MELISSA BLOCK, host:
This is ALL THINGS CONSIDERED from NPR News. I'm Melissa Block.
MICHELE NORRIS, host:
And I'm Michele Norris.
Here's news of the latest attempt to keep satellite radio alive. The nation's sole satellite radio provider, Sirius XM, is getting some badly needed cash from Liberty Media.
NPR's David Folkenflik reports.
DAVID FOLKENFLIK: So, on the surface, today's news is the story of three of the most outsized media figures commanding corner offices. Start with Mel Karmazin, the CEO of Sirius XM Radio. His outfit boasts of nearly 20 million subscribers who listen to major sports, entertainment, music, news and politics shows and, above all, to shock jock Howard Stern. But Karmazin can't afford to pay Sirius' next debt installment, due today, of about $175 million.
Bankruptcy loomed. That debt was being scooped up by one of his frequent antagonists, Charlie Ergen of the satellite TV provider, Dish Network, in the hopes of winning control of the company. Then, this morning, John Malone's Liberty Media, the owner of Dish's rival, Direct TV, swooped in to give Karmazin and Sirius $530 million.
Mr. BISHOP SHEEN (Senior Analyst, Wachovia's Fixed Income Division): This is very much a last minute, eleventh-and-a-half-hour solution.
FOLKENFLIK: That's Bishop Sheen, a senior analyst at Wachovia's Fixed Income Division. So, Karmazin gets to stay on, Sirius XM meets its February payment and Liberty will get 40 percent of the company's stock. What could possibly go wrong?
Mr. SHEEN: From the NFL and Major League Baseball to Howard Stern to Oprah, it probably can't afford to have all that content under one roof and service its debt obligations.
FOLKENFLIK: Ah, that's right, debt - the ugliest four-letter word of 2009. Sirius and XM started as competitors, but profits were hard to come by, so, they announced plans to merge two years ago. Last summer, after an arduous federal antitrust review, they won approval.
Mr. SHEEN: What Sirius XM ended up with was two overly debt-burdened companies getting married to create one mega overly-burdened company.
FOLKENFLIK: And car sales have slowed to a trickle, which is doubly hard on Sirius, which put its receivers in many new cars. For most people, the question isn't who's in control, but whether listeners paying $12.95 a month can count on hearing Sirius' more than 130 channels, which include two NPR channels.
Sirius XM wouldn't comment today, but Karmazin told employees in an e-mail that the Liberty Media investment, quote, "will allow us to continue providing the same great content and innovative programming our subscribers have come to know and love." Peter Fader is one of those subscribers.
But he's also co-director of the Interactive Media Initiative at the Wharton School of Business. Fader says Sirius is making a huge mistake by branding itself as satellite radio instead of as a conduit for all entertainment. In fact, given Sirius's availability online and on mobile devices, Fader says Sirius should be competing directly with a seemingly invulnerable brand - the iPod.
Mr. PETER FADER (Co-Director, Wharton School of Business Interactive Media Initiative): If we could start the world over again, and we didn't have a master marketer like Steve Jobs in one corner and a not-so-master-marketer like Mel Karmazin in the other corner. If you had just laid out the basic attributes of these different kind of services, I think we'd be the winner.
FOLKENFILK: For the moment, Sirius seems focused on survival, not winning. As Wachovia's Bishop Sheen says, Liberty's investment is not a solution to Sirius' debt, just an awfully helpful stopgap measure.
David Folkenfilk, NPR News, New York.
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