FEBRUARY 20th

Sirius & XM Strike $13 Billion Merger Deal
After months of speculation, former rivals Sirius Satellite Radio and XM Satellite Radio announced Monday afternoon that they've agreed to terms on a $13 billion merger deal, which includes net debt of $1.6 billion.

Under terms of the all-stock, tax-free deal, XM shareholders will receive a fixed exchange ratio of 4.6 shares of Sirius common stock for each share of XM they own. XM and Sirius shareholders will each own approximately 50 percent of the combined company.

The companies will continue to operate independently until the transaction is completed, and will work together to determine the combined company's corporate name and headquarters location.

Current Sirius CEO Mel Karmazin will hold the same title for the combined company, while current XM Chairman Gary Parsons will become Chairman of the new company.
Further management appointments will be announced later. Current XM CEO will continue in his current role until the deal closes.

However, whether or not the deal ultimately closes is open to speculation, as it still faces the uncertain prospect of FCC approval. Currently, FCC regulations prohibit one satellite radio company from owning the other.

In a statement, FCC Chairman Kevin Martin said, "Obviously the commission will evaluate any transaction filed to make a determination whether or not approval would be in the public interest. 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."

Pending regulatory approval, the companies expect the deal to close by year's end.

The new company's board of directors will consist of 12 directors, including Karmazin and Parsons, four independent members designated by each company, as well as one representative each from XM partners General Motors and American Honda.

Based on analysts' consensus estimates, the two companies have combined 2006 revenues of approximately $1.5 billion.

"This combination is the next logical step in the evolution of audio entertainment," said Karmazin. "Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies. The combined company will be positioned to capitalize on Sirius and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders."

Parson and Panero added, "We are excited for the many opportunities that an XM and Sirius combination will provide consumers. The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago."

 

More Commercials...Great.

 

It sucks because the FCC has the upper hand. Mel Karmazin has to sit in front of the FCC and ask them to change the agreed upon contract. The original contract stated that the two companies could NOT merge. Now he has to ask them to change that? If the FCC is going to change this they are going to ask for something. Wheather it be regulation on speach or adding commercial content. In the long run it's going to suck for us all.

 

February 21st

Satellite Radio Execs Confident Feds Will OK Merger
Sirius CEO Mel Karmazin and XM Chairman Gary Parsons are confident that the proposed merger between their two satellite radio companies will make it through the regulatory process, even though current FCC rules prohibit one satellite radio company from owning another.

During a Tuesday morning joint conference call, Parsons commented, "We would not have entered into this transaction, going to the expense and effort to do it if we were not confident that this was in the public interest. We believe this is the right thing to do not only for stock holders but for consumers."

Karmazin added, "I would not have gone to our board nor would they have approved it if they didn't believe the chances were greater than 50/50. We're not speaking for the regulators, we know they have a job to do. We're going to cooperate with them, but it is our belief that it would be greater than 50/50."

Pointing specifically to the failed Dish/Direct TV merger, which many point to as a precedent for the proposed satellite radio companies' merger, Karmazin said the two deals don't relate. "This is totally different because in the case of video, 90% of the population is not watching it over the air with rabbit ears but they're getting their television from cable or satellite, so the market are just pay services," he says. "In our case, over 90% are getting their radio over the air and for free, and that will be a restraint on satellite radio's ability to raise prices, and we're confident that the justice department will see that when they look at our competitors."

The always-savvy Karmazin also revealed that he's already speaking with members of Congress about the deal, "to talk to them about why this merger is in the best interest of their constituents (and) a great merger for the consumer."

Karmazin also took a shot at the NAB's continuing lobbying efforts against satellite radio. "Terrestrial radio has been saying all these years that 'satellite radio competes with terrestrial radio,' and now what they're saying is 'satellite radio is a monopoly' if the two companies combine," he said.

"We're not using our local repeaters for any local programming. We certainly believe that we should be allowed because the American public wants us to be allowed to broadcast the Yankee games on XM or broadcast the Giants on Sirius. And the NAB is saying that that's local content, and we're saying we're broadcasting it on a national footprint. We're not into the local advertising market. And again, our belief is that we have the winning side of the rational argument. But NAB has been doing an aggressive job in sort of putting down everything that's competitive to them rather than selling their own proposition."

 

I would imagine the FCC will put some restrictions on rate hikes if they allow this merger to go through.

If not they can jack the price up to $20 a month and go out of business in a year. I really don't think there are enough people are willing to pay $20 a month to keep them in business. I know I will NOT pay more then $13 a month. Infact I only have it since I got the 1/2 price special. I don't care if they have 300 channels.

In any event all reports seem to indicate this will not happen till at least the end of the year or maybe even early next year. All we can do is guess and read whatever press releases that come out.

Just because they MAY be a monopoly doesn't mean people will be willing to pay much more then $12.95 a month. Maybe but, I doubt it.

