Sirius XM Radio (NASDAQ:SIRI) is trying to avoid filing for bankruptcy and is attempting to renegotiate its pricey contracts. Meanwhile Mel Karmazin's company is looking for an investor, in talks with John Malone's Liberty Media (LINTA), in order to avoid a hostile takeover.
This coming Tuesday, February 17, Sirius XM will have $175 million in debt come due, and it's unlikely that it'll be able to pay up. The company carries a total of $3.25 billion in debt. With the stock down over 95 percent over the past year, now trading around 7 cents, it's been a rough year for the company that conquered FCC concerns to merge two rivals. Now CEO Karmazin is trying to renegotiate programming deals with Major League Baseball, the NFL and Oprah.
In the midst of its financial troubles Sirius XM is getting caught in a battle between the two largest satellite TV providers. Echostar (NASDAQ:DISH) has been buying Sirius XM's debt, looking to take over the company as part of a strategy to keep the satellite radio company solvent. Looking to avoid that takeover Sirius is turning to John Malone's LIberty Media which has a controlling interest in EchoStar's competitor DirectTV (DTV).
Now the battle is on between John Malone and Dish's Charles Ergen for control of the struggling radio broadcaster ahead of the Feb 17 deadline. An investment from Malone could make EchoStar's takeover more expensive, but if EchoStar wins the battle, CEO Mel Karmazin would likely lose his job. If Malone's Liberty does a full-out acquisition, Karmazin would likely keep this role.
The decline of Sirius XM is pretty remarkable. There was so much opposition to the merger of these two rivals. But its stock price, hovering under a dime, just goes to show that there truly was enough competition that the merger was anything but anti-competitive.