According to the Wall Street Journal, Charles Ergen's EchoStar Corp. has been accumulating substantial portions of debt from Sirius XM Radio Inc. in what could be the first move in an attempt to take over the company.
Charles Ergen, who himself is the 87th richest man in the world (net worth of $9.5 billion) and controls a satellite empire surrounding Dish Network and EchoStar, has recently acquired part of the $300 million of Sirius XM debt that matures on February 17th, according to WSJ's sources.
Sirius XM has worked down the total debt to about $175 million, but it isn't clear whether Ergen participated in that exchange. The Wall Street Journal reports that Ergen could also be buying up the senior bank debt due in May.
Echostar could be trying to use the debt as a way take control of the company - either inside or outside of bankruptcy - but either way current shareholders would be left with nothing, reports WSJ.
The newspaper offers a possible scenario as to how EchoStar could be trying to take over Sirius XM Radio:
EchoStar could push to buy up to 51% or more of Sirius XM's bank debt with the knowledge that the company will soon need a concession (like a waiver) from its bank group. EchoStar can then block this move and force a bankruptcy - and attempt to take control of Sirius XM in the bankruptcy process.
Effectively, EchoStar would swap its debt for equity in Sirius XM Radio.
As to why EchoStar would be interested in doing this move? The Wall Street Journal suggested that Ergen may be interested in the company's terrestrial repeater network - a footprint on the ground that the company has long sought out.
[Wall Street Journal (subscription required)]
Thanks Chris!
Sirius XM has worked down the total debt to about $175 million, but it isn't clear whether Ergen participated in that exchange. The Wall Street Journal reports that Ergen could also be buying up the senior bank debt due in May.
Echostar could be trying to use the debt as a way take control of the company - either inside or outside of bankruptcy - but either way current shareholders would be left with nothing, reports WSJ.
The newspaper offers a possible scenario as to how EchoStar could be trying to take over Sirius XM Radio:
EchoStar could push to buy up to 51% or more of Sirius XM's bank debt with the knowledge that the company will soon need a concession (like a waiver) from its bank group. EchoStar can then block this move and force a bankruptcy - and attempt to take control of Sirius XM in the bankruptcy process.
Effectively, EchoStar would swap its debt for equity in Sirius XM Radio.
As to why EchoStar would be interested in doing this move? The Wall Street Journal suggested that Ergen may be interested in the company's terrestrial repeater network - a footprint on the ground that the company has long sought out.
[Wall Street Journal (subscription required)]
Thanks Chris!
Poof and I am gone like that. All mourn my death since I died the day the merger took place. Now here is the tombstone, now an Echostar Company.
No sign of a takeover here...So far all they have done is gain equity for taking over Sirius debt. They are one of us and so far not near a large enough player for takeover unless something dramatically changes in the future.
http://www.bloggingstocks.com/2009/02/05/echostar-may-kill-sirius-siri-shareholders/
Yep, Mel is almost out of a job. This is the beginning of the end of SiriusXM.
Let's do it...While Mel has not been in charge for long, this could be a positive step or it could be worse? I hope it happens.
Excuse my ignorance, guys...but is this a bad thing? Won't it mean that we will still be able to use our radios, just pay someone else for it?
forgive my ignorance guys, but isn' this a GOOD thing? Won't we still be able to use our radios...just pay someone else for it?
Joe Clayton, who hired Howard Stern and Mel Karmazin, left the BOD of Sirius when Gary Parsons/XM came on board. He then moved to Echostar BOD last Oct. Hmmm... Mel has an ace up his sleeve in a company to help buy up some of the debt to get Sirus over the hump.
Looks like a buy signal to me.
Since before 2004, Echo Star, Radio Shack, and Sirius have been partnering, to deliver Sat Rad (on DISH TV)and sell their products. This is a business investment from a partner not a take over. The WSJ spun this to be negative as always. Not many facts. We don't know what Echo Star bought. Just a lot of speculation. Should be good long term.
Question...
I know nothing about Echostar.
Would we be doomed by such a takeover or could we be blessed?
I'm sorry, but as huge a fan I am of satellite radio, there are too many
of us disgusted with what Sirius has done to it. This is a company that has no concern for their subscribers and has turned a great concept into glorified FM radio.
I would welcome a takeover if it came from a company that could better a failed execution.
look at the futures on sirius-xm up 12.5% looks like a good day.
