on some weird existential rap thinking he's a poet. Nothing about the music, the band, what the people in did before or after. It's as tightly formatted as commercial stations. That's not an alternative.

I'd love to have a channel that played some rock-steady, some early ska, maybe some calypso, dub, music from the Straight Up Reggae period, and some dancehall and reggaeton.­..with some Clash, Dub Syndicate, African Head Charge or other bands influenced by Reggae or Caribbean sounds either mixed in or given sets. Unfortunately that level of selection and creativity is absent from Sirius right now.

[johnbchap]

The Loft's morning wake-up sets' DJ always tell a lot about the artists & their background. I hear a lot of The Clash obscure cuts, Joe Strummer & Mescaleros on Deep Cuts, The Loft & Celtic Crush . Yeah, 1st Wave alternative plays the same bands - that's what the station is; but what bands get played too much or not enough on XMU? Agreed that early ska, calypso & dub would be welcome at the joint or margaritaville.