Half-billion dollar loan saves Sirius XM
17th Feb 2009 | 19:22
DirecTV rescues satellite radio from looming bankruptcy
Just seven months ago, Sirius merged with rival US satellite radio broadcaster XM in a multi-million dollar merger that was meant to free up the company to storm the airwaves.
Instead, with its stock now worth just pennies and millions of dollars in loans coming due, the joint Sirius XM has been rescued from bankruptcy at the last minute by Liberty Media, parent company of satellite TV broadcaster DirectTV.
Liberty's $530 million loan (£375 million) will pay off some of Sirius XM's most pressing debts and buys the TV company 40 per cent of its radio business - and seats on the board.
That works out at about 10 cents per profanity
Despite having around 20 million subscribers and annual revenue of $2 billion (£1.4 billion), Sirius XM has never turned a profit - a failing that some commentators ascribe to its habit of luring big name presenters with massive pay-checks, such as shock-jock Howard Stern's $100 million (£70 million) annual salary.
"We are excited to be investing in Sirius XM. We have been impressed with the company, its operations and management team," said Greg Maffei, president and CEO of Liberty. "Sirius XM's ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a "must have" service."
Liberty must also be quite excited at the terms of its loan - which attracts a whopping 15 per cent interest rate and is due to be paid back in just three and a half year's time.