 

my guess is that they will start producing combined units rather quickly, available next spring. Old units will be compatable with their old systems, but won't be able to get channels from the 'other' service (XM won't get NPR, or Howard, etc) which will be an incentive to upgrade. In the mean time, they'll work on combining genres . It has also been stated that they will go to an alacarte system, implying that you will be able to pick the channels you want. I'm thinking it would be more like DirecTV, where there would be different levels of service, with extra $$$ for more unique programming.

 

Do you have cable TV? If so, has the price for the same channels gone up? Did you cancel? Have they gone out of business?

I'm not trying to sound sarcastic. I've seen my cable bills go up from about $35/month to $48 for the same service. I didn't cancel because they offer programming unavailable on Dish (local programming). Cable didn't go out of business after the rate increase. That doesn't make the rate-increase right either.

So, if they do go up to $20, there are still a lot of people who might keep it (if only to make use of the radios built into their cars).

And soon afterward, there will be a new thread on AZ: XM for only $100 a year

P.S. I agree about not caring about the having 300 channels. All I want is the music. In fact, if I ran the channels, I wouldn't have bid mega-bucks for Oprah, Howard, NFL or NBA. I'd tell them to come begging to me if they wanted to be on satellite. It's not like they want to be on terrestrial radio.

But there'd probably be a million fewer listeners if it was music-only.

 

I figured that the XM and Sirius radios have a fixed number of channels (255 max). So if each system uses more than 1/2 of them (128+) then there's no way to combine them and still fit within the 255. Similarly, I thought that the channels were literally fixed slices of radio-spectrum of fixed bandwidth.

However, if the spectrum allocated to either system has more than 255 channels each, or of the channels are just created using software, then there might be a way to squeeze more bandwidth out.

Even then, unless the radios can be upgraded, they might not know about the additional channels. Kind of like an old TV not being able to tune the high cable channels (above 100) because it has an old tuner in it. So you need a cable box.

 

There's one major flaw in your analogy, What do you do more of, watch TV or listen to the Radio? The average commute for people is around 35-40 minutes. To the contrary, people average about 170 minutes a day watching TV. Its kinda hard to justify paying a significant rate increase for something that your listening to for about an hour to an hour and a half a day.

I don't have an Ipod or a huge CD collection, but I pay for XM. I look at as if I am buying a CD each month. I think that you will chase people away if the price goes above $15 just because people won't see the value in keeping it.

Personally, I think the move is to lower rates to attract new subs and make up for it in volume.


*EDIT*
As far as units go, XM's units are lightyears ahead of anything that siruis is offering now or can offer in the near future. Sirius will be in trouble if the merger falls through...

 

http://www.engadget.com/2007/03/03/x...xisting-radios

 

I switched to DirecTV many years ago. Only recently switched back to cable as it was the only viable TV provider where I moved. I spend more time in my apartment then I do in my car. I can get by with AM/FM and 6 cds allot easier then I can with rabbit ears on my TV. I don't think many people view satellite radio as a must have. Many people (obviously not all) view cable or satellite TV as a must have though.

How many people do you know with just OTA TV? A few? None? How many people do you know with satellite radio? While they have quite a few subscribers they have such a small part of the market at $13. Guess we will see what that market will bare. I don't think adding a boat load of channels and some programming will make the service worth more then $13 to most people. I could very well be wrong though.

 

The XM-Sirius Deal May Not Fly

Update....
http://www.businessweek.com/bwdaily/...gn_id=rss_null

 

I didn't read through the whole thread... But I did a search and didn't find anything mentioning the ONE ISSUE I have with this merger.

In short, I think it will be great, the competition and need for different tuners (XM doesn't get Sirius and vice-versa), this will all go away.

But - - - Has anyone considered the fact the Name "XM" or "Sirius" will probably no longer exist post merger?

So my ISSUE is this... What is Acura going to do to replace the button on my radio of a now defunked entity????

Am I going to have to now drive around and make the association of XM and "???" all myself? What about someone who buys my car years from now, they'll probably wonder what the "XM" button does.

 

You can't be serious. You can not remember that the XM button is for satellite radio? Of all the things to worry about with this potential merger this is an issue?

 

Yup... Cause "all the things to worry about this merger" really don't affect me...

But the stupid button does!

People will get in my car and tell me that XM is no longer a company anymore, it's now Xirium or some other name.... Then I'll have to explain I bough the car prior to the merger. OH THE HORROR!

 

Wow. onsknth, surely you're being sarcastic.

There are a number of things that would concern me more than the button, and I'm about as anal about that kind of stuff as they come. If nothing else, you could get some sort of mild solvent and etch the "XM" portion of the decal off the button.

 

I without a doubt feel that if some went up to your DVD player and it said "Laser Disc" on it, they would be very unlikely to say "I have no idea what to do now, Laser Disc is too confusing, I'm to accustom to a DVD"

Plus, I have Sirius in my house, almost EVERY single person that sees my little receiver goes "Oh you have XM?".

