Liberty Media Corp. sank hundreds of millions of dollars into Sirius XM this year and pulled the satellite radio company back from the brink of bankruptcy. Liberty President Greg Maffei says Sirius XM is “a great business” and that its Q2 results demonstrate that the company has found its bottom.
Liberty came to the rescue in February, outbidding satellite business rival EchoStar to supply Sirius XM with $530 million in loans and investment cash for a 40% stake in the satellite radio company.
After Liberty reported Friday on earnings for its six public stocks spread across three business units, Maffei was asked what he though of the Sirius XM investment thus far. He responded that he’s convinced the satellite radio company has found a bottom, as demonstrated by its Q2 results.
While Sirius XM was facing bankruptcy in February, Maffei said that’s now a distant memory. “We’re talking now about how much the equity is worth,” he said, declaring satellite radio “a great business.”
RBR/TVBR observation: Sure glad that’s his money, not ours. What’s really mysterious to us is why Mel Karmazin has ignored Maffei’s good advice.
Back in March, just a few days after announcing the deal to bail out Sirius XM, Maffei told CNBC that he envisioned satellite radio no longer being exclusively a subscription service, but with some channels available free to the public. Presumably those would be advertising supported. That’s just what we told the folks who originally started Sirius and XM last century (nearly all of whom are long gone from the business) was missing from their business model. They ignored us then and Mel is ignoring Maffei now, having subsequently told Wall Street analysts that he is absolutely committed to the 100% subscription model. That’s good news to AM and FM stations, of course, but keeps satellite radio on the road to oblivion.
And all these years we’d though Mel was a pretty smart guy.