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Shootout in Space

February 17, 2009 | Ibex Marketing

There was high drama in the U.S. broadcast business over the last week, about 22,000 miles high. That’s where Sirius XM (the merged satellite radio companies) have their geosynchronous satellites in orbit. And the whole system was on the verge of crashing down (financially, not literally) because a major debt payment was due today, and the company about to declare bankruptcy. The debt had been bought up by EchoStar, the company that owns the Dish Network satellite TV service. Some analysts believe that the debt purchase was an attempt to take over the company.

At the eleventh hour, Sirius XM managed to put together a deal with Liberty Media that will save the company, at least for now. Liberty owns DirecTV, the Dish Network’s rival. Liberty will loan Sirius XM enough money to make the current debt payment, as well as one that will come due later this year. In return, Liberty gets representation on the board of directors and ownership of a bit less than half of the company. And Sirius XM lives to keep trying to make satellite radio work.

The economic downturn hit Sirius XM especially hard, since it put the brakes on new car sales, and the company depends on new cars to deliver new subscribers. It’s not clear why either of the satellite TV companies want to have a piece (or all) of the company, because there is little overlap in their technology. Perhaps it is so that they can cross-market the two services, or offer bundle deals. Or maybe DirecTV just want to poke a finger in Dish Network’s eye. In any case, it will be interesting to see how this space war will turn out.