EchoStar Amasses Sirius XM Debt

Charles Ergen's EchoStar has quietly accumulated a substantial portion of Sirius XM Satellite Radio's maturing debt in what could be the first salvo in an attempt to take control of the embattled company. Ergen, who controls a satellite-television empire around Dish Network Corp. and EchoStar, has recently acquired part of a $300 million tranche of Sirius debt that matures on Feb. 17. Ergen's salvo comes as Sirius shares have sunk to just 14 cents each, and large portions of its $3.4 billion debt load trade at a deep discount. The company, which has a market value of $501 million, isn't profitable, and has lost nearly all its value since the Sirius-XM combination was finalized this summer. When Sirius and XM completed their merger last July, it was supposed to represent a strong new beginning, with the two fledgling companies becoming an entertainment force. Instead, a 17-month approval process diverted valuable executive attention from the underlying business, and consumers grew more enamored with their iPods, mobile phones and other alternatives to satellite radio. Echostar could be pursuing a plan to use the debt as a way take control of the company either inside or outside of bankruptcy. Either way, current shareholders would be left with nothing. With about $925 million in debt coming due this year, Sirius is up against a wall. It also owes $43 million for programming fees to the National Football League on Feb. 17, plus $60 million to Major League Baseball in March. The MLB cash is in escrow, and a person familiar with the matter says that the company is negotiating hard with the league to let Sirius tap those funds. Ergen has long sought such a footprint on the ground able to strengthen signals received by mobile users. Over the years, Mr. Ergen has tried but failed to expand his core business. He has dabbled in providing Internet service to rural homes, talked about becoming a major provider of wholesale satellite capacity and looked at ways to meld satellite and ground systems to provide entertainment to mobile devices. But for the most part, those efforts haven't taken off, and Mr. Ergen has told associates that EchoStar was looking for a new strategy.