updated 09:50 am EST, Thu February 5, 2009
EchoStar Eying Sirius XM
Sources allegedly familiar with the situation tell the Wall Street Journal that EchoStar is taking steps that may lead to a buyout of Sirius XM. The satellite TV provider has reportedly bought up some of about $300 million of Sirius XM debt that must be paid back on February 17th, with the possibility of buying out more debt that would be owed in May. EchoStar would potentially use the sudden influence to either get equity in the target company or else sit in a position of power that lets it force a deal should Sirius XM go bankrupt or otherwise need help from its bank.
The recently-merged radio service is said to have little negotiating room as it has $925 million in debt to pay this year.
A takeover would give EchoStar an edge in satellite content as it would be the only company to offer both TV and radio through the same method; it would also potentially assist Sirius XM not only by saving it from bankruptcy but by giving it access to ground facilities to improve its reach. EchoStar owns DISH Network but has been exploring alternative businesses outside of TV.
Both companies, however, are struggling to compete against rivals; Sirius XM in particular is known to have been hurt by its merger as potential listeners have instead opted for portable media players or free traditional and HD Radio broadcasts.