Charlie Ergen Reiterates His Interest In Sirius XM Radio (SIRI)

Satellite mogul Charles Ergen made an unsolicited offer late last year to take control of Sirius XM Radio (Nasdaq: SIRI) and was rejected, according to The Wall Street Journal.

Mr. Ergen's proposal was for one of his two satellite companies: EchoStar Corp. (Nasdaq: SATS) or Dish Network Corp. (Nasdaq: DISH) to inject enough capital into Sirius for it to meet its debt obligations and avoid a bankruptcy filing. However, despite this earlier rejection, Mr. Ergen has recently reiterated his interest in taking control of Sirius XM Radio.

Actually, Ergen is not trying to put Sirius into bankruptcy in order to reduce its debt-load and get a lower price, rather he believes that satellite radio would perfectly complement his television operation. Ergen likes that both are subscriber-based programming businesses that rely on similar technology.

Even if Ergen could gain control of Sirius XM Radio, the FCC may not look too kindly on this type of merger. The FCC may be against approving the marriage of satellite television and radio.

EchoStar began buying Sirius debt several months ago. However, it was only last week that EchoStar acquired control of a piece of Sirius's debt that could determine the company's future.

Mr. Ergen's move to take control of a crucial piece of the debt has cornered Sirius CEO Mel Karmazin. Mel Karmazin said that unless he can raise $175 million, he has one of two options: Sirius file for bankruptcy or SIRI cutting a deal with Mr. Ergen. The bankruptcy option probably would be the least attractive for shareholders as the equity would likely be wiped out.

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Sirius XM Radio Inc., formerly Sirius Satellite Radio Inc., is a satellite radio provider in the United States.

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