Digital Daily » EchoStar

TiVo to DISH: Let's Do the Time Warp Again

John Paczkowski — Fri, 04 Sep 2009 22:00:20 +0000

It’s not the $974.5 million TiVo had been looking for, but the $200 million in sanctions against EchoStar’s DISH Network the company has been awarded isn’t exactly petty cash, either. On Friday, a U.S. District Court judge for the Eastern District of Texas ordered the satellite broadcaster to cough up that sum for its continued infringement of TiVo’s “multimedia time warping system” patent. This in addition to the $192.7 million EchoStar was ordered to pay for violating that same patent up to April 2008.

You see, DISH, though it had been barred from shipping DVRs with the patent-infringing functionality, continued to do so, justifying its behavior by claiming it had implemented a noninfringing workaround. But in June of this year, a court found that not to be the case. The court again reprimanded EchoStar (SATS) and ordered the company to pay TiVo (TIVO) $103 million in additional fines for the violations that occurred during the time in which the “workaround” was implemented. And now, it has added another $200 million to that.

TiVo, as one might imagine, was overjoyed by the ruling, which leaves open the possibility of further sanctions if EchoStar does not abide by the injunction.

“We are pleased by the Court’s ruling to impose contempt sanctions of approximately $200 million against EchoStar for its continued violation of a Court-ordered permanent injunction, and to award TiVo its attorney fees and costs incurred during the contempt proceedings,” the company said in a statement. “This brings total damages and sanctions in this case to approximately $400 million through July 1, 2009, plus attorney fees, and is exclusive of potential further damages and sanctions. Additionally, we are pleased that the Court ‘will seriously entertain the award of enhanced sanctions’ if ‘EchoStar is unsuccessful on appeal and nevertheless continues to disregard this Court’s orders.’”

Who knows, if DISH keeps it up, TiVo may get that $974.5 million yet.

Sirius: Sorry, Charlie

John Paczkowski — Tue, 17 Feb 2009 14:09:46 +0000

Looks like Sirius XM can shelve that bankruptcy filing it’s been preparing these past few weeks–for the time being, anyway. This morning, the struggling satellite radio company announced an 11th-hour deal with John Malone’s Liberty Media that will allow it to meet a Feb. 17 debt deadline that might otherwise have forced the company into Chapter 11 bankruptcy protection. Under its terms, Liberty will provide Sirius (SIRI) with $530 million in loans, a portion of which will be used to repay $171.6 million of its maturing convertible notes, due today. In return, Liberty (LINTA) will receive 12.5 million shares of Sirius XM preferred stock and a couple of seats on Sirius XM’s board.

Not the greatest of terms. Still, Sirius CEO Mel Karmazin has managed to save the company from bankruptcy and from satellite mogul Charlie Ergen without accepting a change in control for the company. And the deal is not subject to the approval of the Federal Communications Commission.

“This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM,” said Sirius CEO Mel Karmazin. “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.”

At 20 cents, Sirius shares are up an astonishing 85.89 percent on news of the deal.

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Call Me Mel "Save-My-Own-Keister" Karmazin

John Paczkowski — Fri, 13 Feb 2009 15:49:06 +0000

Sirius XM (SIRI) is ready to seek bankruptcy protection. The company has warned investors that it’s prepared to file Chapter 11. It has hired bankruptcy and restructuring advisers. And it has filled out the necessary paperwork. But it may never file it.

“People familiar with the situation” tell The Wall Street Journal that Sirius CEO Mel Karmazin and satellite mogul Charlie Ergen are moving closer to an accord that would save the struggling satellite radio outfit from having to file Chapter 11. Apparently, Ergen has agreed to allow Karmazin to keep his job if he agrees to a deal, and that’s been concession enough to keep him at the negotiating table, though he continues to pursue an alternative, and perhaps fantastical, deal with Liberty Media (LINTA).

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Liberty Seriously Considering Sirius?

John Paczkowski — Thu, 12 Feb 2009 21:28:17 +0000

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Sirius-EchoStar-Liberty: Ménage-à-Blah

John Paczkowski — Thu, 12 Feb 2009 20:16:56 +0000

As entertaining as news of a Sirius XM-EchoStar-Liberty Media three-way might be, research houses don’t appear to be giving it much credence. Already a few have issued reports dubious of the idea of Liberty accepting the white knight role in this debacle.

In a note to investors this morning, Collins Stewart analyst Thomas Eagan described the possibility of Liberty acquiring or even investing in the struggling satellite radio concern as “highly doubtful.” Explaining his skepticism, Eagan notes, “We do not believe that Liberty initiated the dialogue with [Sirius]. Additionally, we believe [DirecTV] management does not want [Sirius] combined with its operations. [DirecTV] certainly does not need it. Their operations lead the industry.”

