The stars are aligning…
Back in February 2009, Sirius/XM was within a day or two of filing bankruptcy – being crushed by high interest rate debt that was coming due and not having the cash or friends to refinance it. John Malone came to the rescue. [news story]
John Malone runs a company called Liberty Media – it has a complex company history, but you probably know it best for owning and running DirecTV, the subscription based Satellite TV system that has been doing very well, working in conjunction with AT&T to take subscribers away from Cable TV companies where uVerse is not yet available.
Liberty Media is “on the move” now to take control of Sirius/XM away from Sirius founder Mel Karmazin. The founder of XM has already been squeezed out. Liberty Media filed a request with the FCC to have it designated to be in “effective control” of Sirius/XM – claiming they own 40% of the Sirius/XM stock and continue to purchase it – but Liberty also owns the debt that is still hanging over Mel Karmazin’s head. From the FCC’s point of view, debt is considered ownership if the debt holder exerts influence over the day to day operations of the radio stations.
So what stars are aligning? My prediction about Rush Limbaugh and Sirius/XM
http://streamingradioguide.com/blogradio/?p=1028
What has changed since 2009?
– Clear Channel – the owner of Premiere, Rush’s syndicator – is now run by Bob Pittman, a virulent supporter of Barack Obama, not likely to give more than a tepid defense of Rush (“Rush is just being Rush”)
– Cumulus Radio now owns the former ABC Radio AM stations that are the core of Rush’s major market affiliates (WABC [New York], WLS[Chicago], WBAP[Dallas/Ft Worth], WMAL[Washington DC}). Lew Dickey has a mandate to cut costs everywhere and has made it clear he doesn’t intend to renew the contract for Rush when it runs out. (Citadel also owns KSFO and KABC in California, but they already don’t carry the show – Clear Channel runs the show on their own stations)
– the advertiser boycott continues to grind away at radio, and even without that national advertiser revenue has been drying up for radio
John Malone is a fan of Rush Limbaugh, Mel Karmazin probably not so much – Mel is responsible for bringing Howard Stern and Don Imus to national prominence. Sirius/XM now has in excess of 20 million people paying $20 a month for commercial free satellite radio (20M x $20 x 12 months = ~ $5 billion/yr, about 1/3 of all of terrestrial radio combined). Howard Stern is the highest paid and most dominant program on Sirius/XM.
You don’t have to be a math genius to see that if Rush went to Sirius and only took a few million people with him, that would easily cover what Premiere has been paying him, and free him from the threat of advertiser boycotts, and free up the 20+ minutes of each hour he currently can’t talk while radio stations are playing commercials and doing local news/traffic/weather/sports.
Rush’s long standing position on this is he isn’t going to Sirius/XM – that he is sticking with his friends who “brung him to the dance”. But that was then and this is now. The folks he worked with at Premiere are gone, the Mays family who ran Clear Channel are gone, Phil Boyce and the people who ran ABC Radio are gone, many of the people who were running radio stations have gone into bankruptcy or have died and left their stations to children who were not first generation radio station owners.
On an only somewhat related topic, the Koch Brothers have been fighting for control of the Libertarian Cato Institute, where John Malone was recently named to the board of directors
http://www.courthousenews.com/2012/04/19/45768.htm