The Wall Street Journal is reporting as of today( 2/2/09) there still is no deal with the banks. SXM owes 170+ million dollars in 2 weeks and 350 million in May.

It's looking bleak. Even by some miracle they get the 170 million how in hell will they get the 350 million in May? If no one wants to help them with this payment who's going to step in in May to help them. Especially with them owing twice as much AND since the economy is getting worse, not better.


Report: Sirius XM in "advanced discussions" over debt

By Ryan Saghir on February 2, 2009 8:11 PM | 22 Comments
Mel KarmazinWith $174.6 million in debt due in just about two weeks, word has come out that Sirius XM Radio Inc. are in "advanced" talks about taking on that debt.

According to the Wall Street Journal, people familiar with the matter are saying that Sirius XM is in advanced discussions with "several investors" about taking on the debt.

WSJ also points out that some - but not all - of the participants hold existing Sirius debt.

If Sirius XM can clear this hurdle, there's still $350 million due in May, $400 million due at the end of the year, and another $230 million in convertible notes come due in 2011.

"It's a long road back," given the economic conditions, says RBC Capital Markets analyst David Bank.

http://www.orbitcast.com/archives/report-sirius-xm-in-advanced-discussions-over-debt.html

They could always try raising revenue by threatening their loyal customers with a rate increase if they don't lock in now by buying years of service in advance. Oh wait, they tried that.

They could always try raising revenue by threatening their loyal customers with a rate increase if they don't lock in now by buying years of service in advance. Oh wait, they tried that.

haha x2. these goons have their heads so far up their ass.

I don't understand why anybody would invest or lend Sirius XM $175 million today knowing how much is due in a few months. I'd have very little faith that I'd ever see any of it back.

I don't understand why anybody would invest or lend Sirius XM $175 million today knowing how much is due in a few months. I'd have very little faith that I'd ever see any of it back.
Well let's say Sirius XM already owes you $500M. If you pony up another $175M there's some chance you may see some of that $500M someday. If you don't, you have to hope someone else ponies up the cash or you're out your entire $500M (minus whatever assets can be liquidated). And for some it may be actually just rolling over $50M of that $500M so they're not risking anymore cash, just delaying the payment of the debt.

Basically I think it was telling the negotiations are with existing holders of Sirius XM debt. i.e. folks that do have something to lose if the enterprise fails entirely. This isn't new investors taking on risk, but those already invested in the entity. Given that, there's some hope they'll find the cash or more likely be able to delay the debt payments for at least a while. Plus they could always declare bankruptcy to buy themselves some time as well if they had too...

They payed Stern 500 million for his term at Sirius. Why not talk him and some of their other big name talent into taking ownership of the company in exchange for covering their debt? Oprah could afford to drop a hundred Million or so.

Additionally...what the hell was the point of the merger if they were just gonna go under anyway? It seems like if they hadnt merged one would have gone under and the other would have done better. Now the combined company has taken on the debt of both combined.

Mutually assured destruction. If I can't play, NOBODY can play.

They payed Stern 500 million for his term at Sirius. Why not talk him and some of their other big name talent into taking ownership of the company in exchange for covering their debt? Oprah could afford to drop a hundred Million or so.

Additionally...what the hell was the point of the merger if they were just gonna go under anyway? It seems like if they hadnt merged one would have gone under and the other would have done better. Now the combined company has taken on the debt of both combined.

True without the merger there would be half the debt, but both companies would have more expenses AND 1/2 the subs too.

The merger had to happen, both companies would have folded without it. It was a shot, almost like a Hail Mary pass, but they owed too much debt and the FCC and DoJ taking forever to make a decision didn't help either.

Bankruptcy is probably their only chance to survive now. But of course even that has dangers.

I just called to cancel my subscription. I had been a subscriber since 2004. I had three radios on my account.
They wanted to know why so i told them that in my opinion there is too much talk now. that since the merger all my fave XM channels disappeared and I don't have any good channels to listen to any more. I don't think that what I'm paying is worth it so with the price increase in March, its certainly not worth it.

