It's official: XM and Sirius plan to tie the knot

It's been more than two years since we first reported that XM and Sirius were in talks to merge, and although the New York Post may have jumped the gun a bit way back then, it was certainly on the money today, as the two satellite radio pioneers have just issued a joint press release stating their intention to become life partners. In the proposed $13 billion deal -- which they'd like to go down by the end of the year but which still must pass rather daunting regulatory scrutiny and opposition from such heavyweights as the National Association of Broadcasters -- investors would get 4.6 shares of Sirius stock for each share of XM, with current Sirius CEO Mel Karmazin and XM Chairman Gary Parsons retaining those roles, respectively, in the combined entity (whose name has yet to be decided). As you might imagine, the companies are already trying to spin this as a big win for everyone from Martha Stewart on down, arguing that consumers will end up benefiting from more programming choices and better hardware, manufacturers and retailers will see increased sales, and of course shareholders would gain value through the economies of scale and elimination of redundancies realized from a merger. The new pals also took an opportunity to sneak in a mention about the growing number of choices consumers have for receiving audio content, from old school AM/FM to internet radio to the the still-nascent technologies of cellphone streaming and HD radio, clearly hoping to sway public opinion on that whole anti-trust thing. Still, keep in mind that the FCC is gonna be taking a long, hard look at this one -- in fact, current regulations would need to be changed in order for the merger to gain approval -- so don't get your celebratin' started just yet.

Update: Just in case there was any confusion, both companies will continue to operate independently until such time as a merger is approved, meaning that you needn't fear losing your precious sat feed out of the blue. And even if everything goes according to plan, we highly doubt that your current gear will stop working or that you'll even see an interruption in your service whatsoever.

[paularc3 @ Feb 27th 2008 6:49PM]

now the thing to do is to get my OTR back in the car,it is always going to be on the first preset,i'll even remove the knob to show everybody that xm shouldn't laugh at me because it is my first choice,YES XM LAUGHED AT ME BECAUSE OF MY CHOICE IN MUSIC PREFERENCE,I DON'T THINK THAT THE YOUNG LADY WAS EVER RAISED CORRECTLY WHEN I CALLED XM TO SEE WHAT WAS WRONG WITH MY STATION,WHEN IT DISAPPEARED LIKE THAT!!!

[Gadget Chick @ Feb 19th 2007 3:38PM]

yay for monopolies!

[Bradley Beavers @ Feb 19th 2007 4:03PM]

wont the merger of these two make it pretty easy for them to charge whatever they want?

[Vince D @ Feb 20th 2007 2:35PM]

Well, yeah, isn't that the POINT of the free market, supply is priced to just meet demand? Currently the price of each service does not cover their costs, they have both been losing money and experiencing slow revenue growth, merger will reduce expenses and hopefully bring profitability. Talk of "monopoly" is ridiculous - terrestrial radio has multiple, far more malignant monopolies.

[R @ Mar 6th 2007 8:38PM]

not really... they still have to compete against terrestrial radio, ipods, cds, etc.... if they price it too high i just will continue to not have sat radio as i dont now... i have wanted it for a while now but couldnt decide... the new company will get my business, unless of course they do raise the prices, in which case i will keep suffereing with my 80gb ipod, and am/fm

[J @ Feb 19th 2007 3:49PM]

"combined entity (whose name has yet to be decided)"

Do I hear an at&t as an option... just kidding.

[dave @ Feb 19th 2007 8:15PM]

What you think stock prices will be tomorrow

[Richard @ Feb 19th 2007 6:57PM]

I hate all this monopoly crap, you're just punishing people for being succesful.

I hope the merger goes through, I've been an XM subscriber for years, but it'd be great to be able to listen to some of those exclusive Sirius stations.

[M Peterson @ Feb 19th 2007 3:58PM]

SiXMus

[ksj @ Feb 19th 2007 4:07PM]

crazy. good, i'm glad there's no more competition

[PK @ Feb 19th 2007 4:13PM]

If this merger passes regulatory scrutiny, the FTC might as well be shut down because it will no longer serve a purpose. It's hard to think of a market more concentrated than this one.

