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Media Mogul Attempting to take over Satellite Radio

April 26, 2009
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By Mike Sanch 2/13/09

Not many people pay attention to the recent hyper conglomeration of the media; yet, we here at the Media Revolution, are making it a point to expose the people and companies behind these recent trends towards larger, more centralized, and concentrated media outlets.

With the complicity and assistance of the United States Government, these efforts towards control of the airwaves and electronic media are being led by a handful of men whose main objective is to gain more impact and influence on the opinions of the people.

One of these men and companies involve satellite radio, which was recently allowed to merge by the government. The merger was allowed between XM Radio and Sirius Radio last year, despite the fact that when congress and the FCC originally approved satellite radio to be broadcasted in the mid 90’s; provisions were put into to prevent a monopoly from forming. This was done by outlining that there would be two satellite radio providers, to stimulate healthy competition.

However, last summer the FCC and the U.S. Congress allowed the merger to take place. Sirius Satellite Radio was able to purchase XM Radio. This deal involved a massive amount of debt to be taken on by Sirius, which is led by CEO Mel Karmazin.

The merger between the two companies would have made business sense in the long run, but the recent downturn in the credit market has reached the satellite radio industry. The most significant source of revenue Sirius XM was benefitting from was new car sales that were readily equipped with the satellite radio and service. The recent slowdown in new car sales has led Sirius XM in a position to file bankruptcy, as much of the debts payments are due on February 17,2009 . Market analysts foresee bankruptcy as imminent for Sirius XM.

Enter Charles Ergen

Charles Ergen, one of the world’s most prolific media moguls and billionaires, has voiced his interest in Sirius XM. Ergen is the head of the media company DISH and the sister company EchoStar. Dish is predominately a satellite t.v. provider. Because Ergen’s company holds $400 million in Sirius XM debt, it puts Ergen in the prime position to take over the Satellite radio provider once the bankruptcy papers have been filed. Ergen, who was once a professional gambler, has a track record of taking ambitious and risky ventures, such as his acquisition of the satellite TV assets of Cablevision Systems Corp in 2005

Shelly Lombard, a bond analyst with research firm Gimme Credit was quoted as saying,

“Debt-driven takeovers, if that’s what they are doing, is very typical in vulture investing and hedge fund land, by taking control of a company by buying distressed bonds,”. Lombard added, “I can’t say that I’ve ever seen a corporation take footholds through distressed debt.”

One of the reasons cited for Ergen’s eagerness to acquire a controlling stake in Sirius XM has been the network system that Sirius XM radio now possesses. The network of repeaters and antennas in metropolitan areas amplifies the broadcast signals so that the signals can be received in highly developed areas with tall buildings.

Currently Ergen’s network with DISH is rather limited in comparison, as DISH was originally founded to focus on rural satellite t.v. customers.

Having access to the repeater and additional satellite networks will allow Ergen’s company to cross over into providing video and radio data to cell phones around the country; in addition to the satellite radio.

This conglomeration is just another example of big corporate media becoming more centralized in the hands of fewer men. Ergen can potentially control satellite radio, become a more serious competitor to DirecTv group, and have access to a critical network to broadcast signals to cell phones. This is important because cell phones are quickly and increasingly becoming multi media access points.

LIBRE! will keep you posted on updates, and other examples of media conglomeration.

JOIN THE MEDIA REVOLUTION, JOIN LIBRE!

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