XM + Sirius = Future?

[Perian]

Link: http://www.nytimes.com/2007/01/01/te...=1&oref=slogin


Loaded With Personalities, Now Satellite Radio May Try a Merger

Last year’s debut of Howard Stern’s radio show on Sirius Satellite Radio put the technology on the map, raising the public’s awareness of satellite radio and helping to boost significantly subscriber totals for Sirius and its larger rival, XM Satellite Radio.

Today, thanks in part to the outsize radio personality, the Stern Effect has increased Sirius’s base to about six million subscribers, up 80 percent from one year ago. XM has increased its numbers by more than 30 percent, ending 2006 with 7.7 to 7.9 million customers.

“There is a tendency to view satellite radio as if the glass is half empty, and that it is a failure or disappointment,” said Craig Moffett, senior cable analyst for Sanford C. Bernstein.

“In fact, nothing could be further from the truth,” he said. “Satellite radio is growing faster than any consumer product except for the iPod.”

But Sirius and XM shares have taken a battering on Wall Street, with prices for both off about 50 percent from their year-ago levels. On Friday, Sirius closed at $3.54, while XM ended the year at $14.45.

And now, the industry may be getting ready to try an even more dramatic third act — a possible attempt to merge the two services.

The benefits of a merger have been promoted by the chief executive of Sirius, Mel Karmazin, for a number of months, and Sirius officials continue to say that a merger would be a good thing. XM has not commented on the possibility, and neither company has said whether they have actually discussed the issue.

“When you have two companies in the same industry, we have a similar cost structure. Clearly, a merger makes sense from an investor’s point of view to reduce costs, and to have a better return,” said David Frear, the chief financial officer for Sirius.

Both companies have continued to lose hundreds of millions of dollars because of marketing and other subscriber acquisition expenses. During the year, XM sharply lowered its expectations for 2006 subscriber levels, from January’s predicted end-of-year total of 9 million to a maximum of 7.9 million. (Sirius reduced its subscription projection by about 100,000.)

Full article at link.

[Perian]

It should be noted that GM, through its OnStar Corporation, is a major shareholder in XM Radio with a partnership agreement that runs through 2013.

XM Radio makes "substancial" contributions to the OnStar Corporation for each new XM/GM customer, and receives a portion of the monthly service income from those customers.

[mystikranger]

Gov't wont allow it

[Perian]

Originally Posted by mystikranger

Gov't wont allow it

I guess it will depend on who goes Chapter 11 first...

Love your graphics!

[asim]

Originally Posted by mystikranger

Gov't wont allow it

I don't know about that. They could, this is because of TWO reasons. Look at AT&T now, they are almost as big as they were back in the 1980s. They have so much market these days with all the mergers they are going through.

One of the other reasons is that the government may not see Satellite Radio as one segment (where there are two companies). They may see it as in the general "radio" category, where XM and Sirius wouldn't have an unfair advantage.

[ByTheLake]

Originally Posted by mystikranger

Gov't wont allow it

Yeah, I was wondering the same thing, about how such a merger would then create a monopoly.

Personally, I've had XM for years now ... love it and wouldn't drive without it. (I drive 700 miles/week).

[howpeculiar]

Haven't used Sirius, but we have 4 XM's and love them. I have been concerned about the business model for Satellite based subscription radio since its founding, but decided to enjoy it while it lasts. Both services could works together without merging on common platform issues such as service vehicle (Satellite) development, cheaper launch vehicle support, common format for uplink services (which would give them access to cheaper standardized equipment), and perhaps some content sharing, particularly for common services such as the weather/traffic channels. I don't know how either service developed/purchased TT&C/Ground Station facilities, but commonality would definately benifit both of them. I do see some ways they could work together to reduce overhead costs for the benefit of the consumer, without a merger. Kinda like developing a transmission together....

[throwback]

A merger would be bad for the consumer. Prices would go up. The only thing that has kept the prices reasonable has been the competition between the two.

[tholland]

Originally Posted by throwback

A merger would be bad for the consumer. Prices would go up. The only thing that has kept the prices reasonable has been the competition between the two.

Not necessarily... when you think of the money they spend to attract new subs to their service instead of the other, that should be a major saving. They won't have to print more shares to get people like Stern... outbid the other service to get NASCAR, etc.

[FoMoCo Fan]

The FCC may allow this, because satellite radio as an industry is going to face stiff competition from new cellular based entertainment programming. Imagine having 500 commercial free radio stations available via your cellphone for a flat monthly fee. It's coming. Clear Channel and Cingular already have a deal.

[69Firebird400]

XM Chmn: No Basis For Regulatory Hurdles If Merger Pursued

DOW JONES NEWSWIRES
December 7, 2006 12:06 p.m.

XM Satellite Radio (XMSR) Chairman Gary Parsons said Thursday that if XM and rival Sirius Satellite Radio (SIRI) wanted to merge, regulators would have no basis to think the combination would endanger competition in the radio industry.

"We are operating in a much larger marketplace than satellite radio....The competition is predominantly terrestrial radio," Parsons told a gathering at the annual Credit Suisse Media & Telecom Week conference in New York.
At this time, Parsons said, "there's no urgency" for XM to merge with Sirius, as the companies are "doing a good job" of exploiting the market for satellite radio.

http://online.wsj.com/article/BT-CO-...?mod=wsjcrmain