Sirius XM agrees to $530 million Liberty Media stake

Sirius XM agrees to $530 million Liberty Media stake

Summary: With the threat of bankruptcy looming large last week, troubled Sirius XM Radio announced today that it will accept a $530 million investment from cable giant Liberty Media. The $530 million investment, which will save the satellite radio company from bankruptcy (or a hostile takeover), will take the form of loans in exchange for an equity stake.

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With the threat of bankruptcy looming large last week, troubled Sirius XM Radio announced today that it will accept a $530 million investment from cable giant Liberty Media.

The $530 million investment, which will save the satellite radio company from bankruptcy (or a hostile takeover), will take the form of 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.

Sirius XM CEO Mel Karmazin, whom creditors had been threatening to oust if the company chose bankruptcy over an investment deal, had this to say:

"We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets. 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 had hit Sirius XM particularly hard.

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Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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4 comments
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  • Interesting that a cable provider is funding them.

    Wonder if they will start shifting utilization of satellites?
    Been_Done_Before
  • RE: Sirius XM agrees to $530 million Liberty Media stake

    Sirius will never succeed with their format. I chose XM to avoid disk jockey blather. Sirius will eat your money and leave you nothing Liberty.
    nemc
    • You do realize...

      ...that Sirius and XM are now one and the same?
      itpro_z
  • RE: Sirius XM agrees to $530 million Liberty Media stake

    I was an early adopter of Sirius Satellite radio. It was great for a short while. But then, they decided to add DJ's and in one case added a DJ that insisted in walking all over the music (talking during the instrumental openings or endings). That was too much!

    If I was PAYING for a service, I expect professionalism. Walking on the music is amateurish and in my case, cost them a customer and engendered lots of bad will. Every time someone asks me about satellite radio, I advise against it and tell them my story.

    Since then, (2003) nothing has changed. DJ's still talk over the music, the play lists are shallow and management continues to emulate the failed model of terrestrial radio.

    Let em go under, they had their shot and blew it. . . several times. They have no friend here.

    W Horton
    Oklahoma
    okc_rn@...