Sirius XM is Playing a Dangerous Game
The New York Times is reporting that Sirius XM is preparing to file bankruptcy under chapter 11 and my initial reaction was one of absolute and total deflation and disbelief. I find it sickening that a company with such a growing stream of revenue could just decide to ignore its obligations and in one fell swoop destroy investors in its common stock and bonds as well. Even with sufficient cash on hand, the company it would seem, would be willing to sell out its investors for the sake of getting a free ride on the backs of those who saved and invested in its future.
The New York Times article goes on to speculate that the filing itself may be nothing more than a ploy to force Echostar CEO Charles Ergen into a potential partnership deal. I find it no less despicable that Sirius XM management would risk the savings of thousands of its investors, even if such considerations are in fact the company's motives.
I have to concede, having followed Sirius since 2003, that the potential motive of forcing Mr. Ergen to make an offer seems reasonable. For as long as I can recall, Sirius has never leaked so much as a subscriber figure. They just do not offer any guidance in advance. The only exception I can recall was the merger rumor with XM, which I attributed to a leak on XM's part to increase the pending offer.
In this case, Sirius provided the New York Times with a substantial news leak. In doing this, it has rendered its bonds including those acquired by Mr. Ergen worthless. Mr. Ergen now stands to lose hundreds of millions of dollars if he does not act. Sirius XM is playing a dangerous game of chess with a grandmaster of the game, and doing so at the risk of its private investors.
Im sure siriusXm is in trouble. It could be a high stakes game or it could be just cold hard reality. I know siriusXm has the cash on hand to pay the 175 million dollars. Thats not in question. Why they are saying they dont is beyond me.
The Kraft post is just something to think about. While he didnt say anything on the air (not like he is going to anyways) Its what he said to Mel behind closed doors that matters.
Im looking at losing money in this stock just like most people. I think the service is good but the media,fcc and the current economy has killed the stock. Mel might have cards left to play. For all we know he could pay the debt himself. He is said to be worth nearly a billion dollars. Just wish something good would come out of this. If mel just files BK when he could have let ergen take control he is just pissing on the shareholders.
Wow. That’d be a first. If Mel wants to make a name for himself, be the first CEO to give personal riches to save the fortunes of the many investors who supported him and SIRI.
It would show that he believes in Sirius as much as we all do, which I’m sure he does.
ok I just read a reuters article – “MFC Global, Barclays among big Sirius XM debtholders” and one line stood out…
“We have material insider information and cannot comment on the deal,” said one John Hancock portfolio manager who declined to be named.
does this mean, in fact, there is a deal? or maybe I’m just reading too much into this…
Wow…awesome find zipfly…I’m gonna do a little of my own research and see if there is anything out there that suggests a deal might have been made. I am pesemistic to say the least…but maybe there is a hint somewhere..I just can’t figure out why Mel wouldn’t have announced a deal, unless he is out to screw some people that messed with him over…
Charles are you out there?
What is your take?
Me or Ergen? I think that if we were in a normal credit market situation this would be a non issue. I also think that proper management and direction of this company could have avoided all of this. I really don’t want to elaborate much more then that… I would wind up writing a 5 paragraph essay.
agree whole heartedly Charles . .would you care to speculate in 5 paragraphs or less “why” management has not performed (not a detailed list of failures – we already know all of those and you have already documented quite well the failures of innovation);
is it arrogance, incompetence or perhaps worse?
Bank of NY purchases additional 7.2M shares of SIRI – what dows this mean to us??
Link at: http://www.ceoreportcards.com
Malone served as Independent Director of The Bank of New York Mellon Corporation from 1986 to April 10, 2007…I’m sure he’s still got friends there? They probably knew Liberty was trying to work out a deal with SIRI
wow. good find Joe. Don’t know what this means exactly, but BNY must see something besides bk in sirius’ future…
Did not MEL say that “it would be bad to bail out the company with my money?” Where are the facts in his presentation to shareholders meeting in Dec 2008.
Ironic, TWO years exactly on Presidents day Feb 16, he announced the merger of both companies and taking on the massive debt of XM.