I hope Ergen tea bags Karmazen before he axes him!
Just remember Mel knows what is best for us - remember he told us so after the channel merge. It'll be ok...
Echostar owns Dish Network, it kinda makes sense as it would allow the company to corner the satellite radio market and be a good promotional tool for its Dish Network service.
You all seem to think that satellite radio is going to "die" and "go bankrupt". There's far too much money invested in both of these companies for it to fail. So many investors would be screaming bloody murder. It WILL come back, some how and some way.
If they wanted to partner or make an investment in SIRI then why wouldn't Echostar just buy equity instead of debt? I would err on the side of caution and go with WSJ's take on it. It seems like a solid idea for Echostar. Either SIRI pays them on the debt they just bought up or they can't and then Echostar blocks any negotiations with debt holders and forces them into bankruptcy. They can then negotiate on the outstanding debt that's remaining and get it reduced. If they took over the company outright through equity then they wouldn't have that kind of leverage to alter the terms of the debt they would be taking on.
This EchoStar news is just another of Melvin Alan "Mel" Karmazin scheme's. This time lets hope the FCC does it's job and blocks any more of Melvin Alan "Mel" Karmazin "merge" scheme's. Since Melvin Alan "Mel" Karmazin took his place at Sirius nothing has been done which benefit's consumers. Melvin Alan "Mel" Karmazin killed FM radio and satellite radio. Luckly FM radio is on it's way back while satellite radio has become the radio for newbs and suckers.
You already reported this on 2/2/09
The only news is who.
Good news none the less. Need some short squeeze for once.
Goldman Sachs still needs to get their share though, so they can stop shorting!
I met Joe Paul when I was 15. It's about time that country boy came through!
Given the BS of the Sirius XM deal, who actually believes that the Feds are going to let EchoStar take over another sat co? No chance. This is hot air.
Oh. God. No
I wouldn't put it beyond Charlie to try something like that, whether a satellite-based audio programming company would exist afterward is debatable, but I'm sure Charlie would make better use of the spectrum either way compared to Melvin.
This guy Charles Ergen, the Founder of Echostar has to be a smart guy. He must realize that a large number of the Sirius Xm Radio subscribers are also shareholders. If he is stupid enough to leave shareholders with "their dicks in the wind," he runs the risk of lossing tons of subscribers. Also, isn't stern's contract loaded with shares?
good
Tons of factual mistakes on these reports coming out today--They say its for $300 million due feb 15, yet we know a significant portion has been retired already, so its more like 180 or so--
Stock up sharply today though--Interesting to see what happens later
BYE BYE MEL!
I agree with NJRonbo.
Sirius has ruined the character and depth of satellite radio. Mel does not know the music, and had no feel for the genres and niches of the music industry. At this point in time, I'm willing to gamble on Echostar. Any change would have to be an improvement. Let's get this satellite thing back to the XM model.
Ok, from an inserder perspective. Mel's track record has been to sell or dump companies once he's "acquired" them. He is not committed in this marriage, nor will he ever be, its about money for him. Example of that is referencing "the company" to employees at a Town Hall meeting as "your company", you best believe he has not one solid loyal bone or commitment in his body.
He is an entity that comes to companies, gets his money, regardless of the success of said company, then sells them off to the highest bidder.
Remember the real estate bust? Remember the dot come bust? Well this comes as no surprise, but there's a new bust in town. Its called the "I can't flip this company for a red nickel" bust.
He lacks vision, a realisitic workable plan, he is not a leader and he does not conduct himself like a CEO. He lacks a plan, priorities to realize and savings, any sense of creativity or ingenuity, and certainly no originality. No one likes a double talker or "front stabber".
Paint this picture, everything he said he would do, he hasn't. Everything he said he wouldn't do, he has. Example, it's called "Channel Rationalization" - meaning eliminating what he felt to be "redundant" programming. Before the merger was approved, it was, no one's programming will be affected, they will have the option to get the "best of". Well customers and share holders are getting the "best of" alright. The best of a pile of isht.
His contract is due to expire this year and he has a stellar track record of "flipping companies". This time around though, it will bite him in the arse.
Ensuring that the equity of the company is transferred to another company by ensuring its failure will turn this into the circus nightmare we all know that this can really be. Stop living in your bubble.
They certainly can't do any worse. I'm a Dish subscriber, so maybe a discounted subscription for TV subscribers is in the works. Plus their hardware (like the 722DVR) is awesome. If the hardware for Echostar satellite radio is anywhere near that high quality, then we'll have something.
