CNBC's Maria Bartiromo interviewed Greg Maffei of Liberty Media today on CNBC. It was a positive piece where Maffei expressed that Liberty's investment in Sirius is more than getting some loan interest or breaking apart the company.
MARIA: Liberty Media just completed its deal to invest $530 million into satellite radio provider Sirius XM. we find out why that deal happened, did it make sense, and what is ahead for Liberty. Joining us Greg Maffei, CEO and president of Liberty Media. Nice to have you on the program. Can it make you money back? What are you expecting in terms of a turnaround?
MAFFEI: We think that Sirius XM is fundamentally very attractive company and well positioned. it had gotten into unfortunate circumstances because of the length of time it took to complete the Sirius XM merger because of difficulties in the financing market and difficulties in the automobile market. and that set of circumstances had created an opportunity that we helped get them out of with this -- with these series of loans and investments.
MARIA: Obviously, the automotive industry very important for the satellite radio companies. This is one of the big growth engines. but nobody is predicting the automotive industry to come back any time soon.
MAFFEI: That's right. I think we are certainly of the view the automobile market will be challenged for a period here, but if there's even a 9 million or 10 million car market, we think Sirius XM can prosper and succeed and grow its way out of its debt and be an attractive business.
MARIA: So the company will use that money to pay off upcoming debt. What about the longer term debt? Do you expect to be going to market to raise new money? How do you handle the debt after the most recent most pressured debt payments are due?
MAFFEI: Right. Well, the investment that we made helped them pay off three series of maturities. One that occurred in February, one that partially will be occurring in May and will get extended out to May of 2010 and one which will occur in December of 2009. So the next large maturity will be in May of 2010, and we'll working with the company and trying to help them extend that debt as well over the next several months.
MARIA: Thinking outside the box, Greg, do you see the growth areas beyond sort of the most obvious, like the automotive industry? Where does the next leg of growth come for this business?
MAFFEI: I think Sirius XM is an amazing platform. You have a business with currently 19 million subscribers, the potential to grow enormously, as you know, just from the auto market. Thinking more broadly, the fact that all radios could become satellite radios. The fact that you could have certain amount of satellite radio which was freely available to all, not necessarily premium. The fact that you could imagine devices like iPods or other mp3 players having satellite radio as an option. All of those create a host of opportunities.
MARIA: They may very well, though, mean that you're going to need more capital and that these companies are going to need more money to expand and to grow. Are you committed to putting even more money in this company?
MAFFEI: I think we're committed to making Sirius XM work. One of the things worth noting is a lot of money has been invested already. The satellite is up and the service is up. One great thing about satellite is a ubiquitous platform already running. The main infrastructure is in place and we can add new subscribers relatively cheaply.
MARIA: Your businesses, we're looking at the holdings and of course your businesses are operating over a wide range of platforms, Internet, television, sports. Given the pressures that we talk about every day in this economic slowdown that's the worst anyone has seen, where would you see growth and strength across the economy right now? Do you have any evidence to share with us that we may see some growth areas somewhere around the economy? What are you seeing right now?
MAFFEI: Our businesses that are doing best are largely the subscription businesses, home entertainment products like DirecTV or Starz continually demanded by customers because they're good value entertainment and paid on a monthly basis and look attractive. Part of our businesses probably feeling more challenged are nice to have, not need to have products. QVC where consumers can vote every day and choose to purchase. She, because it's primarily consumers, is holding back. We're doing better than many retailers but clearly we're feeling more effects of fears about spending and the economy in those kind of businesses than the subscription businesses.
MARIA: So you are, though, still seeing that strength from some of those must-have or subscription businesses. Have you seen a sharp pullback there?
MAFFEI: No, and we've been very blessed that businesses like DirecTV, Starz, and Encore continue to do quite well.
MARIA: We'll leave it there, a company having very attractive terms from the distressed situation in the satellite business. Thank you for joining us. We'll see you soon.