Liberty Media Saves Sirius XM From Bankruptcy


Liberty Media's John Malone is indeed Sirius XM's CEO, Mel Karmizan's white knight.

Liberty Media agreed to invest as much as $530 million in Sirius XM Radio in exchange for 40 percent of Sirius' common stock and seats on Sirius' board, which will probably be taken by Liberty Chairman John Malone and CEO Greg Maffei. The deal closed just in time to allow Sirius to pay the $175 million in debt maturing Tuesday, allowing CEO Karmizan to save his job, and fending off the advances of EchoStar .

Liberty will immediately loan $280 million, about $171 million of which will be used immediately. An additional $250 million from Liberty will be available for Sirius to pay off additional debts. Liberty's loan bears a 15 percent interest rate, and will be due in December 2012. CNBC's David Faber reports that the deal requires Sirius to reach a refinancing agreement on $350 million of its bank debt due in May.

This is a victory in Malone's ongoing competition with rival Charlie Ergen, Chairman of EchoStar and Dish Network, as Malone's Liberty is one of the primary shareholders in satellite TV service DirecTV . Sirius has been suffering from the decline in auto sales, which were a crucial source of new satellite radio users. Sirius still has to figure out its business model in this recession, without the help of new auto sales.

The big question is how Malone can potentially merge the infrastructure and offerings of DirecTV's satellite TV and Sirius XM's satellite radio.

    • Liberty to Loan Sirius $530 Million, Get 40% Stake

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