Uh oh! This isn't good!
300 million in debt purchaced at 11 cents is 2.727 BILLION shares that will need to be issued to Echostar. ..... And the PPS goes up today.... Sheeple are running..Like Lemmings over a cliff!
i sure as hell hope not. dish network works sucks!
Great News!
Dear Echostar,
Please take over the company, fire Daddy Mel and any PD that was not from XM, change the name to XM, just XM and bring back all the old XM programming (Fungus, Lucy, Ethel...).
It would be hard if not impossible to do worse then Mel has. I hope it eventually does happen but not giving my hopes up.
Does anyone really think the Obama FCC would approve a takeover of SIRI by Echostar? Not going to happen.
Compared to what? The convoluted system DirecTV uses? Or the price compared to cable. Seriously, have you ever had Dish? I have had it for 6 years. My mom has DirecTV, she hates it and can't wait to go to Dish.
The Wall Street Journal has become a pile of crap since rupert murdock bought it.
It's gradually becoming saturated right wing propaganda articles. I used to love the WSJ but now I can barely stand reading it.
As a shareholder, I hope this article is BS.
I don't know what to think though because I no longer trust the WSJ.
I hope when Mel gets fired that he gets raped by Lexington Steele!
hank,
And fondled by Clay Aiken, for good measure!
Ryan,
Please give Mel Karmazin a call tonight and find out what the Hell is going on. Then let the rest of us know.
This whole thing is giving me a headache.
I cant't wait for Mel to be FIRED. Satrad is the BEST Media Platform for the money you spend. Lets get some REAL people running this company and bring it back to the GREATNESS XM used to be !!
Buying siriusxm is easy, it would take anyone with a little pocket change with siriusxm current condition thanks to Melvin Alan "Mel" Karmazin's "merge" MONOPOLY scheme. Heck siriusxm is very close to being de-listed from the market. It's the more than $1 billion in debt which comes along with siriusxm which is the problem.
Mel does need to be fired....
...but he's not the sole reason for the horrid music programming.
Both John Zellner and Kid Kelly have been fielding complaints through
email and on the phone directly with upset Sirius subscribers.
This is fact. I know this.
Many many complaints have been lodged at them regarding the
talkative DJs and repetition caused by limited playlists.
They entertain these phone calls, make excuses that this is what
their subscribers tell them they want, and then continue to do what
they want to do.
Subscribers who PAY to listen to Sirius have no part of the thought
process that goes into programming. This is another fact that all
of you reading this are aware of.
"The customer is always wrong" has never rang so loudly in the
halls of Sirius.
At this point I welcome a takeover from anyone that can rid the
service of the people that just don't give a shit about their subscribers.
..oh and the only respect I will pay Mr. Zellner is correcting his name
in the above post. It is Jon.
The customer IS always wrong....what makes you smarter than a guy who's worked in the business?
Oh I get it, you're a "paying subscriber"....yes, because your hard earned $12 could easily go somewhere else, but you still love to just dump money into a product you supposedly don't believe in. I'm so sure that in your business, you NEVER berate or belittle the customers behind thier backs, i'm so sure you're just a saint to those customers because, they "pay your salary", right?
NJRonbo,
At the end of the day, there is only one person who is accountable for this cluster fuck, and that is Mel Karmazin. Certainly, he is aided by other defiant incompetents, but he is the one calling the shots - so the onus falls on him.
The more that subscribers clamor for change, the more indifferent does management become. Non paying terrestrial radio listeners get more respect!!! If anybody ever wants a blueprint on how to destroy a company, these guys are the ones to go to. Simply SHAMEFUL !
Are those liver spots, or freckles?
The only issue I have with the notion of Charlie getting SXM is his history of dumping relationships with providers unwilling to give him ridiculous sweetheart deals to carry their programming.
Music channels would likely be safe -- heck, single-artist channels might well become even less common as the price for doing business with Charlie skyrockets -- but the news, sports and talk content would be at severe risk as any or all of the contracts there come up for renewal.
I don't relish an SXM universe where news and analysis are the sole provinces of Bob Edwards, Andrew Wilkow and whoever is still employed at POTUS, let alone where Chris Russo controls all sports content.
