Would a Democrat run FCC allow an EchoStar takeover? - Orbitcast

Would a Democrat run FCC allow an EchoStar takeover?

| 35 Comments
FCC Commissioner Michael Copps
It's a question that I've been asked via email, and I think it's a good one that needs to be discussed publicly. Would a Democratic-controlled FCC (currently headed up by Michael Copps, pictured above) allow for an EchoStar takeover of Sirius XM Radio Inc.?

Considering the extended debate over the Sirius-XM merger, it's hard to see regulators swallowing this pill very easily. But then again, the DOJ did determine that Satellite Radio is part of a greater Audio Entertainment ecosystem, leaving them open to a takeover by a similar entity. Also now the "failing company" argument can easily be put into play.

So what do you think? Would the Obama administration allow for a Sirius XM Radio takeover by EchoStar?

Sound off in the comments below.

Thanks MUSCLE!

35 Comments

It's a good question but I don't think it will cause as many issues as the Merger. This would be a takeover instead of a Merger between two companies offering the same service.

I'm sure it would be questioned and scrutinized but nothing like the merger was and I'm sure it would not drag on for as long.

The real question should be "Do we really want Echostar to own Sirius XM Radio?"

I definitely do not look forward to that day!

He will do whatever he can to kill siriusxm.

The 2009 DOJ might have a different opinion about things than it did during its Bush years. Anything is possible.

Most of the reporting on this suggests that Ergen's real intent is to use the satellite radio spectrum for other purposes. I suspect that it is a biggger issue with the FCC and even may require congressional approval.

Also, according to the reporting, Ergen owns less than 15% of the total debt -- Feb and Dec converts, none of which is senior. Forcing a BK involves a lot of risk with a strategy to gain control as the other debt holders, especially the senior debt holders will have a lot to say about who owns the company -- and the BK judge would have to agree as well -- then the FCC and DOJ/FTC, and maybe Congress, depending on what he wants to do with spectrum. It could be a long and risky process.

On the other hand, if his intent to to gain a major stake in Sirius XM, then continuing to negotiate better terms -- more equity in exchange for the debt, is less risky and may produce a better outcome for him.

The FCC is not about to approve a takeover of SIRI by Echostar. The prior DOJ decision is irrelevant since we are now dealing with a different DOJ. I would speculate that the Sirius-XM merger would not have been approved by either the new FCC or the new DOJ. The rumored takeover is not going to happen. I suspect that we are looking at some sort of alliance or partnership that will involve Sirius' bandwidth and satellites and possibly the back-seat TV system.

Why not? Practically any management team from any company on the planet would be vastly superior to the incompetent jackasses at Sirius, so how can you think that a takeover by a successful satellite provider would be a bad thing?!

Considering that Mel Karmazin and most of the other idiots at Sirius are destroying satellite radio in exactly the same way they ran terrestrial into the ground, they need to go NOW. This is the only positive development since the merger was approved, and I really hope it works out.

Why not? Precedent has already been set. The real question is, why would the FCC even be involved? These are not two companies that are in the same business and will control all the bandwidth and to restructure the SDARS license like Sirius and XM were. Unless there is something in the licensing that says a Sat TV company can't also own a Sat Rad license, then this would be a DOJ issue.

Something to thik about - if Echostar allows Sirius XM to go in to bankruptcy before snapping it up - it will put the laid-off XM employees severance payments in jeopardy.

OBAMA PRESIDENT NAAAAAH!

Thanks for bring this up Ryan.

Not in a million years. With that amount of spectrum ownership? It is so obvious it would be dead on arrival at the FCC. The theme now is NO BIG MEDIA. The Sirius XM merger would have been killed by a Democrat controlled FCC too! This isn't the Bush admin anymore.

No way this about a Echostar takeover. It's about something else. The media's take on this story is totally off base in my opinion..

Of course it would be allowed. This isn't a lessening of competition in the market, and a small contribution to Obama would make it a certainty.

God I hope so! Death to SatRad!

Wouldn't the alternative be a liquidation of assets through bankruptcy? That would reduce competition more than an Echostar takeover, which isn't even a reduction in competition anyway to begin with since it's not like Echostar is competing in the space with SIRI right now.