I was asked if I would pay $4.99 for three months; no I wouldn't. I was asked if I would stay if they gave it to me for free for 3 months; no I wouldn't.

I'm just fed up with it. I'll program my iPod now. Oh, and while I was waiting to speak with a customer rep, I was constantly told that the long waits were do to the overwhelming response to their "Best of Sirius Everything offer". So maybe there is hope for those of you that still subscribe?

Well let's say Sirius XM already owes you $500M. If you pony up another $175M there's some chance you may see some of that $500M someday. If you don't, you have to hope someone else ponies up the cash or you're out your entire $500M (minus whatever assets can be liquidated). And for some it may be actually just rolling over $50M of that $500M so they're not risking anymore cash, just delaying the payment of the debt.

Basically I think it was telling the negotiations are with existing holders of Sirius XM debt. i.e. folks that do have something to lose if the enterprise fails entirely. This isn't new investors taking on risk, but those already invested in the entity. Given that, there's some hope they'll find the cash or more likely be able to delay the debt payments for at least a while. Plus they could always declare bankruptcy to buy themselves some time as well if they had too...
It said some but not all were existing debt holders, I was mostly interested in why anyone without any existing stake would gamble now. But even then if I were owed any portion of the debt due now I wouldn't be too interested in deferring it with so much more debt due so soon. I guess it isn't too big a gamble for those at the end of the line to try to buy their way up to the front, but it still seems like throwing good money after bad at this point.

True without the merger there would be half the debt, but both companies would have more expenses AND 1/2 the subs too.
I still don't know if we have accurate dual-sub figures. And the way the merger was handled really alienated XM fans because almost none of the XM programming survived intact. It really remains to be seen how many XM subs give up. Last I heard XM still retained a slight edge in subscriptions and that's without Howard as a key draw, so what they did to the music services really is unforgivable. They can blame the FCC, DoJ and anyone else they want but ultimately this is on them.

but it still seems like throwing good money after bad at this point.

Yeah, that's the question. I've read a few times that some people think the investors will refinance SXM because that's the only hope the investors have of getting their money back.

BUT eventually if you're an investor you got to look at the overall situation and the future and just say enough is enough and cut your loses.

I still don't know if we have accurate dual-sub figures. And the way the merger was handled really alienated XM fans because almost none of the XM programming survived intact. It really remains to be seen how many XM subs give up. Last I heard XM still retained a slight edge in subscriptions and that's without Howard as a key draw, so what they did to the music services really is unforgivable. They can blame the FCC, DoJ and anyone else they want but ultimately this is on them.

I agree. I've had XM since 2002, but when my account comes due in a few months I'm probably dropping it. XM's music programming needed to be superior to Sirius's, except for baseball XM didn't have all the non music talent to draw subs, so their music stations had to be better.

So yeah I agree, I'm not happy, nor do I understand why after the merger they seemed to embrace Sirius's music philosophy and programming instead of XM's.

But still, the ridiculously long time it took the Feds to rule on the merger didn't help.

This article lays out the problems in some detail. The writer also says SiriusXM is his pick for the worst stock of 2009.




http://www.msnbc.msn.com/id/28897337/

I agree. I've had XM since 2002, but when my account comes due in a few months I'm probably dropping it. XM's music programming needed to be superior to Sirius's, except for baseball XM didn't have all the non music talent to draw subs, so their music stations had to be better.

So yeah I agree, I'm not happy, nor do I understand why after the merger they seemed to embrace Sirius's music philosophy and programming instead of XM's.

But still, the ridiculously long time it took the Feds to rule on the merger didn't help.


I think XM's music blows. of course im only judging boneyard and deeptracks. so what you say as fact is only your opinion.

I think XM's music blows. of course im only judging boneyard and deeptracks. so what you say as fact is only your opinion.

Of course it's my opinion. You thinking XM music blows is only your opinion.

BUT it's also not a secret that there's many more XM subs PO'ed by these changes than Sirius subs. We've seen that here and in other forums.