Or the other reality, is that they found a cheap way to buy some satellite's if their buying this debt on a discount
This could be a way for Echostar to obtain a distribution system for mobile video, possibly using (for example) XM's network for video and Sirius's for SatRad.
Wouldn't be suprised to see a subscription + (limited) advertising model for both (as Dish Network uses).
I say do it. Mel's not a businessman, he's a corporate raider. One he squeezes every dime out of the company he can, he'll be gone. And then, no matter who the new owners are, we'll be able to turn or receivers on without giving him a second thought. I was a subscriber before he came aboard and I'll be a subscriber after he leaves. So sell it all off, Mel...I don't care. Just *go*...the sooner the better.
If Echo does take over Sirius on the cheap, then Mel will be the biggest joke on Wall Street. Imagine, all that work and on the brink of success, and then some cunt runs off with your bitch.
Watching this is like seeing your mother in the hospital and finding out she's finally going to die so the orderlies will stop r@ping her.
Obviously the number of dissatisfied subscribers is growing. Most everyone in this thread is unanimous in opinion. Go to other satellite radio discussion forums and you'll see the same opinion.
At this point my question is this....
What is it going to take to put enough pressure on Sirius to change their music programming? Maybe even hike up the bitrate so that music in the car and home doesn't sound like it's coming out of a tin can.
I don't know if Mel's departure will make a difference. There are still people like Jon Zellner and Kid Kelly programming the music.
We are at a dead end right now because despite the fact this company is hearing our complaints loud and clear, they choose to do nothing about it.
What is the next move? How do we make change?
I used to swear by XM until last November.
The programming sucks now and the sound quality is sounds like its being streamed over a 56k modem.
I canceled my subscription, when are these people going to get it? What happened to merging the channels?
Cancel and be done with it.
Media is a business and the only thing that will speak to them is profit. Do you really think that the next guy is going to be any different? This also applies to services like Slacker. When profit starts rolling in they will start to go downhill too. I don't like what Satrad has become but I hate Terrestrial more so I will share my ears between Satrad, Slacker, and my MP3 player. The only reason I bother with FM is for weather or a traffic report but living in the DC area it isn't necessary. The traffic always sucks.
Good. Don't let the door hit you on the way out.
The only reasons I am sticking with Sirius is Opie and Anthony and
the fact that I can keep up with new music to listen, get information
on (via display) and then download.
Other than that, satellite radio is useless.
And while I remain a satellite radio subscriber I will continue to fight
those who are continuing to ruin the programming.
I agree. I was an XM subscriber and 202 listener before the merger, and while keeping the service isn't the *only* way to get O&A and Ron and Fez, it's certainly the best way. Even if I listened to nothing else, it would still be worth it to me. $13 is not too much to pay for the service at all...and hopefully the programmers actively trying to destroy the other channels will be replaced when Mel departs.
The Amazing Rando,
Wasting $150 - $200 a year on satellite radio is not even worth it for newbs and suckers. I'm sending Dr. Phil over.
Don't be silly, Oprah.
It's worth $13 or more a month to millions of people, and it's worth it to me. If you don't want your subscription any more, feel free to cancel at any time and sell your receiver on eBay. Simple solution to a simple problem.
The Amazing Rando,
It's worth it to millions of people - and hopefully millions more - because $13 a month is less painful than putting up with the torment associated with terrestrial; severely limited playlists, mindless chatter and insufferable morning zoos, and the real deal breaker - 22 minutes of commercials per hour!
People who claim that satellite radio is too expensive are full of shit. The money that most people squander on crap -cell phones, video games, bottled water, soda, junk food, magazines, flowers, QVC, cosmetics, and every other rip off out there...... these "essentials" never seem to be a financial hardship. Mention satellite radio, and all of a sudden people pull out the poverty card - what bullshit artists!
For less than what it costs to go see a movie (add the gasoline/food/drinks/time,etc - not cheap), you can have 130 channels of spontaneous radio entertainment at your beck and call, sans the commercials (music channels). If this isn't a bargain in this day and age, I don't know what is.
If I could only listen to my 5 or 6 "go to" channels, with the luxury of no commercials, it would be worth it to me. I can't get anything like my favorites (channels) anywhere else, and I listen for several hours - at least - each day. I guess it all depends what matters to you and what your priorities are. I try not to be part of the junk culture that pollutes peoples minds and entices them to spend money frivolously. I feel that I am getting good value in return for my investment in satellite radio. How many things can you say that about?