PALM went down end of November fro SP $6.50 to $1.20 and risk of bankrupcy. They get bailed with only $ 150 millions. Now trading SP $ 8.20
It sad that simple folks with foreclosures CAN NOT file bankrubcy and wipe out their debt.
But, F**** corporations can file chapter 11 in a New york second and wipe out shareholders and come clean with no debt.
Where is OBAMA’s change and middle class protection, New SEC and treasury sec. I guess they are busy handing down our tax money to their Friends and ex-co workers in big banks and corporations.
I do NOT understand, why COURTS would allow them to wipe shareholders and start selling new shares to new investors, if the company continues bisness and does not liquidate???
You mention Palm.
I know a good bit about this as I’m part of the Palm Developer Network.
HUGE difference between the two companies.
Palm actually worked on developing a completely new OS and device that is somewhat innovative.
They recruited the best designers with a proven track record and ACTIVELY sought out investors.
Sirius has done NOTHING on the device development front and hasn’t exactly been friendly to investment offers because Mel would have to give up control.
It is one of the reasons they are in the position they are in.
I completely agree. It’s ridiculously unjust to hose “regular” people everytime a bankruptcy occurs. Put us higher on the priority lists and I bet things would change…pay us FIRST. We take risks and suffer consequences. Companies take risks and are rewarded.
There is another possibility that I haven’t seen mentioned. What if Mel is playing true hardball with Ergen? If it were me I would say to Ergen “If you convert the debt to shares I will file the BK and you will be wiped out of your position. Furthermore, if you don’t agree to settle the $175 million in bonds for a discount I will likewise file the BK and your position as creditor is fairly small relative to the other bondholders and you will go to the back of the line as far as having a say in the creditors group in the BK court.” Ergen got himself into this by trying to corner this deal on the cheap (relative to the total outstanding bond debt) and he may not have figured on this “scorched earth” position being played against him. You can be sure that people like Ergen have been behind massive shorting of the stock all the way down. You can also be sure that he has been a major player in badmouthing/telling lies about the company to help his short positions hold. If you look (SEC won’t because they like to pretend there’s no problem with massive shorting) at the action around good news announcements like the merger or big pops in subscribers you will find massive shorting rather than the nice positive pops that logically should come. This stock is the number one shorted stock by a huge margin over the next closest stock. It has been this way for a long time. Find the shorts, chain them to the back of a NYC garbage truck and drag them till they die. I have zero use for short-selling.
“Karmazin is particularly bothered by the deal to air Major League Baseball games, a deal that costs his company $60 million a year, according to a radio industry source. As recently as last week, Karmazin met with top league officials in New York, including league COO Tim Brosnan, who negotiates television and radio deals. Talks apparently didn’t go Karmazin’s way. Brosnan declined to comment, other than to say “we have a binding agreement that we intend to honor.” Karmazin inherited the baseball deal from XM, which merged with Sirius last year. The 11-year deal doesn’t expire until 2015.”
Quoted from: http://www.businessweek.com/te.....B+analysis
Now I’m wondering if the BK rumor was more for helping in negotiations with the MLB and others, from the days where Sirius and XM were competeting with eachother to get talent, and had plenty of credit available. The MLB surely doesn’t want a BK judge to slash their contract. I imagine they would be much more willing to “play ball” now.
Hey cos1000, who’s this chick “Gina” you got sumthin goin with over at “SA” (u dirty dog) . . . all I can think of is “Sideways” (perhaps my all-time favorite) and Virginia Madsen . . just a little tension breaker here while we wait for good news!
I sure hope we don’t end up pouring expensive wine into a paper cup at a cheap burger joint . .
I am not finance whiz, but I remember when the majority of analysts predicted that Apple Computer was going out of business.
It is clear that Sirius XM is still a young company and it will take a long time for it to mature. 10 years from now Sirius XM will be as big as Google, Apple. and AT&T.
That’s my personal opinion.
Would it help if every one writes to Andrew Comeu DA of NY state as he could open legal investigation in any foul play
Should we write to our Senators and Congressmen about how over 6 billions of investors money disappeared by Mel K.? When he said in justifying Merger exactly 2 years ago that merger would save over 10 billion dollars in synergies !!
