Thursday, February 12, 2009

DirecTV Owner Said to Seek Deal for Sirius XM

Is Direct TV, through its owner Liberty Media, interested in obtaining Sirius XM Radio? Are there synergies that make this a good merger Sirius clearly has subscribers, mainly through deals with the automakers, but are these subscribers here for the long haul and can they be merchandised with Direct TV. Perhaps there are other reasons at play. There seems no love lost between John Malone, who heads Liberty, and Charlie Ergen, who leads his competitor Echostar. "Mr. Ergen and Mr. Malone are longtime rivals. In the past they have discussed a possible merger or joint venture to cut costs, but those talks stalled over antitrust concerns in 2002. Mr. Malone’s involvement with Sirius may just be a ploy to make a takeover by EchoStar more expensive, analysts suggest. If that is the case, Mr. Malone would be taking a page from Mr. Ergen’s playbook — EchoStar has been known for becoming involved in potential mergers to drive up the price a rival must pay."

Let's assume the former that there are synergies at play that could be mined with the merger of a radio and cable satellite company. Beyond marketing opportunities, could there be technical efficiencies that could save the radio business. Howard Stern, in a Reuters article, believes that satellite radio is a viable business and can survive."'I'm not concerned. I think satellite radio is great and will be a successful business and it will survive,' he said." As of today, Sirius has a large debt payment due, so timing is everything. Who controls Sirius may simply determine Howard and Sirius' future

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