Satellite Wars Heat Up
Just as everyone thought that Charles Ergen was the lone player at the poker table, news surfaces that Sirius XM radio is in talks with Liberty Media as well as DirecTV (Liberty has an interest in DirecTV). Immediate thought of a bidding war is likely the first thought on every shareholders mind, but shareholders need to be cautious. Like nearly all reports over the past week, this news seems to be a leak that is lacking in detail. Sirius XM, Ergen, Liberty, and DirecTV all have no official comment.
Ergen has been buying up debt to leverage his position. This could give him a leg up on others, but then again, he is rumored to be seeking outright control, and as yet does not seem to have enough of the debt to get to that point. One can imagine that additional reports and leaks will be coming in the couple of days, and that will add fuel to the speculation fire.
While there is speculation that the interest in Sirius XM relates to the satellites and repeaters, the more likely situation is that these suitors are attracted to the top line growth that Sirius XM Radio have, and will continue to have for some time. Costs for satellite radio are coming down, revenues will rise, and that combination is attractive. The stumbling block is the company’s debt, the credit markets, and a poor economy. At some point the credit markets and economy will recover. The question is how the debt will be handled, and who will control Sirius XM Radio going forward.
It is not hard to imagine that there have been a series of meetings and presentations happening at very high levels. Shareholders remain in the dark with opinions, speculation and guestimates. Sirius XM Radio is expected to deliver the Q4 2008 numbers in the final week of February but it could be as early as tomorrow that we begin to see the poker game played out.
Position: Long Sirius XM Radio
at the end of the article you say “paker game” is that a mistake or is that your way to call it a faker poker game.Cause to me this seems like smoke and mirror news and im all in at 5 cents.
see you in the hamptons. plumber mike
typo…..sorry
I remember Jim Cramer saying this stock was going to go to $6.00 after the merger. I bought it hook line and sinker, if this company fails, I am out $50,000, no joke.
Once the process dragged on , Cramer said bondholders would take over and to stay away until Feb. I didn’t want to believe him
actually, Cramer changed his tune after he read through the convertible bond debenture . . that’s when he said the “bond bullies” were in charge and to stay away until Feb . . . he then did the whole lottery ticket BS . .. of course he was pumping the $5 thing for the 18 months prior
Cramer. Does anybody watch him anymore????
So who decides who the buyer is ?
Let’s just say that Liberty/Direct TV decide they want Sirius XM, and are willing to purchase them for 50 cents/share, they actually would be buying some of the debt (almost 1/2 short-term debt) off Echostar.
Now could Echostar decide they refuse to sell the debt to Direct TV because they want Sirius ?
This whole process has a good chance to work out in Sirius favor because the one thing that might be even more important to each of the CEO’s than even $ they have to put up , could be their EGO & they likely will not want to be on the losing end of the stick of not being the acquirer of Sirius. Especially to a main competitor.
Let’s just hope Mel keeps his ego in check and is willing to give up control for shareholders to potentially accept a buyout of the common shares. Just don’t give up control if shareholders will get wiped out. See Mel could just file bankruptcy and keep complete control, but he would be stoned and beaten by a shareholder revolt that I would think he wants to avoid at all costs.
Ergen’s leverage goes away if they simply pay off the debt at the face rate as it comes due . . . the new suitor would of course supply that cash infusion
SRK. It really is that easy. Pay off the bonds. Leverage gone.
Malone has the deep pockets . . . so does Bob Kraft
btw, the DOW Newswire Service did confirm negotiations ongoing with DTV . . if only we could be a fly on the wall . . .
Thanks for the Savery Morsals . . .
Got My Front Row Seat. So No “Down In Front”. Bring IT on!!!
Sirius XM Radio Inc. is seeking an investment from Liberty Media Corp., people familiar with the matter say, in a last-ditch effort to fend off an unsolicited takeover approach from satellite entrepreneur Charles Ergen.
The talks set the stage for a battle between the leading U.S. satellite-television providers — Liberty-controlled DirectTV Group Inc. and Mr. Ergen’s Dish Network Corp. — for control of the country’s sole satellite-radio operator.
