John Malone's deal with Sirius XM Radio may make strategic sense in the long run. In the meantime, he'll reap the financial benefits.

Malone's Liberty Media will get 15 percent interest on a $280 million loan it made Tuesday to Sirius XM. Later this year, Liberty Media plans to inject another $250 million, getting preferred stock that's convertible into a 40 percent stake in the company.

The deal staves off a Sirius XM bankruptcy, likely helps Sirius XM CEO Mel Karmazin keep his job and sticks a thumb in the eye of Malone's fellow Colorado billionaire Charlie Ergen, who had been maneuvering to take control of Sirius XM.

Part of the $280 million Liberty Media provided Sirius XM on Tuesday was used to pay off $175 million in debt Ergen's EchoStar reportedly acquired in hopes of gaining control of the troubled radio-satellite company. The debt was payable Tuesday, and Sirius XM said last week it needed to reach financing agreements to avoid filing Chapter 11.

"We are pleased to have come to this agreement with Liberty Media, particularly in light of today's challenging credit markets," Karmazin said Tuesday in a statement. The Wall Street Journal said in Tuesday's editions that Karmazin passed up a chance to restructure the company's debt last year, believing there was time later, then found itself frozen out in the credit turmoil that began in the late summer.

Liberty Media owns 48 percent of DirecTV, the nation's leading satellite-TV service. Both DirecTV and Ergen's smaller DISH Network carry Sirius XM's satellite-radio channels on their systems. But if Liberty Media has any grand strategic plan in its Sirius XM investment, that was absent from Tuesday's announcement.

Greg Maffei, Liberty Media's president and CEO, simply said, "We have been impressed with the company, its operations and management team. Sirius XM's ability to grow subscribers and revenue in a difficult financial and auto market is indicative of how listeners view this as a 'must have' service." Malone and Maffei will join the Sirius XM board.

DISH Network spokeswoman Kathie Gonzalez did not return a call for comment. She declined comment Monday, when news of the apparent Liberty Media deal was circulating.

Vijay Jayant, a New York-based analyst with Barclays Capital, said in a note to investors "we believe that Liberty views this transaction primarily as an attractive financial investment" and that it doesn't plan to be closely involved in Sirius XM's operation nor to attempt a combination with DirecTV.

Sirius XM was created 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, most notably in Sirius' five-year, $500 million deal to bring on shock jock Howard Stern.

While Sirius XM's subscriber growth may indicate "must have" - it ended the third quarter of 2008 with 18,920,911 subscribers, up 17 percent from the year before - its financials are another matter. The company reported nearly $3.4 billion in debt Sept. 30 and posted negative operating cash flow of $217 million for the first nine months of the year.

That helped create a crunch that left the door open for Ergen, who reportedly owns a couple of hundred million dollars in Sirius XM debt.

Argus Research analyst Joseph Bonner said the terms give Liberty a foothold toward a possible takeover of Sirius, which has two more major debt payments this year and is struggling to gain subscribers in the recession.

"Undoubtedly, Sirius will continue to struggle," he said.

Shelly Lombard, a senior high yield analyst at Gimme Credit, an independent research service on corporate bonds, said in a report her firm has been negative on Sirius "because of the Chapter 11 risk and also because of the business model." Sirius XM gains a huge number of new subscribers from new-car sales, and the auto industry is reporting some of the worst results in its history.

"Sirius hasn't been able to generate positive (earnings before interest, depreciation and amortization) yet, partly due to its high programming costs," Lombard wrote. "And this year it will be even tougher to attract and keep subscribers because of the weak economy and extremely low new vehicle sales. The deal with Liberty takes care of most of Sirius' short-term risk, but the long-term risks remain."

Rocky wire services contributed to this report.