XM and Sirius to merge

**min0 lee** · 02-19-2007, 05:53 PM

XM and Sirius satellite radio companies strike a merger deal Updated 2/19/2007 6:12 PM ET By Laura Petrecca, USA TODAY
Satellite radio giants XM (XMSR) and Sirius (XMSR), once fierce rivals, announced on Monday that they will combine forces in an all-stock merger.
The deal is structured as a "merger of equals" with XM stockholders getting 4.6 shares of Sirius common stock for each share of XM stock. XM and Sirius shareholders will each own 50% of the new company.
On Friday, XM closed at $13.98 a share and Sirius closed at $3.70.
Sirius CEO Mel Karmazin will become CEO of the combined entity, which does not yet have a name. XM Chairman Gary Parsons will be chairman.
PRESS RELEASE: Sirius and XM deal
The companies didn't say what position XM CEO Hugh Panero would have going forward. A joint statement only said that Panero "will continue in his current role until the anticipated close of the merger."
Pending regulatory approval, the merger should be completed by the end of this year.
Karmazin and Parsons will join the new board of directors — which will have a total of 12 members. XM and Sirius will each pick four independent board representatives. One representative from General Motors and one representative from Honda will also join the board.
An XM and Sirius combination makes sense on many levels, says Sanford C. Bernstein & Co. analyst Craig Moffett.
"The benefits of a merger are simply too good to pass up," he says. "There are obvious financial synergies from the fact that these two companies run similar operations."
He points out that there would be numerous "strategic synergies" as well, where the companies could have better leverage in negotiating contracts.
For instance, a XM-Sirius combination would have more power to reduce the fees paid for on-air personalities. "Programming contract renews could be renegotiated without having one company to play off the other," says Moffett.
XM and Sirius each shell out big bucks for big-name talent, which includes Oprah Winfrey and Howard Stern respectively. For instance, Stern's five-year deal costs Sirius about $100 million a year in fixed costs alone. XM paid $55 million for a three-year deal with Winfrey.
Joining forces would also give XM and Sirius the ability to take a tougher stance with automotive revenue sharing agreements (or in-vehicle satellite radio installations and commission arrangements with retailers that sell satellite radio hardware, Moffett says.
Yet, Moffett and other analysts also expect there to be some hurdles for the companies to overcome.
"Obviously the Commission will evaluate any transaction filed to make a determination whether or not approval would be in the public interest," Federal Communications Commission Chairman Kevin Martin said in a statement. "The hurdle here, however, would be high as the Commission originally prohibited one company from holding the only two satellite radio licenses."
"The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices, " Martin said.
"The hurdle here, however, would be high as the Commission originally prohibited one company from holding the only two satellite radio licenses. The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices. "
The National Association of Broadcasters, a trade association that represents free, local radio and TV stations, as well as broadcast networks, put out a statement against the combination.
"Given the government's history of opposing monopolies in all forms, NAB would be shocked if federal regulators permitted a merger of XM and Sirius," NAB Executive Vice President Dennis Wharton said in a statement. "When the FCC authorized satellite radio, it specifically found that the public would be served best by two competitive nationwide systems.
Jimmy Schaeffler, senior research analyst at consulting and research firm The Carmel Group says he doesn't think regulators will approve the merger since XM and Sirius own the satellite radio market.
"The real issue they face is that there's no real competition for what they do," says Schaeffler. "This set of regulators will not approve an anti-competitive merger."
Yet, Karmazin and Parsons both argue that satellite radio is wrangling with more competitors than ever.
Parsons says they now have to compete with iPods and HD Radio, among the growing range of other entertainment options. There's "a much larger marketplace of competition," he says.
Karmazin also says that the public will win out with a greater overall array of programming content.
"The standard is if the deal is in the public interest," he said. "We believe that the benefits are that that consumer will be the big winner."
"We would not be announcing this if we did not think that we'd have approval," he says.