I'd rather they'd split them back up - giving the remnants of Sirius and XM with Echostar and DirecTV, respectively. With different infrastructures and cultures, this merger has been a disaster, especially for (former) XM subscribers.

It's all a matter of how the pitch is made to the Obama administration.

Now, if EchoStar was really interested in repurposing the satellites and terrestrial repeaters for a different market (say, Mobile TV or data services) all they'd have to do is make the point that, by shutting down satellite radio, conservative talk radio would lose an avenue of escape from any future "Fairness Doctrine" regulations.

Put that way, the proposal would probably be approved wholeheartedly...

No frigging way! The Dems, aka The NAB, simply want the whole satellite thing to simply go away. They liked it the old way with individually owned towers everywhere and loud mouth advertisers screaming over the airwaves. It was music to their ears.

This is one ugly, ugly man and that profile has brought up some bad memories of the merger delay process. No wonder the stock is down today.

The fact is satellite radio is an approved monopoly. Other than a terrestrial radio company owning them I doubt there would be any issues with a takeover of Siri/XM. The only issues I see is if Echostar tries to use that spectrum they acquire for something other than satellite radio.

Sirius's current total debt load is $3.25 billion thanks to Melvin Alan "Mel" Karmazin's "merge" MONOPOLY scheme.

Charlie Ergen, EchoStar Seeking Control Of Sirius XM Radio

The Wall Street Journal reports (subscription) that Sirius XM chief Mel Karmazin is "scrambling to raise about $175 million" to fend off a takeover threat from Charlie Ergen's EchoStar Corp.

Ergen, ranked by Forbes as the #35 richest man in America (net worth $8.1 billion), has been buying up Sirius XM's debt, to the tune of $400 million, since late summer, the Journal reports:

Sirius XM Radio Inc. Chief Executive Mel Karmazin is scrambling to raise about $175 million by Feb. 17 to fend off the company's bankruptcy and a possible takeover threat from EchoStar Corp.

Sirius has been in talks for several weeks with EchoStar, which holds around $400 million of the satellite-radio company's debt, people familiar with the matter said.

EchoStar Chairman and Chief Executive Charles Ergen, who is believed to be seeking control of Sirius, has been accumulating Sirius debt since late summer, the people said. EchoStar holds most of the $175 million in Sirius debt expiring in February and owns more than half of a $400 million tranche coming due in December. Both stakes were purchased from hedge funds. Sirius's total debt load is $3.25 billion. Sirius didn't respond to a request for comment.

The Journal describes the process of takeover by acquiring debt as "an unorthodox strategy" and one that "could backfire."

Karmazin "successfully" YEAH RIGHT merged Sirius with XM Satellite radio in July 2008. Ergen was ranked the #1 richest media mogul in Forbes' recent breakdown of billionaires by industry.

http://www.huffingtonpost.com/2009/02/06/charlie-ergen-echostar-se_n_164664.html

SXMInvester,

He looks like the love child of Ernest Borgnine and Abe Vigoda!

god people...

sirius xm is a monopoly only in the sense that it is the only satellite radio company. it is NOT a monopoly in any other sense. if anyone doubts me on this, how many comments on this site alone were there when channels merged were something similar to "goodbye satellite, hello slacker/pandora/ipod"? satellite radio has no competition. right. next people will be telling me there are five lights.

second, stop blaming mel for the stuff that he had no control over (stern's first satrad contract, the declining auto market, the even worse economy in general, yearlong delay in merger, etc.). what's the saying, be careful what you wish for, you just may get it? who else would you want to head up sirius xm, and could they do as good or an even better job that mel has done so far?

on the issue of the question, i say no because the traditional media would probably spin the story in the same way they spun the stories of the banks buying each other up. the public is already pissed at the bank bailout and the second group that needed the bailout got denied. you think that the third industry to require a "bailout" is going to get any public sympathy?

personally, i would like to see what e* wants to do with the company. if its just a straight acquisition with no changes in the structure of the company i have no problem with it. if e* is going to alter parts of the structure, especially the repeaters i would say no.