I have a feeling that our Acura's will continue to run, gas prices will continue to fluctuate radically and we all will continue to salivate at the thought of the new TL for 09 long after the merger does or does not happen.

I'm concerned about what this means for my SERVICE and CHANNELS. But my priorities are probably skewed.

 

Guys, this is my bash on permanency in a world that is far from permanent... To put it another way. I bet Acura never considered the possibility they were permanently adding a button to the radio that included the name of a company that could bankrupt, merge or otherwise fall off the face of the planet.

The button should have simply been labeled "SAT" like they do in just about every other built in radio by every other car manufacturer... (At least that I've seen)

I'm serious here, it appears nobody at Acura or Panasonic ever thought there could be dual channel satellite radio meaning you could use either XM or Sirius depending on your subscription.

In this day, everything MUST be interchangable.

 

That's actually an amazing point. Props.

 

I understand the point being made, however Acura/Honda along with others invested in XM Radio. Therefore, they are going to promote XM Radio brand. Even by labeling the button as XM in their cars.

http://xmradio.mediaroom.com/index.p...ases&item=1290

 

Here's my 2007 SE V6 Camry, built in "XM" tuner... Look at the buttons on the right, there's a button for SAT even though it's an XM tuner... I gotta think Toyota is in bed with XM just as much as Honda.

Wait a minute, maybe that's how Honda got the free 90 day trial period that I didn't get with Toyota... Great, a permanent DEALER STICKER/LICENSE PLATE FRAME!

I hate free advertising, I hate labels period.



BTW - that 440w JBL hauls the mail against non-DVD-A TL stock head unit.

 

To me a SAT button is even more confusing then XM vs. Sirrus. Someone might ask does it get DirecTV or DishNetworks? Expecially on a car with navigation (LCD screen).

 

Yup... You never know what the future may bring.

Having SAT printed on the button instead of XM covers all future possibilities.

 

I remember reading something in the Editor's column in Car and Driver recently about Toyota offering DirecTv in the 2009 Sequoia. Which basically reiterates your point.

 

Read an article yesterday that said that the combined company has assured (HAH!) the FCC that they intend to make sure that all radios sold previously will still work for current subscribers AND that programming from one service will available on the other.

Technical folks (like myself) are skeptical that they will be able to do this withoug lowering the quality of the service due to the increased compression required to transmit the extra programming across the two satellites.

 

hmmm monopoly lol

 

I hope they replace the XM button with MP3.

 

NEW YORK (Reuters) - Sirius Satellite Radio and XM Satellite Radio expect to offer a lower-priced package consisting of fewer channels after the companies combine, Sirius said on Wednesday.

The combined company will provide programming choices on a "more a la carte basis," including tiers of service both higher and lower than the $12.95 per month each company currently charges, Sirius said.

"After the merger, customers may elect to receive fewer channels at a monthly price lower than $12.95; substantially similar programming at the existing $12.95 price; or more channels ... at a modest premium to the cost of one service, and considerably less than the cost of subscribing to both services," Sirius said in a federal filing.

The price of the services, which offer music, talk, news and sports channels, has been a much argued topic during U.S. regulatory hearings over Sirius' proposed acquisition of XM.

 

I'm curious....

Let's say (hypothetically of course) that the deal goes through tomorrow morning and the FCC, Congress etc all give their

How long until we would actually SEE a change? Like when Nextel/Sprint merged, billing, roaming, EVDO (basically anything their customers would notice) etc were not really affected until almost 6 months later.

Would it be a month, 3, 6, until we see (or paid for) a difference?

I ask because I am clueless and curious

 

IME with companies that have synergistic value... You'll see a change almost instantly.

Why?

Because, why compete against one another, you're now one?

My guess....

The two will look at their channel line-up and try to decide what stays and what goes, because there's not a huge point in keeping two of the same, then they'll broadcast the same lineup on both channels. When I say "keeping the same" I'm not talking "type." It just doesn't make sense to have both provide the same weather report... So Oprah will continue to exist just as Howie Stern, but they're both talk shows.

What seems inevitable... The higher demand programs will command a premium. Just as you have now with basic, extended and movie packaged cable TV.

 

Well spoken. I hope the change is near instantaneous, because the rock channels and heavy metal channel (Liquid Metal 42) are unsatisfying at best.

I personally wouldn't mind Stern, I enjoyed his "E!" show, but that depends on how much it would cost.

Just

 

I would welcome a package pricing model. I never listen to the talk or sports channels. A music only package that goes back down to the original $9.95/mo or lower would be great.

 

Only if it's all various channels of rap music! Nothing like thinking of how to kill a mofo to round out the work day on the ride home! Keep it locked on XM Raw66 ya heard!

(j/k, but just in case, I always come on this forum with my flame suit on ala Johnny Blaze!)

 

i like chanel 202 opie/anthony - ron/fezz i hate having a dj select wht i can hear but i like the comedy stuff, im over it already and just going to play my dvd-s and ipod since im installing dom's unit this week