Even using DJ's they seemed to have copied Sirius's philosophy. They wanted to cut costs with this merger so you would think they'd have less DJ's, but instead they seem to have more that only talk, and talk, and talk..Before the merger most of XM's music channels had very little to no DJ's. Now after the merger there's DJ's everywhere. IMO that makes little sense when a company it trying to cut costs.

Of course it's my opinion. You thinking XM music blows is only your opinion.

BUT it's also not a secret that there's many more XM subs PO'ed by these changes than Sirius subs. We've seen that here and in other forums.

Even using DJ's they seemed to have copied Sirius's philosophy. They wanted to cut costs with this merger so you would think they'd have less DJ's, but instead they seem to have more that only talk, and talk, and talk..Before the merger most of XM's music channels had very little to no DJ's. Now after the merger there's DJ's everywhere. IMO that makes little sense when a company it trying to cut costs.


agreed.

I think XM's music blows. of course im only judging boneyard and deeptracks. so what you say as fact is only your opinion.
Sirius XM's Boneyard is nothing like XM's Boneyard with the exception of Eddie Trunk's show. XM's Boneyard treated 80s style metal as a legitimate genre and played new acts that played similar music as well as new music from the big 80s metal acts. Sirius has stated that Boneyard is a "classic metal/hard rock" channel and therefore with the exception of Trunk's show and Breaking Bone which has been shortened they don't play new music. I never listened to Deep Tracks but my understanding is that its been Siriusized as well.

Its perfectly fine to not like XM's programming, but it is a fact not an opinion that XM was marketed as a music first service while Sirius was an also ran until Stern showed up. The dynamics changed a bit in recent years as XM tried to counter but that's just how it is, XM specialized in music, Sirius in talk. Doesn't mean you couldn't like XM's talk or Sirius's music better.

Even using DJ's they seemed to have copied Sirius's philosophy. They wanted to cut costs with this merger so you would think they'd have less DJ's, but instead they seem to have more that only talk, and talk, and talk..Before the merger most of XM's music channels had very little to no DJ's. Now after the merger there's DJ's everywhere. IMO that makes little sense when a company it trying to cut costs.
The biggest difference is that XM's DJs were mostly live, Sirius's are mostly voice tracked, some even track from home studios while XM had their DC studio.

Can't Mel just float another 60 billion shares at $0.03 each to raise the needed $150 million?

Motley Fool Chimes in....



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No Time for Sweet Nothings at Sirius XM

By Rick Aristotle Munarriz
February 3, 2009 | Comments (9)

Recs
21

It's February, but Sirius XM Radio (Nasdaq: SIRI) doesn't have time to chase groundhog shadows, celebrate its first Valentine’s Day as a couple, or ponder the country's past presidents.

Come Feb. 17, the first of this year's three debt repayment deadlines awaits like a hungry tollbooth: lowered-arm blocking passage until the wide bucket is fed some serious change.

In the old days, forward-thinking drivers would load up on the required change before the tollbooths started coming.

Sirius doesn't have that luxury. Its change tray is bare.

The barriers between us
To the satellite radio provider's credit, it has already been eating away at this first burden. What was originally $300 million has been whittled down to just $174.6 million. The company has been persuading some of its creditors to swap debt for equity, where the real shame is that its shares can offer only so much given its pocket-change pricing.

Hold your applause until the end, though.

Yesterday's Wall Street Journal details other key challenges that the company has to overcome to make it out of 2009 alive.

* $43 million the NFL is set to receive this month as part of its programming contract.
* $350 million in the form of a term loan and revolving credit facility are due in May.
* $400 million in senior convertible notes come up in December.
* Sirius can borrow only up to $250 million more without triggering covenants on later debt.

The good news is that 2010 is free and clear of tolls to pay beyond its regular interest expense payments. The bad news is that the stock -- and even the December convertibles -- are priced as if the company has no choice but to file for Chapter 11 bankruptcy reorganization.

