Local magnate John Malone's Liberty Media is poised to gain a major stake in near-bankrupt Sirius XM Radio, possibly outmaneuvering fellow Colorado billionaire Charlie Ergen.

The New York Post reported that the companies are nearing a deal in which Malone's Liberty Media, based in Douglas County, would invest "several hundred million dollars" in Sirius in two stages.

The first piece would be a loan that helps Sirius pay off a borrowing of $175 million, due today, that was purchased by Ergen's EchoStar Communications.

The Wall Street Journal said Monday that the two companies are negotiating the final details of an agreement that could give Liberty control of about half the company. Sirius hoped to announce a deal before the market opens today, The Journal said.

The New York Times reported late Monday that Liberty will pay about $265 million now then make a second payment of up to about $200 million later in 2009 to help pay off about $400 million that Sirius will owe.

The Journal said Ergen had been seeking complete control in return for a roughly $500 million investment and an agreement to restructure about $400 million in Sirius debt that he holds.

The Journal describes Malone as a "white knight" in contrast to Ergen, whom the newspaper describes as a "longtime adversary" of Sirius CEO Mel Karmazin.

Either deal would help Sirius avoid bankruptcy proceedings. The company warned Friday it could file for Chapter 11 as early as today if it couldn't reach a deal with its major debtholders.

"They've got an important financial deadline, and Ergen is clearly already a player," said Jimmy Schaeffler of The Carmel Group.

"Assuming John Malone is on the game board, you'll see a real interesting chess game with the three players - Karmazin, Malone and Ergen. Let's not assume it's over. I think Charlie Ergen is going to fight hard for control of Sirius XM."

EchoStar spokeswoman Kathie Gonzalez declined comment Monday. Liberty spokeswoman Courtnee Ulrich didn't return a call.

The jousting is not mere ego: Both men seem to see Sirius as complementary to their satellite-television holdings.

Ergen's DISH Network, which he founded in 1980, is the nation's second-biggest satellite-television company. Ergen and his family still own half the company, as well as half of spinoff EchoStar. That puts their net worth at roughly $4 billion.

Malone's Liberty Media owns nearly half of DirecTV Group, thanks to a 2006 deal with Rupert Murdoch's News Corp. in which Liberty gave up its News shares in exchange for the DirecTV stake. Malone's holdings in Liberty and several other affiliated companies are worth roughly $1 billion, the Rocky estimates, using public data on Malone's share ownership.

Schaeffler said he viewed Ergen's interest in Sirius XM as fitting into Ergen's strategy of expanding his subscription business into new mobile markets.

He noted Ergen last year paid $700 million for wireless spectrum that could be used for mobile video services, and before that, paid $380 million to buy Sling Media, which produces equipment enabling viewers to watch their home TV from remote locations.

Sirius XM was created just about a year ago by the merger of the nation's only two satellite-radio companies. Sirius and XM competed fiercely for years for listeners and talent.

The combined company reported nearly $3.4 billion in debt at Sept. 30 and posted negative operating cash flow of $217 million for the first nine months of the year.

Friday, Sirius said it had successfully swapped $172.5 million of its convertible senior notes due in December for the same amount of new senior secured notes due in June 2011. To get the 18-month extension, Sirius agreed to pay $9.45 million in cash and stock and accepted a higher interest rate - from 10 percent on the old debt to a sliding scale of 10 percent to 14 percent on the new.

Sirius said the deal is "part of a larger restructuring effort," but if refinancing discussions are unsuccessful, it may be forced to file for bankruptcy protection as early as today. A group of creditors said they will seek Karmazin's removal if the company files for bankruptcy instead of making a deal to remain solvent.

"Creditors believe that a precipitous bankruptcy filing will not be in their best interests," creditor attorney Edward Weisfelner told Bloomberg News.

Bloomberg News and Rocky staff writer Jeff Smith contributed to this report. Finance Editor David Milstead can be reached at milstead@RockyMountainNews.com or 303-954-2648.