Sirius XM Radio Inc. (NASDAQ:SIRI) created a new iPhone application to try to get new business last May.  Now Sirius is attempting to raise $350 million debt financing through 4 year senior secured notes according to an SEC filing.  Sirius needs money to pay off debt.  This past February Liberty Media Corporation invested $530 million to keep Sirius afloat instead of filing bankruptcy.

[via BusinessInsider]

As many of you are aware, Sirius-XM almost had to file for bankruptcy but was given a lifeline from Liberty Media.  Shortly after resolving the financial issue, the company announced that they were going to make an iPhone application.  Now we have found out additional information about their upcoming application.

The application will be for free, but will require a subscription to work.  Current subscribers will have to pay $3/month for the application and non-subscribers have to pay $13 per month.  This is quite hefty considering the other radio stations that are available for free (Pandora/Last.fm/Clear Channel/Shoutcast).

For those of you out there that are Sirius-XM satellite subscribers, do you think you’d shell out $3 per month for it?

[via TUAW]

Sirius XM is the satellite radio company that almost went out of business, but was spared by Liberty Media.  Sirius XM plans on expanding the reach of their programming by unleashing an iPhone application in their second quarter through a potential marketing partnership with DirecTV.

The company is attempting to find new revenue streams because they are looking bad right now.  The iPhone application would be available to Sirius’ 19 million subscribers and Apple’s 7 million U.S.-iPhone users.  It would also be available to iPod Touch WiFi users.

“This is a large and interesting opportunity that will maintain our subscription-based economics while providing customers easier access to our content through means other than our traditional satellite-based platform,” stated Sirius’ CFO David Frear.

Liberty Media Corporation, the parent company of DirectTV, has made it easier for Sirius XM satellite radio to stay alive.  Liberty Media has taken a 40% stake in the satellite radio company in exchange for $530 million.  Sirius XM was forced to pay $172 million today to creditors in the form of convertible notes.  Later this year, the company will owe another $750 million in loans.  Therefore the deal with Liberty Media is just a temporary solution.

Liberty will be loaning Sirius XM $280 million with a 15% interest rate.  Sirius will have to pay back Liberty Media the money by December 2012.  Another part of the deal is a $150 million loan to XM radio for help in paying back Echostar, a satellite TV company.  Echostar had expressed interest in acquiring Sirius XM at one point as well.  Liberty also pledged to loan another $100 million to help pay for Sirius XM’s existing loans.

Once all of the loans are made, Liberty Media will get 12.5 million preferred stock shares in the satellite radio company.  Liberty will also have 40% of the seats on Sirius XM’s board of directors.

“We are pleased to have come to this agreement with Liberty Media, particularly in light of today’s challenging credit markets,” stated Sirius XM CEO Mel Karmazin. “Liberty’s investment is an important validation of what Sirius XM has already achieved and a vote of confidence in what we will achieve.  This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM. By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”

Sirius XM Radio Inc.(NASDAQ:SIRI) may be kicked out of the CEO position of the company if they decide to file for bankruptcy protection according to The Wall Street Journal.  The Journal was notified of this possibility by a group of creditors involved with Sirius.

“Creditors will act quickly and definitively if they perceive that management is acting in their own interest and not in the best interest of the estate,” Edward Weisfelner, a partner with Brown Rudnick, the law firm representing the creditor group, told the newspaper. “The board of directors should carefully consider the ramifications.”  The company met over the weekend to determine which plan is most suitable.

Creditors would petition the court to have Sirius’ management team removed and be replaced with independent trustees.  Sirius was rumored to be seeking investment from Liberty Media.  Liberty Controls DirecTV.  If Sirius goes bankrupt, then it would be the second largest Chapter 11 this year as they have about $5 billion in assets.

The stock for Sirius XM Radio Inc. (NASDAQ:SIRI) has plummeted to below 2 cents per share.  About a year ago, the company stock was hanging on to about $3.19 per share and dropped rapidly.  Mel Karmazin the current CEO of the combined satellite companies said he was planning on cutting costs for Americans to acess the service for $0.43 per day. “Forty-three cents a day — it’s not even vending machine coffee,”stated Karmazin at the time.

