MLB, NFL Appear Protected If Sirius XM Declares Bankruptcy
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MLB Signed 11-Year, $650M
Deal With XM Radio In '04 |
MLB and the NFL "appear to have shielded themselves from financial harm from the expected Chapter 11 bankruptcy filing" of Sirius XM Satellite Radio, which faces $175M in debt payments by the end of February, according to Richard Sandomir of the N.Y. TIMES. Both MLB and the NFL have clauses in their "long-term contracts requiring that future Sirius XM payments be deposited into escrow accounts." The NFL in '03 signed a seven-year, $220M deal that required Sirius to put $85M into escrow for the '06-09 rights payments. MLB, when it signed an 11-year, $650M partnership with XM in '04, required XM to put $120M into escrow, which it did last May by borrowing $62.5M to afford it. MLB's account is "earmarked for the 2009 and 2010 rights payments," the first of which is due on March 1. Sirius XM also has deals with the NHL, NBA, NASCAR, PGA Tour and the IRL, among others, but it is not known if those partnerships have "escrow arrangements or are in talks on their contracts" (N.Y. TIMES, 2/12). In DC, Cecilia Kang reports Sirius XM's $175M debt payments are due next Tuesday, and the company has "no apparent way to pay it." A source said that company officials have "begun to fill out paperwork in the event" that it needs to declare bankruptcy. The source said that Sirius XM CEO Mel Karmazin is "said to be racing to find a way to avoid bankruptcy, which analysts indicated could "threaten the viability for 20 million subscribers." But Kang notes it is "unlikely that Sirius would end service" (WASHINGTON POST, 2/12).
DIRECT RELIEF? In N.Y., Sorkin & Kouwe cites sources as saying that Sirius XM is in preliminary talks with Liberty Media, which owns a controlling interest in DirecTV. A deal "could create a battle for control" of Sirius XM, as EchoStar has been "acquiring Sirius XM's debt and has been angling to take over the company" (N.Y. TIMES, 2/12). Also in N.Y., Peter Lauria cites sources as saying that Karmazin recently "asked to buy" DirecTV in a "desperate bid to avoid filing for bankruptcy" (N.Y. POST, 2/12).
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