Forecast For XM Weather Remains Cloudy, With Strong Chance Of
Storms
We're no closer to knowing whether XM WX satellite weather will
survive the current strife at parent Sirius XM Radio... but we are
learning more about the parties in talks to possible buy the
troubled enterprise.
The New York Times reports Sirius CEO Mel Karmazin is in
preliminary ralks with Liberty Media, which owns DirecTV... the
chief rival of Echostar, the company many expect will attempt a
hostile takeover of Sirius should the company file for bankruptcy
protection.
News surfaced Tuesday that Karmazian was talking with advisers
about
a possible bankruptcy filing, due to a
faltering subscriber base and absence of new credit sources. Many
expect the company will default on the $175 million in debt
payments it owes by February 17.
The bread-and-butter market for Sirius is the automobile
industry. Sirius XM radio systems installed in new vehicles make up
the largest customer base among the roughly 20 million subscribers,
who each pay a monthly fee to listen to hundreds of channels of
entertainment and news programming... but to date, that revenue has
come nowhere close to covering Sirius' extravagant startup
costs.
EchoStar controls much of the debt Sirius owes... and if the
company defaults, or declares bankruptcy, EchoStar will likely make
a play for Sirius' assets. Karmazin is said to be in talks already
with EchoStar CEO Charles Ergen, presumably towards a more amicable
agreement... but it's no secret in the industry neither man cares
much for the other, however, and Karmazin has turned down Ergen's
previous offers for his company.
Liberty is owned by John C. Malone, whose DirecTV is the largest
satellite television subscriber service in the US, ahead of
Echostar's Dish Network. A buyout of Sirius would bolster Liberty's
dominance in satellite entertainment; it would also likely mean
Karmazian would be allowed to keep his job.
Analysts aren't sure how serious Liberty's interest in Sirius
is, however. Some feel it could be little more than a ploy to drive
up the amount of EchoStar's offer... something Ergen has done with
past mergers.
As for the future of XM WX... well, there's little to indicate
how either company would handle what is essentially a small niche
product. For now, much like when faced with a powerful summer storm
along their route, pilots are probably better off seeking shelter
and waiting for the clouds to roll over.