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Satellite Radio War Continues

Financially troubled Sirius-XM reached a deal with Liberty Media, parent company of DirecTV, on Tuesday night to stave off bankruptcy. On the surface, it looks like the satellite radio saga is over for now. But is it really?

Sirius-XM's troubles first became public in late December, when it was apparent that the company would not be able to deal with its mounting debt of over $3 billion. That, coupled with the impending collapse of the Big Three auto companies, made the future look rather bleak for satellite radio.

Sirius-XM chief Mel Karmazin rebuffed an offer from EchoStar CEO Charles Ergen in December. But by January, the situation became more desperate. Then emerged Ergen's rival John Malone, whose DirecTV is locked in a battle for satellite TV superiority with Ergen's Dish Network.

Malone's offer of a $530 million loan in exchange for 40% of the company saved the day for now - and Sirius-XM officials insisted that it was the best deal they got, better than anything Ergen had offered.

Malone said he won't be meddling with Sirius-XM's operations, content to allow it to run the way it is. But don't count out Ergen, though. He still owns a considerable amount of Sirius debt, so he's not out of the game by any means.

From the Wall Street Journal:

One way Mr. Ergen could try to scuttle the Liberty deal would be to acquire some of the $350 million in bank debt outstanding and then refuse to extend the maturity; Liberty might then back out of its deal. In that case, Sirius would likely have difficulty repaying Mr. Ergen for the December notes he holds. He could use the debt as leverage to make another attempt to seize control of the company.

Stay tuned.