Reasons to be somewhat cheerful
I have said all along that I think Sirius will do everything possible to avoid bankruptcy reorganization. It may clean up the balance sheet and reshuffle leadership at the company, but it would be a credibility killer.

Most subscribers don't know the difference between bankruptcy reorganization and outright liquidation. Their knee-jerk reactions would be to cancel the service or avoid signing long-term contracts.

There are also a few important things to note about the needy mouths that Sirius has to feed this year. The NFL knows that Sirius needs it, just as Major League Baseball can bank on XM. Losing the NFL would cause a mutiny second only to the hypothetical loss of Howard Stern. However, this is also an incremental deal to XM. Oh, and it's also the off-season, so there are several months to repair any disrupted content deals.

The $350 million that is due in three months is also interesting. Lead lenders include JPMorgan Chase (NYSE: JPM) and UBS AG (NYSE: UBS), on the hook for $100 million apiece. The last thing they need is for the market to whack down their stocks if Sirius files for bankruptcy, forcing likely asset writedowns. They should be easy to sell on a refinancing deal, because time should be kind to Sirius.

Reasons to be somewhat fearful
Free-falling car sales at Sirius XM partners like Ford (NYSE: F) and General Motors (NYSE: GM) are problematic, but not fatal. Automakers have been slumping for several quarters yet Sirius XM has still managed to grow its subscriber base.

There is also the negative impact of the softening economy, though Netflix (Nasdaq: NFLX) has proved that consumers will take to low-priced entertainment subscriptions during recessionary times if the perceived value is there.

Sirius is also in a better position there, given its newfound pricing flexibility. It began offering lower-priced plans with limited channels shortly after last year's merger completion. The company is barred from raising rates on its regular plans for now, but it has telegraphed a rate hike on Web streaming and on additional receivers within the same account come next month.

That is a brilliant move that will find subscribers paying up to lock in years of discounted service at the old rate at a time when the company can use the cash flow.

Sure, there are countless threats to Sirius in the form of audio alternatives like Internet radio, Web-streaming smartphones, and just about anything Apple (Nasdaq: AAPL) does to improve its pole position in digital music.

This isn't going to make the tolls any easier, so let's hope that Sirius has the gift of gab to negotiate its way past the toll collectors.

Anyone else find it ironic that siri survived on its own longer than our mega-banks? LOL

Some of the early post merger articles mentioned that the merger would enable them to at least clear the upcoming $175 million debt payment. I wonder if these new articles are overly critical in this regard or if there really is a new problem.

Anyone else find it ironic that siri survived on its own longer than our mega-banks? LOL

Some of the early post merger articles mentioned that the merger would enable them to at least clear the upcoming $175 million debt payment. I wonder if these new articles are overly critical in this regard or if there really is a new problem.

1) I think many are being more critical now because the economic news is getting worse.

2) also I think many believe even if the clear the 175 million hurdle they won't clear the 350 million they owe in May. So all this 175 mil payment will do is delay the inevitable.

Here's SXM possible new owners..

From Orbitcast:

Report: EchoStar could be attempting to take over Sirius XM Radio

According to the Wall Street Journal, Charles Ergen's EchoStar Corp. has been accumulating substantial portions of debt from Sirius XM Radio Inc. in what could be the first move in an attempt to take over the company.

Charles Ergen, who himself is the 87th richest man in the world (net worth of $9.5 billion) and controls a satellite empire surrounding Dish Network and EchoStar, has recently acquired part of the $300 million of Sirius XM debt that matures on February 17th, according to WSJ's sources.

Sirius XM has worked down the total debt to about $175 million, but it isn't clear whether Ergen participated in that exchange. The Wall Street Journal reports that Ergen could also be buying up the senior bank debt due in May.

Echostar could be trying to use the debt as a way take control of the company - either inside or outside of bankruptcy - but either way current shareholders would be left with nothing, reports WSJ.

The newspaper offers a possible scenario as to how EchoStar could be trying to take over Sirius XM Radio:

EchoStar could push to buy up to 51% or more of Sirius XM's bank debt with the knowledge that the company will soon need a concession (like a waiver) from its bank group. EchoStar can then block this move and force a bankruptcy - and attempt to take control of Sirius XM in the bankruptcy process.