Liberty, which is controlled by billionaire John Malone, emerged as a potential “white knight” for Sirius after Mr. Ergen made an unsolicited offer late last year to take control of the radio …
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Billionaire.
Forgot WaLL St. Journal online.
This guys got my can of Whoopass. Hope he breaks it out.
It’s a ME$$……….!!
well guys . . a couple of blueberry pop tarts and then I’m turning in for the night . . . hoping for visions of sugar plums; see ya all in the am . . .
Give us Liberty Media or give us Death!
You are killing me with that diet. Eating the same great stuff on the West Coast. Hasta Manana amigo.
Viva La Media De Libertad!!!!!!!!!
Be nice to see SiriusXm radios and subs sold on QVC. Maybe that is part of Malone’s plans to buy SIRI? Imagine how many subs he could add?
I could see it already…”call within the next 20 minutes and we’ll throw in a snuggie absolutely free!”
I’m 20 with 30,000 shares averaged at 10 cents. Hoping to get rich soon.
If its liberty they can lend money for a portion of the equity. If the loan gets them thru 2009 you could see the share price triple in a day…big deal…that 10 cents..with current market cap at 200 million it could go to 600 million..25% of 200 million is 50 million…25% of 600 million is 150 million…nice immediate payback for 750 million bridge loan. Buying 30 months and an improving economy…it could be a win for everyone including shareholders. Remember Mel has the shares are the ok to issue them. Liberty would love to poke Ergan in the eye. It is not over yet. Also liberty is brilliant when it comes to using tax credits…thats an asset that no one is including when they think of Siri-XM.
With all this talk of Liberty and Echo, will the Fed’s approve these other media co’s to take over the sat rad licenses?
Koop
I was thinking about this one earlier today.
The potential suitor could come in as a (silent partner).
Then the FCC/NAB or anyone else for that matter, could not touch them.
Markets are closed monday. Whatever’s going to happen is coming before the weekend. Besides, can you really imagine these execs doing negotiations over the weekend?
Hell yeah,
Mel did the merger financing… the “ugly” financing on a Sunday, if my facts are in order.
Thank you Tyler. I very much appreciate you being there and I always look forward to your articles, especially when things heat up. Pass me some of those cashews, will ya?
Let’s not get too cocky here…we’re just as likely going to need to turn this site into SiriusSupportGroup.com.
Brad. I thought it already was.
awesome!!!
http://www.businessweek.com/te.....gn_id=yhoo
could this be the real reason for the bankruptcy leak…maybe mel is using the threat to leverage a better deal with all the talent and sports while siri seems down and out.
It’s all over but the shouting.
Get ready for the Direct TV bid
Whoooooosh!!!!!!!
Here goes that coaster ride again !!
Hold on to your stomachs!!!
let’s just hope the ride pulls back up at the starting gate and doesn’t derail.
Amen, brother Amen !!
So are you guys expecting a complete buyout/merger? Or more of a partnership/bailout/loan situation?
Option # 1 of course the ideal situation that Mel wants is an investment from Direct TV or other so he could still hold control and have a chance to grow the stock over the coming years.
His 2nd option is a buyout from Direct TV
3rd option bankruptcy to fend off optoin # 4
4th option – give control to Ergen and shareholders get nothing
Would a DirectTV buyout become FCC territory? If so, what happens in the short term with debt? Can they still accept money from Direct TV before the FCC would step in?
DirectTV could buy all the debt and just make a new deal with Sirius pending FCC review.
Bids are in for the inevitable drop from the shorts and yesterdays 3-cent buyers, whad’ya say the low will be today ?
.04 ?
I pulled my sell bid just before it broke through .07 – looks like gaining some steam. Looking to trade it if it pops, but don’t want to get left behind if Direct TV buys them out at a big premium to the present price.
Short video on CNBC this morning. Interestingly, the speaker asked the question of whether Sirius XM would have to accept a buyout offer rather than declare bankruptcy. What I got from that is that in the event of Sirius XM declaring bankruptcy, a judge might say that they had a buyout offer, and therefore could pay their debts that were due – therefore, bankruptcy would not be granted. I am not suggesting that bankruptcy is in the cards now, just raising this interesting concept. Anyone have any ideas or knowledge of this concept?
Here is the link to the 3 minute video: