Now has a 40 percent stake in the company
Last modified on Wednesday, 18 February 2009 07:50
Sirius XM has been saved, so to speak, by a last minute deal that sees DirecTV’s parent company, Liberty Media, becoming a 40 percent stakeholder in the satellite radio company. The $530 million dollar loan was made because Liberty Media did not want to see the company declare bankruptcy or worse yet, be acquired by Charles Ergen of EchoStar fame, according to many analysts.
The loan will see Sirius XM pay off the EchoStar debts that the company has, while at the same time see John Malone and Greg Maffei join Sirius XM’s Board of Directors. This move is significant, as Sirius XM CEO Mel Karmazin has been under pressure to step down as CEO and hand the reins over to someone who could navigate the company through its current financial crisis.
With the 40 percent interest in the company, it is likely that we will see Sirius XM and DirecTV bring some joint packages to the table, or perhaps engage in some co-marketing efforts. While some are complaining about the interest rate, which happens to be 15 percent on the loan, ultimately the company has a large subscriber base; and it is likely that the company should be able to recover and be stronger than ever.