What a Storm!
When I mentioned last month that the lull in industry news was the calm before the storm, I never in my wildest dreams imagined how big the storm would be. When I wrote that article I never imagined that the two satellite companies would be in a war trying to gain control of the Sirius XM.
Well it’s happening now and this latest war came out of nowhere.
As you might have read in Monday’s edition of The Satellite Dish I gave you my feelings of why Charlie Ergen’s Echostar was trying to gain control of Sirius XM. And so far what I predicted has come true, as I reported Monday I was hearing some buzz that commercial music provider MUZAK was getting close to filing for bankruptcy. On late Tuesday afternoon news came out that MUZAK has indeed filed for bankruptcy. But I never saw what came to light last night, and that was that Sirius XM CEO Mel Karmazin would go to Liberty Media
(the owners of DirecTV) to try thwarting off a takeover an attempt by Echostar / Dish Network CEO Charlie Ergen.
So now it appears that we have a bidding war going on between Echostar and Liberty Media. This move shows me what amazing businessman Karmazin is. Mr. Karmazin could be pitting the two arch rivals against each other to drive up the price that Echostar is willing to pay.
Charlie Ergen is a shrewd card player and nobody knows if Liberty Media is bluffing. Will Charlie bill willing to call their bluff or will he be willing to raise the states to see Liberty Media’s hand?
This is all going to play out over the next week and we could have an exciting conclusion on the 17th which is D Day for Sirius XM. It is that day they must repay $175 million in debt to Echostar, if they don’t then it’s almost certain they will file for Chapter 11 bankruptcy, but all of this could be avoided if a deal can be made between Sirius XM and an one of the two companies (or even another outside company.)
This is going to be interesting to watch.
In thinking about who I would like to see win control of Sirius XM might surprise a lot of people and I am going to come out and say I do hope that Liberty Media comes out on top of this one. Why Liberty Media over Echostar? The main reason is because the DirecTV name has been built up over the years as being the premiere premium television service, when people think of the ultimate provider they think of DirecTV. DirecTV also has star power that also helps build up the reputation that DirecTV is the premium television service. If you compare DirecTV commercials vs. Dish Network commercials you will see what I mean.
Echostar / Dish Network on the other hand has none of that high class / celebrity feeling. Most of what the public sees of Dish Network in the news and in the media is that they are having disputes that usually end up with channels being removed from the Dish Network lineup.
I honestly think that DirecTV could better manage the company then Dish and use that quality reputation that they have built on the DirecTV name and the celebrity star power that they have built up to turn Sirius XM Satellite radio back into a premium radio service worth paying for again.
If DirecTV (Liberty Media) does get Sirius XM I do hope they keep Mel Karmazin on board but at the same time clear house on the management that has turned Sirius XM from a great premium radio service into a glorified FM radio service that people pay for. Once this is all said and done let’s hope that people signed up for Sirius XM to get away from shallow playlists and overly chatty DJ’s to get premium radio content that is work paying for.
With that said, no matter what happens over the next week Satellite Radio will be around for a long time to come. With satellite radio being a cash positive business that makes over $2 billion a year, I can’t see anyone buying them just to turn the service off.
Good times for satellite radio customers might just be in the cards. Stay Tuned!
Alietr commented:
Well, they need to do something. as an XM subscriber, I\’ve felt that the service has declined dramatically since the merger. Besides most of my favorite channels being replaced by their inferior Sirius counterparts (filled with unecessary and obnoxious yakking between songs and weaker song selections repeated more frequently), the latest affront is charging for online streaming. They claim to have to charge for it as a result of \’upgrading\’ the service, but I signed up for a year of service that included the online streaming and now they\’re going to drop it. Frankly, I\’m pretty sure I\’m just going to unsubscribe completely. They have no interest in retaining their customers at this point, just grabbing as much cash as they can within the parameters of their settlement agreement. XM used to invoke warm and fuzzy feelings in me; Sirius treats me strictly as a business would. While I recognize their financial condition, it\’s a shame, frankly.
SA commented:
Scott: Please keep in mind that a Liberty purchase of Sirius-XM does not equate to a DTV purchase of the entity. While Malone owns over 50% of DTV stock, a standstill agreement between Liberty and DTV, prevents Malone from controlling DTV. It is not clear that if Liberty gains control of Sirius that it will be merged/put under the control of DTV. At this point, I do not think that DTV (Chase Carey and Co.) is truly interested in owning/running Sirius. DTV certainly does not want to consolidate Sirius\’ ugly financials (including its balance sheeet), and I don\’t think investors would greet such an acquisition by DTV, favorably.
bgfred commented:
Your take on Dish vs DirecTV is a point well taken, but I don\’t think that you can reconcile:
a) keeping mel
with
b) shifts in programming to get the FM out.
Mel hired a lot of the FM @$$&%%&s (to put it politely) and he doesn\’t know any better. I\’m not saying the guy is loyal to anyone but Mel, just that he\’s not going to initiatie those kinds of changes, and no one else will while he\’s still on the roost.
Also, the programming philosophy of the current sirius service is nothing if not \”celebrity driven\” so if that\’s DirecTV\’s promotional approach, they would seem to be of one mind with the programming approach that Sirius already has (particularly in music) and thus less likely to make the kinds of changes you\’re hoping for.
In that last regard (a quality, non-FM sounding premium service), you and I are on the same page - but I don\’t think this road is most likely to get you there. But you could be exactly right - and I\’ll accept any path that gets us there.
Gumbyandpokie999 commented:
If Direct-** buys Sirius,I\’ll sell all my equipment and demand my money back!