Sirius and XM to Merge!!!

[jasonxctf]

Satellite, Sirius Seen Announcing Merger Monday - NY Post (Not rated) 12 minutes ago Satellite, Sirius Seen Announcing Merger Monday - NY Post

 

Feb 19, 2007 09:23:15 (ET)

 

 

DOW JONES NEWSWIRES

 

XM Satellite Radio Holdings Inc. (XMSR) and rival Sirius Satellite Radio Inc. (SIRI) are expected to announce their long-awaited merger Monday, the New York Post reported in its online edition, citing a source familiar with the deal.

 

The two sides were locked in negotiations over the weekend trying to hammer out a final agreement, the newspaper reported, citing the same, unnamed source.

 

Talks were still going on and the deal could fall apart at any time, the New York Post said.

 

With antitrust issues of paramount importance, the newspaper cited its source as saying lawyers for both companies were working overtime to fine-tune the language of the agreement and frame the discussion around the deal itself and not regulatory concerns.

 

According to the New York Post's source, XM Chairman Gary Parsons would retain his title in the combined entity, with Sirius' Mel Karmazin likely taking the chief executive role, the newspaper said. It is unclear what role, if any, XM CEO Hugh Panero would play, according to the report.

 

Washington-based XM ended the third quarter with 7.19 million subscribers, while New York-based Sirius ended with 5.1 million. A merger would join Sirius content, such as Howard Stern, Frank Sinatra and Nascar, with XM's Oprah Winfrey, Bob Dylan and Major League Baseball.

[Texsox]

Interesting news. I wonder if this will cause rates to increase without competition, or decrease with reduction in advertising expenses, administrative, etc. Or stay the same?

[aboz56]

I'll be dropping XM if this is the case.

[BurlyMan56]

I've had sirius but lately find myself not usin it

[SoxFan562004]

Interesting. If those subscriber #'s are right, it looks like Sirius picked up about 5m subscribers since Stern signed on. 100% can't be given to Stern, but IMO a large portion of that is due to him. If XM would have signed Stern, they would have likely driven Sirius out of business.

 

I have Sirius (I'm a huge stern fan, since his show use to be on the syndicated channel 9 out of NY) and I love it. Enjoy the Stern stuff, but listen to the music a lot also.

[Kyyle23]

A certain Howard Stern fan on this site is probably none too happy about this....

[SoxFan562004]

A certain Howard Stern fan on this site is probably none too happy about this....

I'm not the one you're talking about, but as a Stern fan, as long as I can use the Sirius unit I already have, I could care less what umbrella he's under. I'm sure Howard will claim this as a victory, that he took the struggling Sirius, with about 600k users and forced this merger.

[Kyyle23]

I'm not the one you're talking about, but as a Stern fan, as long as I can use the Sirius unit I already have, I could care less what umbrella he's under. I'm sure Howard will claim this as a victory, that he took the struggling Sirius, with about 600k users and forced this merger.

 

No, Im referring to TonyHo. He used to love to take every opportunity to blast XM and extol the virtues of Sirius. Now they are one and the same. Its kind of funny

[HuskyCaucasian]

What would the new corporate name be?

Sirius XM? Sounds good to me!

XM-Sirius? BLAH!

SiriusX? Interesting?

[WilliamTell]

Do you think they'll just come up with a brand new name instead of using both names in it?

[Rex Kickass]

It will probably be XM. It has the stronger brand recognition.

 

I would argue that although Howard might have brought about a million people to Sirius, the bulk of the new subscriptions had more to do with the growing availability of Sirius in new cars than anything else.

[HuskyCaucasian]

I welcom a merger. I have been itching to get satalite for my car, however I am not sure I can get it past the "finance committee" (aka my wife). With two seperate networks, I'd have to choose between NLF/NBA or MLB. I didnt like that idea. Hopefully a merged company will offer one service, that woul dbe sweet! I need my White Sox and Bulls when i travel.

[greasywheels121]

Yay Monopoly.

[RockRaines]

It will probably be XM. It has the stronger brand recognition.

 

I would argue that although Howard might have brought about a million people to Sirius, the bulk of the new subscriptions had more to do with the growing availability of Sirius in new cars than anything else.

Not only that but XM is a just a better name period.

 

I wonder if they are going to sell new receivers, also for people who have sat radio just for sports like I do, this really is an awesome thing. Now its not just MLB and big ten for me, I can listen to everything.

 

This seems like an anti trust thing though.

[knightni]

As a monopoly, they'll raise rates faster than your local cable provider.

[WilliamTell]

As a monopoly, they'll raise rates faster than your local cable provider.

 

sad but possibly true

[NorthSideSox72]

As a monopoly, they'll raise rates faster than your local cable provider.

And turning into a monopolized market is bad for quality as well. Seems hard to believe this will pass muster when reviewed for trust concerns. I'd be surprised if this doesn't end up in court.

