Liberty sees Sirius marketing, mobile video deals

By Yinka Adegoke

NEW YORK (Reuters) - Liberty Media Corp sees potential co-marketing and mobile video partnerships with Sirius XM Radio Inc, but its $530 million investment is pitched more for financial than strategic reasons.

Liberty Chief Executive Greg Maffei told Reuters there were few obvious technology synergies and little overlap in distribution channels between Sirius XM and Liberty''s affiliate DirecTV Group Inc, the largest U.S. satellite television provider.

Nonetheless, Sirius XM is an attractive investment, Maffei said on Tuesday, because it is a good company in unfortunate circumstances. He pointed to tight credit markets and plunging sales of vehicles, satellite radio''s primary sales channel.

"It''s a great service with 20 million subscribers," he said in a phone interview. "We''ve structured a very attractive investment, with security on the upside and on the downside."

The Denver-based Liberty Media, controlled by cable mogul John Malone, agreed to lend $530 million to Sirius XM in exchange for a 40 percent equity stake, saving the satellite radio provider from possible bankruptcy.

The deal includes a $280 million senior secured loan paying a 15 percent interest rate, the companies said, but did not give details on the security.

Maffei said Liberty would be looking at the possibilities of co-marketing DirecTV and Sirius XM to each other''s subscribers and joint content deals, as well as working on a mobile video initiative.

But he said these were not the primary reasons for doing the deal, as Liberty believes in Sirius XM''s current business.

IN SUPPORT OF KARMAZIN

Maffei said he expects Sirius XM management to remain unchanged under the leadership of CEO Mel Karmazin. "One of the things that was attractive to us was the quality of the team led by Mel," he said.

Liberty had been involved in a bidding battle for Sirius against EchoStar Corp, a satellite TV company controlled by Charlie Ergen.

Maffei said his company had worked with Ergen successfully in the past and would not rule out working with him again on Sirius XM, but he said it was not a priority.

"We look at Charlie, obviously, as a competitor in some ways but also as someone we''ve worked with in the past," he said.

Ergen''s offer, which came after he was reported to have snapped up hundreds of millions of dollars of Sirius debt, was said to involve a takeover of the entire business. Most observers said Karmazin, who had previously clashed with Ergen when he ran Viacom, would be less likely to agree to a takeover.

"There clearly is less enthusiasm for Charlie from some members of Sirius XM," said Maffei.  Continued...