Posted by chicagomedia.org on February 05, 2009 at 16:14:00:
In Reply to: Dish TV (EchoStar) to take over Sirius XM? posted by chicagomedia.org on February 05, 2009 at 16:12:58:
Sirius XM being stalked by Dish?
by Tom Taylor
Thursday, February 5th 2009
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Sirius XM EchoStar has "quietly accumulated Sirius XM debt", says the Wall Street Journal.
Object - a takeover? Possibly a squeeze-play to force Mel Karmazin's company into Chapter 11, then swap its debt for equity and grab even more of the cheap debt from other bondholders? The Journal says EchoStar/Dish Network's Charles Ergen could also try to snatch the prize before it gets to Chapter 11, and that "either way, current shareholders would be left with nothing." Why is EchoStar interested? Its own core satellite TV business has been drifting and Ergen's searching for a new strategy. His company could also benefit from the Sirius XM ground facilities and repeaters. You probably couldn't combine the celestial hardware of the TV satellite service and the only remaining satellite radio supplier. But there would be economies of scale with the back-office aspects of the two subscription-based operations.
Mel may be running out of options.
The Journal reporters say that Sirius XM is "up against a wall", with a total of $925 million in debt coming due this year. It's "negotiating hard with Major League Baseball to let Sirius tap into" the $60 million it's got in escrow for MLB. That's payable in March. As previously reported Sirius XM has a hefty payment to the NFL coming up, and the league's worried about getting it. Sure enough, the Journal says Sirius XM "owes $43 million to the NFL on February 17." And car sales, which are critical to Sirius XM hitting its subscriber targets, may actually slump below 10 million vehicles a year. Suddenly - this is high drama.