Liberty Media Rides in to Rescue Sirius XM

Chairman John Malone to Join Radio Company's Board

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NEW YORK ( -- Sirius XM Satellite Radio won't be going bankrupt just yet. The troubled Mel Karmazin-helmed radio company announced a $530 million investment from Liberty Media Corp., home of DirecTV, today, the day it was due to repay $171.6 million in bonds. The Liberty deal includes a $280 million senior-secured loan to Sirius, $250 million of which will be used toward the debts due today.

Liberty Media is the second satellite TV company to invest in Sirius XM in recent weeks, following a $400 million investment from EchoStar, which includes satellite TV provider Dish Network at the end of 2008 and a surprise takeover bid from CEO Charlie Ergen.

Sirius XM's combined audience of nearly 19 million satellite radio subscribers would make an attractive pairing with a satellite-TV company. Yet Thomas Eagan, a media analyst for Collins Stewart, wrote last week in an investor note of Liberty's possible acquisition of Sirius XM, "DirecTV certainly does not need it. Their operations lead the industry."

EchoStar, meanwhile, could use the extra subscribers, having lost 10,000 in the third quarter of 2008, taking a net loss of $308 million.

In the meantime, Sirius subsidiary XM Satellite Radio will receive an additional loan of $150 million, with Liberty offering to finance up to $100 million of XM's outstanding loans to its lenders. In exchange, Liberty will receive 12.5 million shares of preferred stock, or 40% of Sirius' common shares, and two seats on the company's board. Liberty Chairman John Malone and President-CEO Greg Maffei are expected to join Sirius XM's board of directors following today's investment.

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