 

The argument Sirius and XM will make of course is that regular radio, and cable/satelite provided music channels, are natural competitors, so its not a true monopoly. That's B.S. though. And they'll argue that they can create a more profitable entity by cutting advertising needs and decreasing some administrative costs, and supposedly pass that onto the consumer. Don't believe that for a second.

[3 BeWareTheNewSox 5]

Is it for sure that they be one service, and not just keep the 2 separate services? It seems like that would complicate things a lot more (just one service)

[Rex Kickass]

Here's what you'll see I bet.

 

Both systems will work at least for 24 months after the merger... at which point, an upgrade will become necessary, or they'll send a signal that's backwards compatible with both. Commercial free music radio will end on most frequencies. It will clear DOJ approval because there is plenty of sat radio competition. It's main focus is in the car, honestly. Not only are there regular radio stations, there also will be HD radio coming up in the next three to four years... this means that in larger markets, like Chicago, the number of local broadcast stations will double or triple. Within five years of the merger, pricing will have creeped up to 19.99 a month. I doubt there's a lot more room than that where they could raise their rates without having killer attrition.

[NorthSideSox72]

Here's what you'll see I bet.

 

Both systems will work at least for 24 months after the merger... at which point, an upgrade will become necessary, or they'll send a signal that's backwards compatible with both. Commercial free music radio will end on most frequencies. It will clear DOJ approval because there is plenty of sat radio competition. It's main focus is in the car, honestly. Not only are there regular radio stations, there also will be HD radio coming up in the next three to four years... this means that in larger markets, like Chicago, the number of local broadcast stations will double or triple. Within five years of the merger, pricing will have creeped up to 19.99 a month. I doubt there's a lot more room than that where they could raise their rates without having killer attrition.

I agree with what most this, but can you elaborate on the part in bold? How is 1 company "plenty of competition"?

[SoxFan562004]

Here's what you'll see I bet.

 

Both systems will work at least for 24 months after the merger... at which point, an upgrade will become necessary, or they'll send a signal that's backwards compatible with both. Commercial free music radio will end on most frequencies. It will clear DOJ approval because there is plenty of sat radio competition. It's main focus is in the car, honestly. Not only are there regular radio stations, there also will be HD radio coming up in the next three to four years... this means that in larger markets, like Chicago, the number of local broadcast stations will double or triple. Within five years of the merger, pricing will have creeped up to 19.99 a month. I doubt there's a lot more room than that where they could raise their rates without having killer attrition.

i'm sure they're already starting studies to see what that number is. That's a slippery slope, all it would take is one bad guess, and they'll lose a ton of people.

 

I wonder what this will do to people who bought the lifetime subscriptions.

 

Rex, have you seen any numbers/reports about the car effect? I know Howard isn't responsible for the full roughly 5m they brought in, but you guessed about 1m, I would guess somewhere in the middle at about 2.5m.

[redandwhite]

This is incredible. Absolutely a dream come true. I picked up Sirius for Christmas solely because of Howard Stern, but I always had a soft spot for XM. Now that I can have both, it's an absolute delight. I love this.

[Rex Kickass]

I agree with what most this, but can you elaborate on the part in bold? How is 1 company "plenty of competition"?

 

It's plenty of competition because Sat radio doesn't exist in a void. If it did, terrestrial radio wouldn't have fought its existence for a decade. In a market like Chicago for example there are 40+ options before XM or Sirius ever launched.

[NorthSideSox72]

It's plenty of competition because Sat radio doesn't exist in a void. If it did, terrestrial radio wouldn't have fought its existence for a decade. In a market like Chicago for example there are 40+ options before XM or Sirius ever launched.

I just don't agree that regular radio is in the same market, really, as conventional radio. But then, this argument right here is exactly the one likely in DOJ board rooms, and then possibly in court. What makes up the market, exactly?

[Texsox]

I just don't agree that regular radio is in the same market, really, as conventional radio. But then, this argument right here is exactly the one likely in DOJ board rooms, and then possibly in court. What makes up the market, exactly?

 

The only difference is delivery method, plus the consumer still has the option to pay zero and receive over the air content. Add in Podcasts, etc. and I could see it passing

 

Of the six or seven subscribers I know that have Sirius, all have it because it was installed in the vehicles they bought, and none are Sterns fans. Very unscientific research, but fwiw.

 

I was planning on buying a XM system before the baseball season started, so this is probably all good.

 

Final note on Sterns success forcing a merger, I was thinking the opposite, Sirius didn't achieve the critical mass they were looking for and made themselves available. If they thought they could have caught XM, they probably would have continued to compete.

 

 

 

I just don't agree that regular radio is in the same market, really, as conventional radio. But then, this argument right here is exactly the one likely in DOJ board rooms, and then possibly in court. What makes up the market, exactly?