Sirius XM being stalked by Dish?

[Scott Greczkowski]

Sirius XM being stalked by Dish?

by Tom Taylor

EchoStar has "quietly accumulated Sirius XM debt", says the Wall Street Journal.
Object - a takeover? Possibly a squeeze-play to force Mel Karmazin's company into Chapter 11, then swap its debt for equity and grab even more of the cheap debt from other bondholders? The Journal says EchoStar/Dish Network's Charles Ergen could also try to snatch the prize before it gets to Chapter 11, and that "either way, current shareholders would be left with nothing." Why is EchoStar interested?

Read the rest at Radio-Info.com

 

[Weezknight]

Interesting read. I hope there aren't too many Sirius shareholders who are Dish Network subs. Charlie will have even more people against him since the people who own Sirius XM stock will lose big time in this scenario!

 

[JosephB]

It makes sense, to be honest. A big expense for XM Sirius are all the administrative functions. They could eliminate probably 80% of the CSRs along with 99% of the payroll, HR, finance, accounting, etc. staff. The only people they'd have to keep around are the DJs and programming people along with some engineering staff. He could also leverage Echostar and build or at least design their own receivers and speed up the merging of the XM and Sirius platforms.

Charlie has a good base for building a very large and integrated broadcasting and communications company, it's just too bad he runs it like my old boss ran his company that only had 4 employees. Charlie seems like he's just never grown out of the small business mentality of being scrappy. All of the disputes with programmers are the prime evidence of that.

 

[ReconPJ]

I believe that would net him an additional 6 sattelites...Only would need three for radio....

 

[jacmyoung]

I believe that would net him an additional 6 sattelites...Only would need three for radio....

I think this may be the key. What can the investors expect with a dying company?

 

[Rangers484]

Interesting read. I hope there aren't too many Sirius shareholders who are Dish Network subs. Charlie will have even more people against him since the people who own Sirius XM stock will lose big time in this scenario!

You mean their stock that is tradding for pennies on the dollar wasn't what cost them their money already?

 

[Timpanogos]

Dish: "danger Will Robinson!" XM would be a BAD move.

 

[Scott Greczkowski]

Here is the WSJ article... unfortunately I don't have an account there to read the entire thing.

EchoStar Amasses Sirius XM Debt - WSJ.com

 

[OV_HDFan]

Interesting read. I hope there aren't too many Sirius shareholders who are Dish Network subs. Charlie will have even more people against him since the people who own Sirius XM stock will lose big time in this scenario!

Have you checked the price of sirius/XM Stock lately? A whopping .14 a share. I think the company and FCC already tanked this stock. Don't think Uncle Chuck can do much more damage. BTW I think this is a good thing. I think Dish could actually make backseat TV a real option.

 

[VinceT3]

for a low low price of 500-800 mil and Sirius XM could be yous too..

 

[Scott Greczkowski]

Heres a story from CBS Marketwatch

http://www.marketwatch.com/news/story/echostar-seen-acquiring-sirius-debt/story.aspx?guid={6DA577E6-58A8-4AE2-BA24-968BA93DA36D}&dist=msr_1

 

[VinceT3]

my guess is they want them for the satellite to car stuff.. with the frequency they purchased.. Sirius XM's existing infrastructure.. it's definitely a bold move on their part.. not sure if it'll pay off though..

 

[Rangers484]

Doesn't Dish has a history of buying failing satellite companies and their equipment that has eventually paid off?

 

[JosephB]

I don't think they could turn the satellites into an asset for the existing Dish Network service, but think about how much capacity Sirius XM has. 6 satellites carrying two duplicative services. If I were Charlie here's the scenario I'd run:

Buy up all the debt and heck, maybe even the equity since it's dirt cheap.
Let it fall into bankruptcy and pick up the company for next to nothing.
Drop the duplicate service, either XM or Sirius. Work out whatever you want to with the subs with hardware that is useless (or heck, don't..an argument could be made that they would be useless if Sirius XM went under anyway)
Merge all the operations of the company with Dish and Echostar, whichever would be appropriate: IE hardware with Echostar, services and programming with Dish. You would eliminate a huge amount of the overhead, as I'm sure Sirius XM isn't so large that the HR/Finance/Payroll/etc operations of Dish and Echostar couldn't pick up the additional employees without only marginal increases in cost.

In this case, Dish Network has a huge advantage. They have broadcast TV, satellite radio, and a platform they can turn into mobile TV. They also have Sling which they can leverage the radio assets into. If push comes to shove they can even use the SDARS satellites for future Dish Network services and put an XM or Sirius antenna on new dish installs.

With all of this, buy up Sprint (or at least form a strategic alliance with them). Imagine being able to bundle Wimax, mobile phone, TV, and satellite radio. Dish would overnight become the provider of every type of communications into your home. They could even work to put satellite reception into mobile phones. Imagine a smartphone with satellite radio and mobile TV...and the radio and TV wouldn't have to burn up precious terrestrial bandwidth.

 

[hrxtreme]

Dish would overnight become the provider of every type of communications into your home.

Sounds like Charlie wants to takeover the world!!! But in all honesty, this is interesting... we shall see...

 

[Dish VIP]

Does this explain why new HD programming is still in "soon" mode? !sadroll

 

[navychop]

Well, I'm gob smacked!

Adding these "radio" satellites might make some kind of attractive package for Dish subs- remember, there is in fact a limited video mode working out of satellite radio. He could keep both satellite systems running, with new hardware to receive both, use one just for expanded nationwide video (TV), and the other for radio. Synergy, synergy, synergy. Maybe even dump the old company & it's obligations to subs entirely, form up something rational, and make an attractive offer to former subs.

Gee, I wish I'd seen this coming. Might work out quite nicely, especially if the FCC plays nice.

 

[truckracer]

watch the subscription prices keep climbing....pretty soon we could have a 50-60 dollar month satellite radio bill with a two year contract. Yeah! whoopeeee

 

[mwgiii]

Charlie could not do any worse that Mel has.

 

[FIREBIRD81]

Sounds like a hostile takeover. Sirius and Dish shares are up on the news. How could it not be good for shareholders, unless sirius files chapter 11? Charlie can't steal the shares! If he's taking over the company he has to BUY the shares. Buying the debt up actually gives Sirius more time to operate, unless Charlie then demands Siius pay him immediately and forces chapter 11. I would think that would be dangerously close to corporate raiding, tho and he could get into some trouble with the SEC. And seriously....are you telling me he is going to force Howard Stern to give up his stake in the company that was a huge part of is compensation and expect Howard to stay? NO Howard = no sirius. It doesn't make sense that he would do that.. ....