John Malone probably won’t lose much sleep over his $530 million loan to Sirius XM Radio. His media empire, Liberty Media, has a market cap of $12.4 billion, so Malone’s 40 percent stake in Sirius XM may be something of a punt. And in the satellite broadcasting industry, Malone certainly has a good leg.
Sirius XM has a big debt pile — $3.25 billion, with $171.6 million due today — but it also has a sexy subscriber base of 20 million users, which rivals the top cable operations in the country. Malone and rival Charles Ergan would have been looking at that number as a palliative for the exorbitant talent contracts Sirius boss Mel Karmazin has (Thanks, KB) doled out to Howard Stern, Oprah Winfrey and Martha Stewart.
Liberty shareholders might have wanted Malone to wait for the bankruptcy to hit and bid for the satellites and other pieces. But Ergan, owner of EchoStar and Dish Network and holder of the Sirius XM debt coming due today, would have the pole position in an asset sale.
The satellite radio model banks heavily on a healthy U.S. auto market. U.S. automakers are in Washington today, where they may find a more sympathetic ear with a Democrat in the White House. Keeping satellite radio afloat is probably not among the points that GM and Chrysler will present in their case for more tax-funded support, but perhaps Malone is betting the bailout will ignite a recovery in satellite radio’s fortunes.
* The board of Italian power company Enel SpA meets today to approve buying Acciona’s 25 percent stake in Spain’s Endesa, a source close to the matter said. Other sources have put the value of the deal at about 11 billion euros. The purchase would lift Enel’s stake in Endesa to 92 percent.