After what happened on 11/12/2008, I hope so, and hope that Charlie Ergen gets rid of melvin and bring back The Beat and drop bpm. Yes, I am still bitter about bpm replacing The Beat. I hope sirius/xm does not get the $175 million they need to stay a-float.

This article pretty much explains what the analysts believe is going on

http://www.reuters.com/article/newsOne/idUSTRE5150ZB20090206?pageNumber=1&virtualBrandChannel=0&sp=true

Quite obvious this isn't about a takeover through distressed debt.

ctk,

Obviously, you are correct about the whole monopoly debate; only delusional and ignorant people would even entertain the thought that satellite radio is a true monopoly. It's competition grows as we speak - and to most people it is certainly not an essential item that they can't live without.

Even though I bash Mel, it's true; the calamitous series of events that occured were out of his control, and created a monumental burden. It is probably a miracle they are still alive, if you think about it.

I'm not sure it'd be in Ergen's best interest to have 20 million subscribers mad at him. I am a dish customer, enjoy the service greatly, have the HD Turbo Silver package with locals and it costs me around $65 a month total. Not bad. Plus it's not like DIRECTV where they try to shove sports packages you don't want or need down your throat.

One advantage to all this, is that Charlie Ergen is a stickler for costs control. Which would make him the Anti-Mel Karmazin, anyone not pulling their weight or deemed worthless to the company (O&A, The 'Howard News Team', Mad Dog, and that Oprah channel no one listens to) would be dumped in due time. Although they could make a deal with Oprah for her new 'network' on TV, to have it coincide with her radio network. But even that's unlikely.

Howard will likely be on his way out the door by the time this is all over, so he's not included in the dump list. That's 500 million off the books that could go for maintaining infrastructure, and developing new technologies as opposed to paying outlandish money for hack 'talent.'

This would also increase the likelihood that SiriusXM would become a music-only service since the first sign of MLB, NBA, NFL or NHL wanting more money for their content, they would be shown the door. And likely will if the BK filing nullifies all the contracts.

Plenty of scenarios at play here, whether those are good or bad is your call.

Why not!

It can't get much worse than it already is at Sirius/XM!

This company has been on the down slope for two years at the very least.

I love the service, but the business aspect has to change. Bring back Joe Clayton!

The photo above is of FCC Commissioner Michael Copps. Not Ergen.

Rediculous premise. The FCC would have no reason to be involved in anything like this anyway.

SXMInvester,

Your post, which was disturbingly honest (what the hell is that thing trying to push its way out of his lower lip?!), was the impetuous of my remark. It's all about you, my fine man!

You right - that heinous mug brought back that "other" horrible period. Let's hope Mel has some pride and some decency..... and does what is in EVERYBODIES best interest. I still believe that satellite radio should have a promising future; if only common sense would prevail.

Steve -
I figured it out. That thing on his lower lip might just be the missing hanging chad from the Florida election in 2000.

I'd like to punch that mug with both hands for about an hour straight !

I would have to agree with you about this being a disater to for XM subscribers. I am an employee of XM, and I can tell you from personal experience that most subscribers are very disatisfied with their service, but I do not forsee the two companies ever being divided again.

Amen to you Adam, they are nothing but jerks at Sirius-XM, I mean, look what we got now, and they approve such shows as Wolfman Jack, the man has been dead over 12 years, and they let the likes of TJ Lubinsky, the guy with the best Doo Wop show in the world, they let him go, and they play Cousin Brucie to the sky, using his name on everything and anything to get listeners, I think they really are overdoing him and playing him, and I have written to them, talked to them, they are all up in the sky as far as I am concerned, I say what goes around comes around. Sirius XM is a loser as far as I am concerned anymore, I ordered it for a certain reason and that reason is gone, why not a refund!!!! Yeah, right!!!

Sorry Jay, I think it has been a disaster to Sirius listeners, we are the ones who lost shows and now have to listen to have baked DJ's, before we just had music, But we all have opinions, just wish we could have the good old days back where everyone was happy with what they bought. And why they bought it.

I think it has been a disaster to SIRIUS listeners. You XM-ers got the same, we lost a great ICON, you get to keep all the mouthy DJ's, whom we did not have to put up with...We got a dead man, if that is what you like, I am talking about the Wolfman, well, to each his own....