Over at Barclays Capital, James M. Ratcliffe and Vijay Jayant are equally skeptical of an alliance between Sirius (SIRI) Liberty (LINTA). “Liberty involvement is more likely an effort by Sirius XM to attract a competing bidder, in our view–we don’t believe the company is fundamentally interested in becoming involved in the satellite radio business,” they wrote, adding that a Sirius bankruptcy is still a distinct possibility. “Chapter 11 would allow the restructuring of above-market OEM revenue share contracts and branded programming contracts, improving operating cash flows,” they explained. “On the other hand, it would result in aggressive competition among the various capital stakeholders and create a significant management distraction for as much as eighteen months.”

For Sirius, bankruptcy may be a more attractive option than cutting a deal with EchoStar’s (SATS) Ergen, but that’s not really saying much. Anyway, Sirius has about a week to decide between the two.

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Sirius: Give Me Liberty or Give Me Ergen

John Paczkowski — Thu, 12 Feb 2009 13:44:01 +0000

The Sirius XM fiasco is fast becoming high drama. Hoping to avoid bankruptcy and fend off an unsolicited takeover attempt from satellite mogul Charlie Ergen’s EchoStar, which has been acquiring its debt, Sirius has approached Liberty Media about a possible transaction. “People briefed on the negotiations” say talks between the two companies are advanced, but it’s not yet clear how much Liberty would be willing to invest in Sirius and whether it’s even interested in taking control of the company.

Like EchoStar (SATS), Liberty Media’s interest in Sirius (SIRI) revolves around the company’s physical assets–satellite and terrestrial repeaters, towers that bolster satellite radio services with Liberty’s DirectTV (DTV) satellite television services. Said Stanford Group analyst Fred Moran: “All of these companies are satellite-delivered media. If you can cross-market, cross-promote and intertwine services between satellite video and satellite audio, you could strengthen your competitive position.”

Question is, is Liberty Media (LINTA) interested in such a thing and is it willing to repay Sirius XM’s debts and buy out the company’s existing shareholders to do it? If it’s not, Sirius may well be forced into bankruptcy, which company officials reportedly claim is preferable to inking a deal with Ergen and EchoStar. Seems Sirius CEO Mel Karmazin can’t bear the thought of giving up control of the company to Ergen.

Sirius shares are trading higher this morning on the news after being viciously beaten down Wednesday by reports that the satellite radio company is mulling a Chapter 11 bankruptcy filing.

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Insert "Sirius Trouble" Pun Here

John Paczkowski — Wed, 11 Feb 2009 21:18:21 +0000

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A Bankruptcy Filing, Mel? Surely You Can't Be Sirius…

John Paczkowski — Wed, 11 Feb 2009 01:20:08 +0000

Looks like Mel Karmazin, CEO of embattled satellite broadcaster Sirius XM, would rather file for bankruptcy than yield partial control of the company to Charlie Ergen and Echostar (SATS).

“People close to the company” tell the New York Times that Sirius may be days away from filing Chapter 11.

From the Times:

Sirius has been working with the restructuring expert Joseph A. Bondi of Alvarez & Marsal and the bankruptcy lawyer Mark Thompson of Simpson, Thatcher & Bartlett to help prepare a Chapter 11 filing, people close to the company said. The documents and analysis are close to being completed and a filing could come within days, according to a person familiar with the matter.”

Or not. A bankruptcy filing would wipe out shareholders, among them Karmazin, who invested $2.7 million in Sirius (SIRI) stock last summer. And with Ergen’s offer reportedly still on the table, it would expose Sirius’s management to shareholder lawsuits. So perhaps the threat of a possible bankruptcy filing made through the media is a bluff to force Ergen’s hand. After all, just because the company has hired bankruptcy and restructuring advisers doesn’t necessarily mean a filing is imminent.

Sirius shares, which had been trading a bit higher than their typical 12 cents a share, have fallen deep into the mud on the news. They’re down more than 40 percent to six cents as I write this.

A nasty price for shareholders to pay if this is truly a high-stakes game of chicken….

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Re-Kindled

John Paczkowski — Mon, 09 Feb 2009 21:37:26 +0000

[ See post to watch video ]

Sirius Rolls Out New 24 Hour Investor Keening Channel

John Paczkowski — Mon, 09 Feb 2009 17:50:34 +0000

Apparently satellite mogul Charlie Ergen’s run at Sirius XM has been in the works for quite some time. Indeed, “people familiar with the situation” tell The Wall Street Journal that Ergen made an offer late last year to take control of struggling satellite radio outfit, but was rebuffed. His proposal: that one of his two satellite companies, EchoStar (SATS) or Dish Network (DISH), supply Sirius with enough capital to meet its debt obligations and avoid a bankruptcy filing. Clearly, then, Ergen isn’t looking to force Sirius into bankruptcy in order to claim its assets on the cheap, but rather because he sees it as a natural complement to his television operations.

