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Update Sirius-XM entering Lions Den?
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Update Sirius-XM entering Lions Den? - 14-February-2009, 13:30

Sirius-XM entering Lions Den?

Troubled pay-radio broadcaster Sirius-XM is reportedly talking to one of John Malones businesses about securing a life-saving investment.

Such a move would be akin to switching from one of the rings of Barnum & Baileys three-ring Circus where Ring One is occupied by ferocious man-eating tigers in the shape of Charlie Ergen & Co, to Ring Two where there are a few pride of half-starved lions waiting to tear Sirius limb from limb, and in the shape of John Darth Vader Malone and DirecTV. Ring 3, of course, is where the lawyers, accountants and other scavengers wait patiently for their pickings.

The analogy may not be wholly fair, but it is designed to show what a dangerous state Sirius-XM is now in. In fact, Ring 3 might prove to be a much safer option despite the threats and perils therein.

Charlie Ergens Ring One option (and Sirius has certainly held talks with Ergen) is highly relevant given that Ergen, a famous poker player, is holding a very strong hand of cards and is able to dictate much of what happens in the next few days. As we have said before, Echostar could take the business over in a heartbeat subject to FCC permission while at the same time restructuring the contracts with the much weaker auto-makers as well as some of the on-air talent. Ergen holds at least $125m of the very pressing $300m debt obligation thats due to be met this coming Tuesday.

Ergen might want Sirius for a ton of reasons: the valuable satellite orbital slots; the potential of growing the business over time from 19m to 30+m subscribers; or just using Sirius-XM for its host of other valuable uses not least Telematics into cars. It could just be that he believes Cartoon Network into a cars back seat is a subscriber winner!

Then theres Malone, another powerful player in the industry with rock-solid connections. He also controls DirecTV, which could also absorb Sirius-XM in a flash. Sources told Wednesdays New York Post that DirecTV would not be making any sort of bid for Sirius-XM. But Malone has plenty of other financial irons in the fire.

It is always possible that another White Knight might emerge as the days pass, but just at the moment it seems there are few adventurous types waiting to rescue Sirius-XM from the debt circus.
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