Creditors may oust Sirius XM chief

Sirius XM Radio's chief executive may lose his job if the company chooses to file for bankruptcy protection.

A group of creditors tells The Wall Street Journal that it will seek the removal of CEO Mel Karmazin if the company chooses bankruptcy over a deal with an investor that would allow it to remain solvent.

"Creditors will act quickly and definitively if they perceive that management is acting in their own interest and not in the best interest of the estate," Edward Weisfelner, a partner with Brown Rudnick, the law firm representing the creditor group, told the newspaper. "The board of directors should carefully consider the ramifications."

The company is reportedly meeting this weekend to determine a course of action, with a final decision expected as early as Monday.

Sirius is staring at a significant debt crisis. According to a story that appeared on Yahoo Finance, financial research firm Moody's "thinks there's a 'high likelihood' that Sirius will fail to repay or refinance its debt in 2009." And that debt is reportedly coming due Tuesday.

If the company does file for bankruptcy, the creditors could petition the court to have Sirius' management removed and have the company placed under the stewardship of an independent trustee.

Sirius has been rumored to be seeking some sort of an investment from Liberty Media, which controls DirecTV, according to several media reports quoting anonymous sources close to the matter. A deal between the satellite radio giant and the largest U.S. satellite-TV provider could help Sirius fend off bankruptcy and an unsolicited takeover attempt from satellite company EchoStar, which has bought up Sirius' debt.

The company is also rumored to be mulling a bankruptcy filing to pressure Charles Ergen, the satellite-TV magnate who recently bought up most of Sirius' debt, to make a formal offer for the company.

[TomMariner]

No need to wait for bankrupcy. Mr. Mel Karmazin made some of the stupidest deals in business history. He won the fight with XM over ruling the satellite air waves, but it was a phyrric victory that will kill them both. The jerk dramatically overpaid for talent including the "guy who saved Sirius", the :King of all Media".

XM got their receivers in most cars with easy deals that locked in listeners, concentrated on music, and paid attention to the satellite technology. And Mel Karmazin made sure both bulked up on debt. Just when Internet Radio mobile is available in most viable markets with a gazillion free channels.

And now this turkey is driving the stake through the heart of the entire business by killing non-commercial channels, raising already high fees and charging fees for the XM Internet connection as the new free channels are strengthening.

All we can hope is that much of Mr. Mel Karmazin's personal assets are tied up in his company so he can feel the pain of his ignorant management.

[bdaughtry]

Sirius XM must go to bankruptcy. It's the only way to get out of their bone-headed deals with the likes of Howard Stern. The concept for ad-free satellite radio is so great, that only a complete idiot could screw it up.....and guess what.....they did. Loose the multi-million dollar deals for worthless content, price the service at $5 per month, and watch it gain new subscribers by the millions.

[dennisl59]

The Great Satellite Radio Experiment has FAILED. Why? I don't care. It's over, done and finished. Thank You.

[Renegade Knight]

Well now, I'd much rather they save the company and thereby the shareholders than the debt vultures. If the vultures see value enough to compete over who gets the company, it seems there is hope after all. If the company itself does what it needs to do.

[dennisl59]

SIRI closed at...$.10 a share. That's 10 Cents....in the real world that is ZERO. The Company Stock is worthless and if you own any, you have my condolences.

[aka_tripleB]

That could be why everyone is so interested in the company. Even if Sirius-XM flops after it's purchased. You more than make up your investment selling the assets, such as the satellites and spectrum.

[pjhenry1216]

XM Radio was so much better before the merger. The XM channels that were lost are sorely missed. The channels that were 'replaced' are nowhere near as good anymore. Once the channels had changed, it was painfully obvious. I heard the same songs over and over again. The DJs are nowhere near as good. I think if they kept XM programming in place, they'd probably still be in a problem, but nowhere near as big. I don't think its coincidence that this happened so soon after the merger. Sirius may have had more money at the time, but XM was the talent. Now, they have no money or talent. I miss my XM.

[bschmidt25]

I was shocked (well, not totally shocked) last night when I was listening for about an hour and noticed that not one, twice, but 3 times they played the SAME SONG at the SAME TIME on adjacent channels (XM20 and 21). I would agree wholeheartedly that it was much better before they monkeyed with the programming back in November. Some channels that were deleted are sorely missed by me and other ones where there was "no change" according to them really aren't the same. I knew the claim that it was going to benefit was bull as soon as I heard it. The new charge for online radio really gets me too.

[roadsider]

Stern was signed on BEFORE Karmazin was brought aboard. Since then, Sirius subscribers ballooned. It could be argued that Stern cost them nothing to bring aboard. Fifty mil to Oprah and whatever amount to Martha Stewart are definitely more dubious deals. Neither of them are radio personalities. I can't speak for the quality of XM before the merger, but in my small tastes of both services before the merger, I saw nothing offered by either networks that wasn't better on my own ipod or that I couldn't stream on the internet. I think we'll soon see that Satellite radio will go down as a transitional technogy that had its merits, but that in the end, missed the boat.

If Stern was smart, he'd be putting together a pay internet service for his program and turning it into a podcast. It won't be long before we all have the internet in our cars in any case.

[crazynexus]

I have sirius radio, have had for over a year. I really enjoy it, but after the merger, they brought over some garbage content from XM. And as for streaming over internet, I'd love to see you stream via the internet while driving through Montana, or through the mountains of Colorado and Tennessee, while never losing connection except from an overpass. Satellite radio brings commercial free radio anywhere and everywhere you go. I still listen to Channel 14, Classic Vinyl all the time on my sirius during my daily commute to and from work. Nothing beats listening to football on the radio either, the commentators are way better than TV!

[bschmidt25]

I agree about the reach of satellite radio - it's a huge plus on long trips, especially when I don't want to fool around with my iPod. But that's about all that's keeping me there right now. The number of commercial free stations is down to single digits on the ones I listen to where before there were only a handful that had any commercials. It's frustrating. They took a good product and are doing a great job of running it into the ground.

[kief35]

Mel told the board that the price would go down if the merger went though. Typical big corp. b.s. I was a big Stern fan but after what was promised to what you really got is bullShi@. They lost another customer!