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Sirius XM Radio announced today that it may avoid bankruptcy with a loan of $530 million from Liberty Media .

John Malone (right), who owns Liberty Media and a controlling interest in DirecTV, was the white knight. Malone agreed to invest hundreds of millions of dollars in the company in exchange for several board seats and a minority stake for just under half the company.

Liberty’s news release said the loan will go to paying $175 million in debt that comes due for Sirius today. The remainder of funds will be used to pay other debts coming due in May and at the end of the year, and for general working capital to run the satellite radio business.

Liberty will receive 40 percent of Sirius’s common stock and get seats on Sirius’s board of directors. John Malone, with a big stake in DirecTV, is no friend of EchoStar and their Dish Network.

Charlie Ergen, owner of Dish Network, has been a longtime nemesis of Mel Karmazin, chief executive of Sirius XM Radio, explains the NY Times. Ergen had cleverly bought up $175 million of Sirius XM’s debt, knowing full well that Mr. Karmazin couldn’t afford the payments, so he could turn around and try to take control of the company.

Payment was due today.

The last-minute deal with Liberty will help Sirius pay off some of its heavy debt burden while also retaining management control, said the Washington Post.

“We are pleased to have come to this agreement with Liberty Media, particularly in light of today’s challenging credit markets,” Karmazin said in the release. “This agreement enables Sirius XM to continue to develop the opportunities first outlined in the merger of Sirius and XM. By strengthening our capital structure and enhancing our financial flexibility, this investment allows us to continue providing the great content and innovative programming our subscribers know and love.”

Sirius has never turned a profit and has heavy costs associated with its deals for talent, including shock jock Howard Stern, who is paid $100 million a year for his Sirius show. The company’s biggest assets are its 20 million radio subscribers and nearly $2 billion in annual revenue.

Related Satellite Radio articles on Dailywireless include; Satellite Radio: The End Near?, XM Gets Sirius, PBS Switches to AMC-21 Satellite, Satellite Radio: Terrestrial Receivers or Not?, Clear Channel Traffic Network on HD Radio, and FCC Approves Satellite Radio Merger.

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