Sirius CEO Mel Karmazin obviously doesn’t share that view, though he may soon come round.

With just a week or so left until its first round of debt obligations come due, Sirius (SIRI) is in a tight spot. As Karmazin told investors last week, the company needs to raise $175 million, and quickly. If it can’t, it will end up either filing for bankruptcy or cutting a deal with Ergen. Given that Karmazin himself invested $2.7 million in Sirius stock last summer, Karmazin may well opt for the latter. Unless, of course, another potential investor–say AT&T (T) or Liberty Media (LINTA)–comes sniffing around. Either way, it’s going to be a volatile and stressful week for Sirius investors.

Sirius Debt Problems? Call EchoStar! No Upfront Fees!

John Paczkowski — Fri, 06 Feb 2009 23:10:25 +0000

A quick update on Thursday’s Sirius/EchoStar story. People familiar with the matter tell The Wall Street Journal that the portion of Sirius XM Satellite Radio’s (SIRI) maturing debt that EchoStar (SATS) has purchased is a sizable one. It holds most of the $175 million tranche of debt that matures on Feb. 17 and more than half of a $400 million tranche coming due in December. Grand total: around $400 million.

Just why EchoStar is amassing this debt is unclear. It may be looking to take control of the company outright to gain its physical assets–satellite and terrestrial repeaters (towers that bolster reception of satellite signals). Or it could be setting the stage for some sort of alliance under which it would use those assets to help build a network for delivering mobile video in cars and consumer devices. A partnership is certainly a possibility. As a commenter on yesterday’s post noted, the companies may have an intermediary in former Sirius CEO Joseph Clayton, who sits on EchoStar’s board. Said Janco Partner analyst April Horace, “There clearly is a relationship and some triangularity between Sirius and Dish and EchoStar, taking into consideration that Joe Clayton now sits on the board of EchoStar. Joe knows Sirius like the back of his hand.”

Lenovo Boss Falls on Sword as Losses Mount

John Paczkowski — Thu, 05 Feb 2009 20:44:44 +0000

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Sirius XM: The Beginning of the End or the End of the Beginning?

John Paczkowski — Thu, 05 Feb 2009 15:30:53 +0000

Sirius XM Satellite Radio is having its best day at market in recent memory thanks to a report claiming EchoStar has been buying up its maturing debt in preparation for an attempt to gain control of the company. Shares in Sirius are up more than 28 percent at 18 cents on The Wall Street Journal’s claim that EchoStar recently acquired part of a $300 million tranche of Sirius debt that matures on Feb. 17.

Clearly, EchoStar (SATS) is not so addled as to think it can make money on that debt. So the company is either making an investment in Sirius (SIRI) with an eye toward some sort of strategic future arrangement (the two companies have worked together in the past) or it’s amassing debt as a means of taking control of Sirius. If Echostar were to buy up more than 50 percent of the struggling satellite radio operator, it could force Sirius into bankruptcy, swap its debt for equity and take control of the company. The first scenario is certainly plausible, but the second seems far more likely.

“The issue, I think, is that [Sirius] is potentially a very valuable franchise with a unique quasi-monopoly position in the automobile,” said Sanford Bernstein analyst Craig Moffett. “The company is starved of capital but not starved of potential growth. An investor with sufficiently deep pockets can buy what is potentially a very attractive franchise on the cheap.”

Paul Allen Still Suffering From Investor Attention Deficit Disorder

John Paczkowski — Wed, 19 Dec 2007 08:01:31 +0000

The Federal Communications Commission’s “beachfront” spectrum auction in January will, for the most part, be a multibillion-dollar bidding war among the usual suspects. And one or two unusual ones as well.

Among the more than 260 applicants included on the bidder list released last night by the FCC (accepted applications; incomplete applications) are AT&T, Verizon Wireless, Cox Communications, Google (bidding as Google Airwaves Inc.), MetroPCS, Qualcomm, National Datacast (the for-profit subsidiary of the Public Broadcasting Service), Alltel, Towerstream, Chevron and Frontier Wireless (EchoStar).

And then there’s zillionaire investor Paul Allen–Microsoft’s other founder (pictured above). Applications from Vulcan Spectrum LLC and Bend Cable Communications LLC, both Allen-backed ventures, have been accepted by the FCC. Seems Allen fancies himself the Pied Piper of the Wired World, and the Wireless World as well. Perhaps someday we’ll have the Paul Allen Brain Atlas, the Paul Allen Telescope Array and the Paul Allen Advanced Wireless Services Spectrum.