Updated from 4:14 p.m. EST
Sirius XM Radio (SIRI) avoided bankruptcy Tuesday, but satellite radio is still in a difficult orbit.
The pact also kept Sirius XM out of the hands of Dish Network (DISH) CEO Charles Ergen, who had purchased Sirius debt in an attempt to pick up the company's assets cheaply if it had failed.But all the last minute drama between Liberty Media, which controls DirecTV (DTV), and its satellite rivals, Ergen's EchoStar (SATS) and Dish, fails to fully address Sirius' ongoing saga. Earlier this decade, when subscriber growth was soaring and credit markets were more freewheeling, Sirius and XM took on $3.4 billion in total debt. The combined Sirius XM expects to spend $1.3 billion in loans and interest toward payments this year. And then there are the programming costs. Programming is the second highest expense for Sirius XM and eats about 23% of its revenue. Take these arrangements, among others: A five-year $500 million contract with Howard Stern that expires next year, a $650 million 11-year pact with Major League Baseball, a seven-year $220 million deal with the National Football League and a five-year $107.5 million contract with Nascar. These programming deals were a legacy from a heady growth period, when Sirius and XM fought to outbid each other for the best radio talent and contracts. Liberty Media's last minute save preserves those contracts, which would likely have been torn up in a bankruptcy restructuring effort.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV