Liberty Media Ponders an Investment in Struggling Sirius XM

The Wall Street Journal and The New York Times report that Liberty Media, owner of the DirectTV satellite television service, is considering an investment in struggling Sirius XM Radio, which has been fending off a bid by the owner of Dish Network. The discussions put the two U.S.-based satellite TV services in competition for America’s only satellite radio service, which is said to be nearing bankruptcy.

Assuming one of the TV services gains control of Sirius XM, it will face a daunting challenge making its investment pay off. In a Knowledge at Wharton article last fall, Wharton faculty found plenty to worry about at Sirius XM, including the price Sirius paid to purchase rival XM network, its free-spending on big names such as Howard Stern, and the limits imposed by its market and technology.

Eventually, predicted Wharton marketing professor Jagmohan S. Raju, satellite radio will become just another channel on an integrated multimedia device. “XM was originally going to be just another band like AM and FM, and that still makes sense,” says Raju. “What’s needed is a seamless device that can cover everything.”