Sirius Chief Executive Officer, Mel Karamzin, got his wish in 2008 when the government allowed him to merge with the only other commercially viable satellite radio provider - XM Radio - but little was said about how he was going to handle the massive debt that the company is saddled with. The first step was to wreck the programming by changing or "XM-iszing" nearly every Sirius station. Next was announcing that Sirius XM would raise rates on the their best, multi-receiver subscribers at a time when hundreds of thousands of Americans are losing their jobs and can least afford extra goodies like pay radio. Now the Wall Street Journal is saying EchoStar (parent of satellite TV provider, Dish Network) CEO, Charlie Ergen, is looking to take over Sirius XM.
And who could blame Ergen (the eight most wealthy man in the world with a net worth of over eight billion says Huffington Post) as Sirius stock as dropped like a rock in the last year from nearly $4 a share to $0.13 on Friday. Ergen started buying up assets in preparation for this buy out starting last summer and now reportedly Mel Karmazin, is scrambling to get access to liquidity that is needed to pay one of two major debt payments for Sirius XM this year. In the current credit market, perhaps it should have been Mel who was in front of Congress looking for a bailout since money is pretty hard to come by these days via traditional sources? Ergen could fund the payment personally, becoming a "cash buyer", an advantage that if you ask any real estate agent is about the only way a house gets sold in the United States these days.
If EchoStar takes over Sirius XM, the satellite TV provider get tens of millions of new subscribers that they can use to make a run at satellite television leader DirecTV (who I wouldn't be surprised to jump in the game and bid too). The boost that comes from a Sirius XM acquisition is likely one of the fastest ways EchoStar can compete with DirecTV and their very tempting NFL package deal and could cost comparable sums of marketing dollars and more expensive amounts of time if EchoStar has eyes on being number one in the satellite content business. Bundling satellite HDTV and mobile radio into a more affordable package might be just what the doctor ordered for financially ailing yet entertainment hungry American consumers.
Collateral damage from the deal could mean satellite radio icon Howard Stern might be more likely to walk out at the end of his deal if his long time supporter and friend, Mel Karmazin isn't taken care of nicely in the takeover. HomeTheaterReview.com has suggested that Stern's content is perfect for pay pod casting which would reinvent him again as truly the King of all Media. Stern's ability to lure millions of listeners from free terrestrial radio over to pay radio is legendary.
Sources: The Wall Street Journal, The Huffington Post, Forbes.com, The Los Angeles Times
For advertising please contact the editor at [email protected]