Effectively, EchoStar would swap its debt for equity in Sirius XM Radio.

As to why EchoStar would be interested in doing this move? The Wall Street Journal suggested that Ergen may be interested in the company's terrestrial repeater network - a footprint on the ground that the company has long sought out.

Here's SXM possible new owners..

From Orbitcast:

Report: EchoStar could be attempting to take over Sirius XM Radio

According to the Wall Street Journal, Charles Ergen's EchoStar Corp. has been accumulating substantial portions of debt from Sirius XM Radio Inc. in what could be the first move in an attempt to take over the company.

Charles Ergen, who himself is the 87th richest man in the world (net worth of $9.5 billion) and controls a satellite empire surrounding Dish Network and EchoStar, has recently acquired part of the $300 million of Sirius XM debt that matures on February 17th, according to WSJ's sources.

Sirius XM has worked down the total debt to about $175 million, but it isn't clear whether Ergen participated in that exchange. The Wall Street Journal reports that Ergen could also be buying up the senior bank debt due in May.

Echostar could be trying to use the debt as a way take control of the company - either inside or outside of bankruptcy - but either way current shareholders would be left with nothing, reports WSJ.

The newspaper offers a possible scenario as to how EchoStar could be trying to take over Sirius XM Radio:

EchoStar could push to buy up to 51% or more of Sirius XM's bank debt with the knowledge that the company will soon need a concession (like a waiver) from its bank group. EchoStar can then block this move and force a bankruptcy - and attempt to take control of Sirius XM in the bankruptcy process.

Effectively, EchoStar would swap its debt for equity in Sirius XM Radio.

As to why EchoStar would be interested in doing this move? The Wall Street Journal suggested that Ergen may be interested in the company's terrestrial repeater network - a footprint on the ground that the company has long sought out.
I hope this happens and they throw Mel and the current management staff out on their asses.

I hope this happens and they throw Mel and the current management staff out on their asses.

I understand your feelings, but.....

1) If EchoStar gets control their plans maybe not include a satellite radio music service. And.....

2) From what I've read about Mr. Ergen, he's no day at the beach.

More and more it looks like Dish is making a move for SXM.. The last part of this article is VERY interesting..

Confirmed: Echostar Is Buying Sirius’ Bank Debt, Not Convertible Debt; Aiming For Control?

By Rory Maher - Thu 05 Feb 2009 11:15 AM PST

The Wall Street Journal reported this morning that satellite TV provider Echostar (NSDQ: SATS) Corp. was quietly buying up portions of Sirius Satellite Radio’s debt, setting off rumors that Echostar CEO Charlie Ergen may be making a play for control of the satellite radio provider in an effort to to build its business, which has suffered from increasing competition. Echostar could be buying a couple of different types of Sirius debt, each of which would have different implications:

—If Echostar is buying the convertible debt due in February, it could either be making a play for equity (it would have the option to convert the debt to equity), or planning to get in line behind the bank debt holders in bankruptcy proceedings.
—If Echostar is buying bank debt, it could be looking to take control of the company during bankruptcy proceedings. as, again, bank debt holders are first in line for the assets.

I spoke to a couple people outside the company but intimately familiar with the situation who confirmed that Echostar is buying the bank debt, not the convertible debt. This would support the idea that Ergen is looking to control Sirius (NSDQ: SIRI). The real question then becomes what is he going to do with Sirius if he takes control of it.

My sources believe that if Echostar buys enough bank debt, the most likely next steps are:

—Ergen sees value in the company as a standalone business once the subordinated debt and equity holders are wiped out in bankruptcy and the bank debt holders take control of the company, leaving Sirius with no debt on its balance sheet

or

—Ergen would attempt to use the assets to expand into other businesses within Echostar.

