By Jui Chakravorty Das
NEW YORK (Reuters) - Liberty Media Corp is in talks with Sirius XM Radio Inc to invest in the satellite radio company's capital structure, but the talks do not involve a takeover of the company, a source familiar with the talks said on Friday.
The talks between the two companies are friendly and do not include an equity stake, the source said. Any possible agreement could include a loan to Sirius, or paying off its debt, or assuming the debt obligations.
Another person familiar with the talks said both EchoStar Corp and Liberty Media continue intense talks with Sirius XM.
The discussions with EchoStar are more of a hostile nature while Liberty's talks are cooperative with Sirius management, but a winning party remains uncertain, the people said.
Sirius, Liberty and EchoStar did not immediately return calls for comment.
Sirius XM's talks with Liberty are seen as a last-ditch attempt by Sirius chief Mel Karmazin to stave off a takeover bid by Charles Ergen's EchoStar, which holds $175 million in Sirius convertible bonds due on February 17.
Satellite mogul Charles Ergen, who owns satellite companies EchoStar Corp and Dish Network Corp, began amassing Sirius debt several months ago and is hoping to take control of Sirius, one of the sources said.
Industry experts have said a Sirius bankruptcy is likely if the company does not cut a deal with either party.
Sirius, faced with a slowdown in retail demand for its radios and the downturn in the automobile industry where it gains most of its new subscribers, has to consider all options in an effort to control costs.
It is even trying to renegotiate some content deals, including contracts with Major League Baseball and Oprah Winfrey, according to a report on BusinessWeek's website.
Liberty Media is in the process of splitting off most of its Liberty Entertainment unit, which owns the majority stake in U.S. satellite TV operator DirecTV Group Inc.
Some media reports had suggested DirecTV was in talks with Sirius, but a source said the discussions are with Liberty Media's management and not with that unit.
Sirius, which has a total debt load of about $3.25 billion, began planning to refinance its debt following its merger with rival satellite-radio operator XM, which was approved last July. But the credit markets froze shortly thereafter.
(Editing by Derek Caney, Phil Berlowitz)
