Englewood, Colo. - SiriusXM is opposing a request by Liberty Media to take de facto control of the satellite broadcaster, potentially leading to the departure of SiriusXM CEO Mel Karmazin and possible new marketing directions.
Liberty received preferred stock convertible to 40 percent of SiriusXM stock as part of its $530 million
to rescue SiriusXM from bankruptcy in 2009. The Federal Communications Commission (FCC) consented to the deal once Liberty declared that it was not taking de facto control of SiriusXM and said that the investment deal stipulated a three-year moratorium on any Liberty effort to take de facto control. That moratorium ended March 6, 2012.
Under the 2009 deal, Liberty was limited to choosing five of the board's 13 members, but if Liberty converts its preferred stock to common stock, it would be able to vote for all board members. Liberty would be SiriusXM's single largest common-stock shareholder. No other shareholder owns 5 percent or more of SiriusXM stock, Liberty said.
Under the moratorium, Liberty also agreed not to initiate stockholder proposals, influence or control management and directors, or buy stock to acquire more than 49.9 percent of SiriusXM common stock. Liberty said it doesn't plan to exercise those rights while it awaits FCC approval.
Since the investment, SiriusXM has turned profitable, its subscriber base is growing, and its stock price has soared.
In a past investors' conference call, SiriusXM CEO Mel Karmazin said, "I'm not really good at working for somebody."
Liberty Media owns Starz, the Atlanta Braves and TruePosition, a maker of E911 products for the cellular industry. It purchased more than 40 percent of DirecTV in 2008, and it also has ownership stakes in Barnes & Noble, Live Nation Entertainment.