If the latter is true, Ergen would probably use Sirius’ terrestrial repeaters (which boost satellite transmissions locally in areas with high interference like cities) and orbital slots to launch a broadband Internet service that he has tried unsuccessfully to get off the ground in the past. Of course, Ergen would need to successfully convince the FCC that satellite radio is not a viable business and that the agency should amend the licenses granted to Sirius to allow the spectrum on the company’s orbital slots and repeaters to be used for broadband Internet access.

That’s a tall order, but given the upside, it’s understandable how tempting it must be for Ergan.

Intersting info. Most feel that Sirius will declare bankruptcy to rid itself of high priced talent, but if echostar controls it for broadband then satellite radio is finished.

It might not be so bleak though...sirius has the backseat TV service. if echostar acquires siriusXM, wouldn't there be a possiblility that the backseat tv service would expand to more than three channels for kids?

It might not be so bleak though...sirius has the backseat TV service. if echostar acquires siriusXM, wouldn't there be a possiblility that the backseat tv service would expand to more than three channels for kids?

Only if they got rid of all the audio/music stations and went to just video. Even then there would probably only be enough bandwidth for 10-12 video channels.

Seem like there's many things EchoStar could do with SXM if they get control of it... I highlighted what I think is particularly interesting.


What Would Charlie Ergen Do With Sirius, Anyway?
Posted by Eric Savitz

So, let’s suppose Charlie Ergen, the CEO of both EchoStar (SATS) and DISH Network (DISH), really does manage to gain control of the financial troubled satellite radio player Sirius-XM (SIRI). What would he actually do with it?

In the report Thursday that triggered intensified interest on the fate of Sirius-XM, the Wall Street Journal theorized that Ergen is less interested in satellite radio per se then he in the company’s network of ground facilities.

Kaufman Bros. analyst Todd Mitchell this morning noted in a research piece that the Sirius and XM satellite distribution platforms are largely duplicative. Mitchell says the Sirius platform is highly specialized for satellite radio, but that the XM platform is “basically relatively generic,” with “Boeing workhorse satellites in very strategic orbits.” Mitchell says the XM satellites could be re-purposed “for any number of things,” including incremental HD capacity for the DISH Network.

Stanford Group analysts Paul Gallant and Paul Glenchur this morning took a look at the potential regulatory issues involved in EchoStar taking over Sirius. They say a purchase of Sirius by Echostar, whether out of bankruptcy or as part of a debt-for-equity swap, would require approval from both the FCC and the Justice Department. They also note that such a combination does not appear to create competitive issues, but that at this point it isn’t clear what EchoStar would do with Sirius, so assessing the regulatory prospects for a deal isn’t easy. In any case, they note that the Obama Administration is certainly likely to give more scrutiny to any potential deal than the Bush Administration would have.

The Stanford Group analysts agree that one possibility is that EchoStar would reallocate some of pay radio spectrum for terrestrial use. They say the company could combine excess pay radio spectrum with other spectrum the company acquired in last year’s 700 MHz spectrum auction to offer some kind of new service.

A more radical approach, the analysts say, would be for EchoStar to simply shutdown the pay radio business and use all of the spectrum for mobile TV or wireless broadband. The Stanford Group analysts write that they have no reason to think that is what EchoStar has in mind; but they do say that it is conceivable that Ergen would rather re-purpose the spectrum for something else. Doing that would require FCC approval, and the Commission might not be that eager to pull the plug on a service with 20 million customers.

Meanwhile, SIRI shares have given up yesterday’s gains; as I noted yesterday, it seems clear that any acquisition of the company by Ergen is likely to effectively wipe out the common stock holders.

I still don't know if we have accurate dual-sub figures. And the way the merger was handled really alienated XM fans because almost none of the XM programming survived intact. It really remains to be seen how many XM subs give up. Last I heard XM still retained a slight edge in subscriptions and that's without Howard as a key draw, so what they did to the music services really is unforgivable. They can blame the FCC, DoJ and anyone else they want but ultimately this is on them.

The Sirius guys really screwd up one of XM's biggest assets: MLB Home Plate Channel 175. Now a bad and rotating melange of mis-matched talent.

Why???????????? :(