Do Share holders have any say in stopping BK or Mel decision in refusing any offers?
Fat lady isn’t getting her channel yet.
Sirius XM Radio in talks with Liberty Media: report
By John Letzing
Last update: 7:48 p.m. EST Feb. 11, 2009
What a play that would be if Direc TV sticks it to Dish again… Thanks King for the update just read the story… fingers crossed. You guys have kept my spirit up with your posts… thank you~!!!
Got my front row seat with my homies.
SRK.Vapor.Cos1000.Dread.GIS.Charles.Tyler.SXM.HOPE.SHARK ET AL.
Bring It On. I’m Fit. Fired friggen Up. And Ready To Rumble.
Pick you weapon and location. Name your time.
GIS. Great to see you on the board. I’m praying for you, as I do all of us, especially those that bought premerger.
C’mon LIBERTY MEDIA. The friggen Dish competition. DTV. Stick your nose in this thing and make us a BIG offer.
The Buzz Homies Are In The House. Someone please break out a can of Whoopasssss!!!!!!
Hey Socal . . . I feel like I’m on that last turn of the 440 . . . rigormortis has set in and I’m just trying to get to the finish line on fumes
Who needs Disney . . . we are on the mother of all Space Mountain right now
Time for some Top Raman soup
LOL. SRK. You broke out that Raman line. My daughter loves that stuff. Beef is her all timer.
I was contemplating about a twelve pack…….
In this case, lol, we are trying to get to the finish line with a decimal point to the right of the first digit.
You know SRK. This stock is a different investment, regardless of what others say. It’s one bought from passion for the product. For the “idea” that it can happen. It’s why their are forums like the Buzz etc. Why people like Charles and Tyler invest their own time and money into these things. Cause they have passion for it. It’s a community. A fraternity. And those that invested have entrusted this passion and community in the hands of one “Mel Karmazin”. And that’s as damn honest and basic and it can get. And in reality, that’s as damn beautiful as it should be.
Like hitting the finish line of a PR when YOU were out there busting your butt on Christmas and New Years day while most were hanging by the heater gaining another ten.
Hi SoCal..keep smiling it gets better soon!!!
Keep hope alive!!!!
Thanks man. Need another boondoggle to your State.
I sold out and bought MTL !!
Whatever these two titans of the industry do, would probably be good for the industry as a whole and likely way down the line…………someday………………….
However in the here and now, and especially in the current economic down turn where we all are suffering, it would be powerfully unforgivable to destroy the common shareholders who have stuck by these two SATRADs through thick and thin, just to get something ‘on the cheap’.
Particularly when, they have so much already, and, the promise of this business, will give them so much more, one day. We invested for this as well, and to cheat us now embodies the essence of why we are all in this economic mess in the first place!!
These two titans (Karmazin, Ergen) have an obligation not only to the Satellite industry, but to the business nation at large to begin to try righting wrongs………………………and not perpetuate corporate malfeasances.
Amen!
Nuff Said ?
I’m sick to my stomach how recently just how many mortal men in such high places in this country seem to have sold their souls for profit at the expense of all of us hard working americans in this country. We get up every day just to make a living. pay our debts and maybe have a little left over to invest in companies and technologies we believe in. Only to have those who run these companies skrew us over for their own personal gain. I’m also sick of the injustice and betrail of our goverment that has worked only for its own being and not for the people it was created for.
There will be justice at judgement day
Our fore fathers must be rolling in their graves
Let us hope for all Sirius investors that there is a positive outcome to what is happening now
Amen, Mike, amen !!
Mike,
I couldn’t have said it better, even though I was going to give it a shot. No need – you hit the nail on the head !!! We have been betrayed by everybody involved, and it is BEYOND CRIMINAL !
DRALAND,
My sentiments exactly. This could end up being one of the greatest injustices to a large group of people in a long, long time. This country is a fucking mess, and there seems to be no more honor and decency anymore. Whatever happened to peoples sense of RIGHT and WRONG? Very sad, indeed!