Liberty Media Salvage Operation - Part One

Once upon a time a junkman had a dream

Following up on Curly R's two part series on the Sirius XM train wreck, after a very near disaster in the form of bankruptcy or hostile takeover, CEO Mel Karmazin today somehow managed to keep the nation's only satellite radio provider out of the ditch, at an incredibly steep cost. Tonight Curly R debuts a two part series on the Sirius bailout.

Part One: Not Even Close
Part Two: Tomorrow

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To recap the past 24 hours, when Sirius and XM proposed to merge two years ago this week, an argument that was first approved by the Department of Justice last spring and the Federal Communications Commission last summer, there were a few salient arguments to the business case. One was the cost of running two competing operations was simply too high. Between maintaining satellite and ground operations, running an overhead business and paying out the spiraling costs of talent and access to programming the companies simply could not make a go of it alone. Allowing them to merge would permit them to thin overlapping functions and consolidate operations.

Another argument was improved access to credit to keep the business afloat. To finance customer acquisition and the escrow of license payments to partners like MLB and the NFL the company had taken on a staggering amount of debt, more than three billion dollars overall, and for the proposed combined company to get over that hump where the essentially annuitized revenue stream overcame current obligations and put the company in the black they were going to need more cash, more debt.

Both promises fell down, hard. The first, well it turns out that combining business operations only went so far. Combining the 90s channels, eliminating Lucy on XM and running Sirius Lithium on both streams, firing all those DJs and support staff, that only went so far, it turns out the combined company still had two satellite networks to maintain and still carried two sets of really fucking expensive contracts for talent and access to programming.

The second, well as if the company was not already toxically loaded with debt and looking at twelve to fifteen percent interest rates the worldwide credit crash did not help things. No one will lend Sirius XM any more money.

Going into Wednesday, Sirius had a 170+ million dollar debt service payment due. Most of that debt had been bought on the cheap by Charles Ergen, CEO of EchoStar, the operator of the Dish Network satellite TV network. Charles and Mel Karmazin do not get along and Charles wanted to negotiate with Sirius XM to keep the company out of bankruptcy, gain control and oust Mel on his keister. Then maybe raid company's broadcast spectrum and toss it aside.

Playing with millions of dollars, billions in liabilities and peoples' lives Mel Karmazin did what any corporate shark would do. He called Charles Ergen's sworn enemy.


Curly R's Liberty Media Salvage Operation concludes tomorrow with part two, My Enemy's Enemy.



I am dating myself here and proud of it with the logo from the Vulture, Harry Broderick's (as played by Andy Griffith) cobbled together space ship from the too short lived and incredibly entertaining to a nine year old Salvage-1 that ran 14 episodes plus a two hour pilot on ABC in 1979, from here via here.