**MCx2** · 02-19-2007, 05:55 PM

Cool.

**KelJu** · 02-19-2007, 05:57 PM

Does that mean I'll get XM stations on my sirius?

**tucker01** · 02-19-2007, 06:26 PM

there have been rumours about this for a while. I wonder what will happen, I love my sirius and howard stern

**largepkg** · 02-19-2007, 06:27 PM

Originally Posted by KelJu

Does that mean I'll get XM stations on my sirius?

Ultimately yes, but it will take some time. This was inevitable. It would've been impossible for both to exist losing $ at the rate they were.

This will also stimulate many more new sales.

**fletcher6490** · 02-19-2007, 06:35 PM

Originally Posted by IainDaniel

there have been rumours about this for a while. I wonder what will happen, I love my sirius and howard stern

That's what I'm saying. I'd pay the $12/month just to be able to listen to Howard and nothing else.

**min0 lee** · 02-19-2007, 06:36 PM

Am and Fm will soon seperate.

I joke

**tucker01** · 02-19-2007, 06:46 PM

sweet this way I will get my nhl and mlb as well

**AKIRA** · 02-19-2007, 08:42 PM

Originally Posted by largepkg

Ultimately yes, but it will take some time. This was inevitable. It would've been impossible for both to exist losing $ at the rate they were.

This will also stimulate many more new sales.

I didnt know they were doing that badly. I hope I get Sirius channels on my XM.

I cant stand FM anymore.

**BoneCrusher** · 02-19-2007, 08:51 PM

I'd like to see the P&L on this Stern endeavor. Personally I think Stern sux ... but that's just me. I need more that just someone saying fuck every 20 seconds to be entertained. How much money are they making off of this deal with him?

**bigss75** · 02-19-2007, 08:53 PM

It was only a matter of time

**Luke95** · 02-19-2007, 08:59 PM

I couldn't see it working any other way. Eventually, one or the other will be deemed a 'monopoly' and then Satelite we be government regulated as well.

**maniclion** · 02-20-2007, 03:02 AM

I can't wait to get my MP3 capable stereo in my car...then I'll be able to play most anything I want....entire months worth of listening material all programmed by me, myself and I...

**fletcher6490** · 02-20-2007, 03:38 AM

Originally Posted by BoneCrusher

I'd like to see the P&L on this Stern endeavor. Personally I think Stern sux ... but that's just me. I need more that just someone saying fuck every 20 seconds to be entertained. How much money are they making off of this deal with him?

Wow, apparently you've never really listened to the show. You sound like the typical person who has never made an attempt to try the show out yet you can tell everyone else it sucks. It's ok, I felt the same way before I actually gave it a chance.

**tucker01** · 02-20-2007, 05:17 AM

Originally Posted by fletcher6490

Wow, apparently you've never really listened to the show. You sound like the typical person who has never made an attempt to try the show out yet you can tell everyone else it sucks. It's ok, I felt the same way before I actually gave it a chance.

YEah they say shit, ass, cock, cunt, fag and a whole lot of other swear words

**AKIRA** · 02-20-2007, 06:26 AM

I always thought the people ON howard stern were funny, but not Howard himself.

I remember hearing some guys Opie & Anthony were better...

**BoneCrusher** · 02-20-2007, 07:06 AM

Originally Posted by fletcher6490

Wow, apparently you've never really listened to the show. You sound like the typical person who has never made an attempt to try the show out yet you can tell everyone else it sucks. It's ok, I felt the same way before I actually gave it a chance.

You sound like you're making up what I did then making me guilty for it ...

