Sirius XM agrees to $530 million Liberty stake

Troubled Sirius XM Radio announced Tuesday, following reports, that it will accept an investment from cable giant Liberty Media.

The investment, which will save the satellite radio company from bankruptcy or a hostile takeover, will take the form of $530 million in loans in exchange for an equity stake.

The first phase of the investment will consist of a $280 million loan, $250 million of which will be funded immediately on Tuesday, a statement from Sirius XM noted. The second phase, a $150 million loan, will be aimed specifically at the company's XM Satellite Radio subsidiary. Liberty, which owns a big stake in satellite television provider DirecTV, will also offer to purchase up to $100 million worth of XM's outstanding loans.

"We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets," said Sirius XM CEO Mel Karmazin, whom creditors had been threatening to oust if the company chose bankruptcy over an investment deal. "Liberty's investment is an important validation of what Sirius XM has already achieved and a vote of confidence in what we will achieve. This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM."

Sirius XM was formed in July when longstanding merger agreements between two rival satellite radio companies, Sirius Satellite Radio and XM Satellite Radio, closed following FCC approval.

In October, Karmazin took the stage at a New York business-media conference and insisted that the company was on a firm path to profitability despite the fact that the credit crunch--then in its first throes--had hit Sirius XM particularly hard.

This post was expanded at 6:20 a.m. PST.

[bdaughtry]

Sirius XM is doomed. They should have gone into bankruptcy to unload their foolish contracts with the like of Howard Stern. When the money runs out from this deal, that's where they'll be......in bankruptcy.

[paulsecic]

I knew from day 1 XM Sirius wouldn't last 20 years. That's why I didn't buy it. Great doorstoppers now.

[zizzybaloobah]

I can't imagine them lasting much longer. When you renew, they offer a lifetime subscription for $400 - but who would put out that kind of dough when there's doubt about the companies survival? The monthly subscriptions are going up (shocker!) They are working hard to get subscribers to renew, but are strangely silent when you ask about the negative things that have happened since the merger (dropped channels, annoying DJ's, etc.). If you're not interested in pleasing your existing customers, how are you going to stay in business. It's not like Comcast where they have a local government-sanctioned monopolies and can act as they please.

[ddhboy]

Mel is an idiot. Instead of talking about a Sirius XM chapter 11 bankruptcy now, we'll be talking about a chapter 7 bankruptcy a few months later.

[gopnick]

Sirius XM had plenty of revenue, if you discounted the constant (huge) interest payments on debt. Liberty Media can sit on this debt much, much longer than Sirius XM. This is a good marriage of old money and new technology.

[georgiarat]

Until the CEO goes nothing will get any better but they probably would have to use the loan money to pay off his golden parachute.

[mchamma416]

Yes, this is a make or break scenario but I'm going with LIberty/XMSirius on this one. I am surprised at how slow the country is taking to satellite radio. This reminds me of HBO back in the early 80's.

[tgrenier]

I hope they make it. I cannot imagine going back to AM/FM.

[Velvet-Elvis]

I am an XM subscriber ...<br /><br />Since the SIRIUS-XM merger, I have been annoyed with the dropped channels, channel name changes and having to listen to a DJ instead of a constant feed of music. It also appears that the playlist for most channels isn't as deep as it was when solely on XM (Channel 44, for instance -- was "Fred" and now is "First Wave" ... and when I leave it streaming on desktop, I constantly hear the same songs)<br /><br />That said, I hope that satellite radio (regardless of whether it's SIRIUS-XM or some other company) survives. I've tried listening to local radio again, and it's darn near unbearable. Only saving grace is my local NPR affiliate.

[mikehill33]

Howard Stern better do a show 5 days a week and give me more ORIGINAL PROGRAMMING!<br /><br />Sirius got lazy with their programming!

[dennisl59]

Good Money after Bad...MORONS!!!

[chili_picante]

I'm an XM subscriber and agree 100% with Velvet-Elvis. Friends that had Sirius before the merger also agree that the programming has gotten worse. In addition, the online-listening app has several bugs that were introduced after the merger, and now they want to charge extra for on-line streaming! <br />My hope is that CEO Mel will still be ousted!

[leyla_a]

it's funny because I am a Sirius subsriber since before the merger and i feel the exact same way. My channels seem so much more "watered-down" and generic since we've picked up the XM channels. My "left of center" channel used to be great with lots of independent artists and now it is just the usual stuff you would hear on terrestial radio

[leyla_a]

Sirius is the best thing that has happened to me in ages. I hope that they will do what ever it takes to make this work. Being able to tune in on a Sunday afternoon and enjoy two hours of "french punk rock" or a radio show hosted by my favorite artist is so refreshing. <br /> <br />http://www.sundaymorningsoliloquy.com

[kaysebekude]

I wish XM could have stayed single because this marriage is not working out. XM definitely had a better playlist. Sirius might as well be commercial so repititious.

[JIMBOB200]

I agree that the music is repeated way to often. I listen to the 60's on 6 channel. When it was XM only, you would go days without hearing the same song, now it is the same songs every day, and many are not played at all. Wake up Mel, and smell the roses before it gets to be too late.