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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 Targon on 2/17/2009 11:21:39 AM , Rating: 2
Of course, because the problems affecting the auto industry are generated by the overall economy being down. When people can not afford to pay cash for something, they need credit. When banks refuse to lend to people who are credit-worthy, those people can not buy the goods.

Ford had seen problems with the "SUV-only" problems ahead of time, so while there are problems, Ford isn't having nearly as much trouble as GM. If GM fails, there may be a market for repairing GM cars and trucks as the focus of the business for maybe ten more years, but after the first three years, even that market would quickly dry up as people get rid of their GM cars/tricks and buy something from a company that still exists, just because they KNOW they can get parts and repairs for what they have.

If Apple suddenly went out of business, after only three years, most people with a Mac would already switch to a Windows based computer just because there would still be support, and new parts could be gotten easily. People will only stick with a product from a dead company ONLY if they can continue getting support and parts, or if they can do the work themselves.

"Well, there may be a reason why they call them 'Mac' trucks! Windows machines will not be trucks." -- Microsoft CEO Steve Ballmer

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