Forecast For XM Weather Remains Cloudy, With Strong Chance Of Storms

We're no closer to knowing whether XM WX satellite weather will survive the current strife at parent Sirius XM Radio... but we are learning more about the parties in talks to possible buy the troubled enterprise.

The New York Times reports Sirius CEO Mel Karmazin is in preliminary ralks with Liberty Media, which owns DirecTV... the chief rival of Echostar, the company many expect will attempt a hostile takeover of Sirius should the company file for bankruptcy protection.

News surfaced Tuesday that Karmazian was talking with advisers about a possible bankruptcy filing, due to a faltering subscriber base and absence of new credit sources. Many expect the company will default on the $175 million in debt payments it owes by February 17.

The bread-and-butter market for Sirius is the automobile industry. Sirius XM radio systems installed in new vehicles make up the largest customer base among the roughly 20 million subscribers, who each pay a monthly fee to listen to hundreds of channels of entertainment and news programming... but to date, that revenue has come nowhere close to covering Sirius' extravagant startup costs.

EchoStar controls much of the debt Sirius owes... and if the company defaults, or declares bankruptcy, EchoStar will likely make a play for Sirius' assets. Karmazin is said to be in talks already with EchoStar CEO Charles Ergen, presumably towards a more amicable agreement... but it's no secret in the industry neither man cares much for the other, however, and Karmazin has turned down Ergen's previous offers for his company.

Liberty is owned by John C. Malone, whose DirecTV is the largest satellite television subscriber service in the US, ahead of Echostar's Dish Network. A buyout of Sirius would bolster Liberty's dominance in satellite entertainment; it would also likely mean Karmazian would be allowed to keep his job.

Analysts aren't sure how serious Liberty's interest in Sirius is, however. Some feel it could be little more than a ploy to drive up the amount of EchoStar's offer... something Ergen has done with past mergers.

As for the future of XM WX... well, there's little to indicate how either company would handle what is essentially a small niche product. For now, much like when faced with a powerful summer storm along their route, pilots are probably better off seeking shelter and waiting for the clouds to roll over.

FMI: www.sirius.com, www.echostar.com, www.libertymedia.com