- The Washington Times - Wednesday, February 18, 2009

Facing a likely bankruptcy, Sirius XM Radio Inc. found a savior in Liberty Media Corp., which will lend $530 million to the satellite radio provider and block a bid for control that had been waged by a rival both companies share: Dish Network Corp. CEO Charlie Ergen.

Sirius had warned it could file for bankruptcy as early as Tuesday if it could not successfully negotiate with its debt holders.

Sirius has 20 million subscribers who use the service to listen to sports, music and talk, including shock-jock Howard Stern’s show, which Sirius landed with a five-year, $500 million contract that could have been terminated in a bankruptcy.

The company found itself on the brink as credit markets dried up and auto sales plunged - a critical factor for Sirius because many new subscribers buy the service in package offers with cars and trucks.

The crisis put Sirius Chief Executive Officer Mel Karmazin in a standoff with Mr. Ergen, who bought up much of the batch of debt that was coming due Tuesday and offered capital infusions and a restructuring of the loans in return for control of the company.

That would likely have meant Mr. Karmazin’s ouster, but he appears to have found an alternative - in Liberty Chairman John Malone - in time to stave off a Chapter 11 bankruptcy filing.

Mr. Karmazin and Mr. Ergen have squabbled before, including when Mr. Karmazin headed Viacom Inc. and fought with Dish Network over the fees for carrying Viacom channels. Mr. Malone is also a rival of Mr. Ergen’s, since Liberty controls satellite TV provider DirecTV Group Inc., which competes with Mr. Ergen’s Dish.

However, Liberty said its deal with Sirius will not be made by its Liberty Entertainment unit, which includes DirecTV. Liberty plans to spin off a portion of the business into a separate, publicly traded company.

Representatives for Mr. Ergen did not return messages seeking comment.

As part of the deal announced Tuesday, Liberty will provide Sirius with a $280 million senior secured loan. Sirius will use the loan to repay $172 million of its maturing 2.5 percent convertible notes that had been due. The rest will be used for general corporate purposes.

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