271 million shorts can be wrong!
SIRIUS XM SATELLITE RADIO FORUM
Karmazin Seeks Sirius Salvation With Ergen-Malone ‘Cage Match’
Email | Print | A A A
By Serena Saitto and James Callan
Feb. 13 (Bloomberg) -- Mel Karmazin, chief executive of Sirius XM Radio Inc., is pitting two media billionaires in a “cage match” to save the satellite-radio company he formed almost seven months ago.
Karmazin is in talks with John Malone’s Liberty Media Corp. and DirecTV Group Inc., the satellite-television company it controls, about a possible transaction, according to people familiar with the situation, who declined to be identified. A deal may help avert a takeover by Charles Ergen’s EchoStar Corp., which holds $175 million in bonds due Feb. 17.
“John Malone and Charlie Ergen would both be absolutely satisfied to put down the other in a public way,” Bishop Cheen, a bond analyst at Wachovia Securities in Charlotte, North Carolina, said in an interview. “They’re natural cage-match contestants. This is media theater at its best.”
Malone and Ergen, both based in Englewood, Colorado, control the largest and second-largest satellite-TV broadcasters respectively and could use Sirius XM’s capacity to integrate radio and TV services, according to Fred Moran, an analyst at Stanford Group. Over the decades, the two men have competed for customers and over acquisitions. In 2003, Ergen, 55, abandoned a bid on DirecTV’s then-parent company, Hughes Electronics Corp.
EchoStar has been buying some of New York-based Sirius XM’s debt after Karmazin turned down its unsolicited bid for the company, a person familiar with the plan said Feb. 10.
‘Cunning Negotiators’
“These are three of the most cunning negotiators on the planet,” said Chris Marangi, an analyst for Rye, New York-based Gabelli & Co., whose affiliate Gamco Investors Inc. owns Liberty and EchoStar shares. “It’s logical for Karmazin to pick up the phone and call Malone. There are very few people in the world who know the value of the subscriber business and the spectrum and can come up with the financial engineering to pull it all off.”
A deal with Malone, 67, or Ergen may prevent Sirius XM from seeking bankruptcy protection. The broadcaster has been working with lawyers to prepare a possible filing, the New York Times said Feb. 10, citing unidentified people close to the company.
Karmazin, 65, completed the merger of Sirius and XM, the only two U.S. pay-radio providers, in July, after the credit- market crisis took hold. Sirius XM has about $3.25 billion in total debt. The stock has traded for less than $1 a share since September as investors became concerned that Karmazin wouldn’t be able to manage the debt or meet growth projections.
Patrick Reilly, a spokesman for Sirius XM, declined to comment, as did Marc Lumpkin, a spokesman for EchoStar. Robert Mercer, a spokesman for El Segundo, California-based DirecTV, said the company doesn’t comment on speculation.
Calls to Ergen’s and Malone’s offices weren’t returned.
EchoStar Dispute
Karmazin, who was president of Viacom Inc. until June 2004, has feuded with Ergen too. Viacom was at the time the owner of the CBS broadcast-TV network, since spun off.
Ergen, who founded EchoStar in 1980, sued Viacom in January 2004, claiming it was breaking antitrust laws by demanding that EchoStar carry less-popular cable networks to continue running the signals of the CBS stations.
During the dispute, resolved later that year, Viacom kept its channels off the Dish network for two days and callers to EchoStar were greeted with a recording that divulged Karmazin’s home telephone number, Mediaweek reported on Oct. 11, 2004.
Sirius XM rose 2 cents to 7 cents in Nasdaq Stock Market trading yesterday. EchoStar, down 57 percent in the past year, rose 6 cents to $15.21. DirecTV gained 54 cents to $23.48 and has declined 1.7 percent in the past year.
EchoStar, a satellite-equipment company, was separated from Dish Network Corp., the television service also controlled by Ergen, at the beginning of last year.
Ergen ranked 35th in Forbes’s list of the 400 wealthiest Americans with an estimated fortune of $8.1 billion last year. Malone’s net worth was $2.3 billion in 2008, according to Forbes.
Malone’s DirecTV
Malone gained control of DirecTV last year after buying out News Corp.’s stake. Rupert Murdoch’s News Corp. had bought the stake in 2003, after Ergen dropped his bid on DirecTV’s parent company because he couldn’t get regulatory approval.
Dish Network had 13.8 million customers as of Sept. 30, trailing DirecTV’s 17.3 million. Sirius XM, which lured customers with programs including talk-show host Howard Stern and the National Football League, has more than 18.9 million subscribers.
“All of these companies are satellite-delivered media,” said Stanford Group analyst Moran, who is based in Boca Raton, Florida. “If you can cross-market, cross-promote and intertwine services between satellite video and satellite audio, you could strengthen your competitive position.”
UBS AG, Switzerland’s largest investment bank, is advising DirecTV on its talks with Sirius, according to people familiar with the matter. Douglas Morris, UBS spokesman in New York, declined to comment.
Roger Altman, CEO of investment bank Evercore Partners Inc., confirmed on a conference call last week that his firm is working with Sirius XM. He wouldn’t say whether the work involves mergers and acquisitions or restructuring.
To contact the reporter on this story: Serena Saitto in New York at ssaitto@bloomberg.net. James Callan in New York at jcallan2@bloomberg.net.
From the WSJ article:
"Most observers doubt that Sirius will follow through with its threat to seek bankruptcy protection. Such a step would wipe out its equity holders and likely leave many of its creditors, including Mr. Ergen, with nothing."
There you go, a big contradiction to the paragraph above.
that means nothing, market is closedOriginally Posted by RMAN
lol, yep.
they always ask crazy prices AH
Okay guys I admit I am totally new to investing and have the young and dumb mentality ahahha explaining my ability to take quite the risk on this stock...
SiriusOwner, you have really come around today I am quite enjoying your post's ahahha!
To be honest I have no idea what to think, however the optimist side of me thinks something good is going to happen...
My question is, all of these articles state something along the lines that Ergen and Malone would not be interested in taking common shareholder as part of the deal? They can't just say "naw we don't want them, let's just wipe them out..."???
Oh and all these articles say we are coming close to a deal, are they just all bullshit too and no one really knows anything???
Last edited by Hopeful; 02-13-2009 at 02:40 AM.
yeah hopeful there is reason to be "hopeful" kehe :O but still expect that bk is a real possibility but yeah i got giddy reading that.
Well big day tomorrow, I probably won't sleep tonight but hey I never do anyway...
It talks about Karmazin keeping his job. Do you think he would want his job if his equity is wiped out ? No way because he would be too bitter, so I have a feeling there is an equity deal here or Karmazin follows through with his threat or Liberty could snatch it from Ergen, which he could not deal with with his EGO.
Reply With Quote