I spend a lot of time staring out over my dashboard so yeah I have listened to his show. Shock DJ's and tits on the airwaves got old long ago. The long amounts of time between the funny bits became unbearable for me. Just seems to me that every time I turn the show on to see if they'll make me laugh it's the same shit over and over again with different guests. Show us your tits, fuck fuck fuck ...

for way to long and then something funny for a moment. Not worth what Serius is payin the guy IMHO. I'd still like to know what they pay out vs how much they brought in from the additional listeners he's gained them. Not people that already HAD Serius and just tuned in 'cuz that doesn't add revenue. I mean people that said "Fuck ... Howard Stern is on fucking Serius lets go subscribe and see what the fuck he's up too". Adding new sub's adds revenue.

**tucker01** · 02-20-2007, 07:11 AM

Well when he started just over a year ago they had 600,000 listeners, now they are equal with XM at over 6 million listeners.

I would guess that howard had a big involvment in that growth.

**BoneCrusher** · 02-20-2007, 07:13 AM

Originally Posted by IainDaniel

Well when he started just over a year ago they had 600,000 listeners, now they are equal with XM at over 6 million listeners.

I would guess that howard had a big involvment in that growth.

Where you get them numbers from?

**tucker01** · 02-20-2007, 07:25 AM

Actually they were just numbers I remember hearing. When Howard announced on the Radio to switching over to Sirius, there has been a significant growth, considering Sirius was a basically a nobody compared to xm who had been in the industry since the 88

Here is a chart of the numbers

**ZECH** · 02-20-2007, 07:30 AM

I may be in the minority here, but I'm not paying to hear radio, no matter how cool it is.

**I Are Baboon** · 02-20-2007, 07:35 AM

I've been a Sirius subscriber for about 14 months now and have not listened to one minute of Howard Stern.

I hope us Sirius subscribers will soon get MLB for no additional charge, but I find that highly unlikely.

**rantheman** · 02-20-2007, 07:36 AM

O & A rule. They make howard seem second rate.

**BoneCrusher** · 02-20-2007, 07:54 AM

Originally Posted by IainDaniel

Actually they were just numbers I remember hearing. When Howard announced on the Radio to switching over to Sirius, there has been a significant growth, considering Sirius was a basically a nobody compared to xm who had been in the industry since the 88

Here is a chart of the numbers

Nothing there really that has Howard's name. He joined them last summer ... no spikes. Just steady growth same as XM. Be hard to convince anyone Howard's the man on this ...

**BoneCrusher** · 02-20-2007, 07:56 AM

Originally Posted by dg806

I may be in the minority here, but I'm not paying to hear radio, no matter how cool it is.

It's not the cool factor ... it's the get what I want factor. I love my music and local radio just doesn't do it and this is cheap.

**tucker01** · 02-20-2007, 08:07 AM

Originally Posted by BoneCrusher

Nothing there really that has Howard's name. He joined them last summer ... no spikes. Just steady growth same as XM. Be hard to convince anyone Howard's the man on this ...

True enough.

**tucker01** · 02-20-2007, 08:09 AM

Originally Posted by BoneCrusher

It's not the cool factor ... it's the get what I want factor. I love my music and local radio just doesn't do it and this is cheap.

Exactly. I listen to quite an array of channels, I get my nhl live between 10am and 12pm, plus a multitude of other sports channels.

Plus I can listen to specific genres of music, and when I get bored just flip to another genre. For 13$ a month it is well worth it, AM/FM are shit in comparison.

**largepkg** · 02-20-2007, 09:44 AM

Originally Posted by AKIRA

I didnt know they were doing that badly. I hope I get Sirius channels on my XM.

I cant stand FM anymore.

They are both losing millions trying to sign new talent so they can keep pace with one another. Plus their stock prices are/were plunging.

With a monopoly and already inflated operational costs, don't expect any new programing.

**MCx2** · 02-20-2007, 11:19 AM

Originally Posted by BoneCrusher

Personally I think Stern sux ... but that's just me. I need more that just someone saying fuck every 20 seconds to be entertained.

You are my new favorite member, well right behind BigDyl of course.

Stern is total crap.

**tucker01** · 02-20-2007, 11:20 AM

Artie is pretty fucking funny.

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