Sirius is now hiring advisers in preparation for a possible bankruptcy according to sources at the NYT.  This is bad news for celebrities who currently depend on Sirius XM to broadcast content such as Eminem’s Shade45 and Howard Stern.  A bankruptcy may cause Sirius XM to cancel contracts with celebrities.

If Sirius goes bankrupt, it would be the second largest Chapter 11 of the year.  The company has $5 billion in assets including the satellite technologies.  That is shortly behind Smurfit-Stone, a company with $7 billion in assets.  Sirius XM has never seen a profit even when both companies were independent of each other.  Now they have $3.25 billion in debt.

The automotive industry taking a hit has a direct correlation with Sirius’ failure.  Many of the new cars on the market are Sirius XM-ready.  If consumers aren’t buying them, they won’t have access to the satellite radio unless buying the peripheral device.

“Sirius XM hired Joseph A. Bondi of Alvarez & Marsal and Mark J. Thompson, a bankruptcy lawyer with Simpson, Thacher & Bartlett, to help prepare a Chapter 11 filing,” stated the NYT.  “Documents and analysis are close to completion and a filing could come in days.”

EchoStar, a TV company may end up pushing the takeover Sirius as they already have bought some of the satellite radio company’s debt at $400 million worth.  Once Pulse 2.0 finds out more, we’ll report it in the coming weeks.

For more information, check out the discussion on Techmeme.

 
“As I have indicated before, this is an unusual situation,” stated Kevin Martin, Chairman of the FCC. “I am recommending that with the voluntary commitments (Sirius and XM) have offered, on balance, this transaction would be in the public interest.”

The FCC is expecting to back a merger between Sirius Satellite Radio Inc. (NASDAQ:SIRI) and XM Satellite Radio Holdings Inc. (NASDAQ:XMSR).  In March 2008, Sirius received approval from the Justice Department to be able to acquire XM for $4.59 billion.  CEO of Sirius, Melvin Karmazin is likely to take the CEO position of the combined companies.

Karmazin stated previously that XM and Sirius channels would be available “a la carte.”  Earlier this year, AOL LLC signed with CBS Radio instead of renewing with XM to provide radio across their services.

[1] CNET: FCC chief expected to back Sirius-XM merger by Steven Musil

“Competition in the marketplace generally protects consumers and I have no reason to believe that this won’t happen here,” stated Justice Department Antitrust Chief, Thomas Barnett.

Sirius Satellite Radio Inc. (NASDAQ:SIRI) has received the approval it needs to purchase XM Satellite Radio (Public, NASDAQ:XMSR) for $4.59 billion. The Justice Department has given both companies antitrust clearance on the basis that consumers have choices. This includes audio on mobile phones and other personal digital music players. There is still one hurdle left: the FCC. Both companies have to get approval from the Federal Communications Commission.

CEO of Mel Karmazin made a promise to the government that if both companies were to combine, they would give consumers options such making certain channels available “a la carte.” And consumers would be able to block adult content and receive refunds for channels that they don’t want. This promise made by Karmazin may influence the FCC decision.

Sirius and XM Satellite radio charge roughly $13 per month to subscribe to their services. If both companies merge, the monthly price for their services is undisclosed.

Earlier this month, AOL made it clear that XM will not be power AIM Radio or Winamp starting on May 1st. This partnership break is related to AOL’s shift in advertising effort. AOL Radio will now be powered by CBS. CBS Radio will be taking over the advertising sales for AOL and will be splitting revenues.

Going forward, I think AOL Radio is going to suck. I was just comparing XM Radio’s channel listings with CBS Radio. XM stations are unique and have more interesting options compared to CBS. AOL wasn’t making much money from the XM Satellite Radio deal so it may have made sense for them to switch. I have a feeling that I may not be the only one that is going to stop listening to AOL Radio though.

Information Sources:
[1] Engadget: XM / Sirius merger approved! by Nilay Patel
[2] Washington Post: AOL, CBS Team Up For Radio, Advertising by Cecilia Kang