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Liberty Media saves Sirius XM from Echostar

Sirius XM, the largest provider of satellite radio, has struggled mightily in the months since the company was created by the merger of Sirius and XM.  On the verge of bankruptcy, Sirius has been saved for the time being by Liberty Media, which has agreed to loan the company a large amount of money to prevent it from being taken over by Charles Ergen's EchoStar or forced to declare bankruptcy.

The deal loans Sirius XM $530M USD, enough to pay off its debts to EchoStar, and in exchange Liberty Media will have a 40 percent stake in the company via 12.5 million shares of preferred stock.  The move will dilute the stock of current shareholders, but given the fact that its low value was largely due to the uncertainty surrounding the company, this is welcome news to many.

Sirius XM will have Liberty Media's chief executive John Malone, who brokered the deal with Sirius XM chief Mel Karmazin, on its board of directors.  The company also expects to add Liberty Media's Greg Maffei to its board.

The loans issued to Sirius XM will come at a 15 percent interest rate.  The deal is a significant one as it means the nation's top satellite TV provider (DirecTV, a subsidiary of Liberty Media) and its top satellite radio provider, Sirius XM, will be closely tied. 

No word has been announced if the companies will plan joint packages or marketing, but given their new ties, such promotions seem likely.



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RE: Finally!
By Chudilo on 2/17/2009 11:07:03 AM , Rating: 3
Well then brake them up into smaller pieces and let the smaller pieces be consolidated or purchased by other vendors. Some of the pieces will inevitably fail. But if anything it would be a great improvement for the industry.

That's what the justice department is there for, with the whole process of reviewing all major corporate the mergers. If they allowed these guys to grow "too big to fail" then they didn't do their job either.

What is the point of the whole Justice department having to approve a merger, if the country's economy depends on livelihood of a particular company.

Break them up. Smaller pieces could really be more effective in managing quality, reliability and could potentially be consolidated amongst the big three.

As an added benefit UAW won't have as much power as well.


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