[matthew @ Feb 19th 2007 4:22PM]

The FTC is basically useless anyway.

The thing everyone forgets is that monopoly isn't the problem: it's the abuse of monopoly to unfairly control a market.

XM and Sirius have so far both struggled for customers for several reasons, not the least of which being problems of customer awareness. Many people simply don't know - and won't learn without extensive research - which network would be better for them (in terms of content, quality and price). People are used to having one radio "network", expecting competitors to just be different channels. The idea of two separate networks with non-interoperable hardware just isn't what people want.

The question is how this new hybrid company (I love the AT&T joke...) will shape its new business model: if no other satellite companies emerge, will they offer channels 'for rent' to other content providers? Will they continue to own all channels? Etc.

[fatgolfer @ Feb 19th 2007 4:38PM]

It depends on who you are identifying as their primary competition. From the total subscriber pool vs. total people who listen to radio/music standpoint; the largest competitor of XM/Sirius is over-the-air broadcast radio. Not each other. You are correct, they could charge whatever they want, but they are free to charge whatever they want right now. If they were to charge $50/month then there is an alternative that can be accessed from anywhere/anytime free of charge. I don't think they'd sell too many units at that price point.

[Mark @ Feb 19th 2007 4:21PM]

I don't understand this 'monopoly' thing....right now, there are only 2, and they are both the same monthly cost...so big deal if they become 1...I totally doubt they are going to raise the fee....they are not doing to well at 12.95....not to mention, this is a 'service', so if people don't like it, they can leave it...they don't need it to survive...The FTC should have no say in this, as there are not 3 companies, where 1 would be left out...If they don't allow them to merge, one of them or both will be going out of business soon, and that would be worse. I guess the FCC would get involved for the wireless transmissions...as they have no ground on satelites.

[Shane @ Feb 19th 2007 5:13PM]

Mark said:
"I guess the FCC would get involved for the wireless transmissions...as they have no ground on satelites."

Actually, yes, they do get involved in things related to satellite communication. RF is RF whether it's staying on the earth or being relayed via satellite.

In addition, the FCC gets involved in ownership rules related to traditional broadcasters so they probably have a say from that side of things as well. I actually would be in favor of this happening but there are a number of regulatory hurdles for XM and Sirius to clear...

[Ben @ Feb 19th 2007 5:44PM]

I don't think that the new XM/Sirius will really have a monopoly. They still have to compete with traditional FM/AM radio and HD radio. Maybe in the future when satellite radio is as prolific as cable television, the FCC will step in and split up XM/Sirius.

[picaso @ Feb 19th 2007 4:29PM]

The right thing to do is prohibit this merger, but in the "big business/big government Bush White House" this will sail through in no time. We'll also probably get cable-style tiered pricing. I would be shocked with 2 things: The price doesn't go up and we get all channels from both services.

[Ben @ Feb 19th 2007 4:47PM]

*insert some comment talking about mergers and acquisitions like I am a lawyer who does this for a living here*

[Jaycup @ Feb 19th 2007 5:28PM]

Some of these concepts are taught in business school. They are just giving their input. The final decision will be made by lawyers/regulatory agencies and the like.

[michael @ Feb 19th 2007 4:24PM]

This is great news! Now I'm won't have to go nuts deciding which one to go for. It was always hard knowing the one has this, but the other has that and that the good ones are all dispersed so much, that it's hard to pick one. It's at least good that I'll have a broad range of choices now. Yay!

[PK @ Feb 19th 2007 4:36PM]

Matthew, under the Clayton Act, a merger is prohibited if its effect "may be substantially to lessen competition, or to tend to create a monopoly." I don't see how this merger could do anything but substantially lessen competition (going from 2 players in the market to 1)

[Adam @ Feb 19th 2007 4:40PM]

I hope this is good news. I love Sirius, and it won't be a monopoly because people have a 2nd option (free terrestrial radio). No one is forced to choose satellite.

I hope they change the name to SeXM.

[J @ Feb 19th 2007 5:17PM]

Maybe now they will offer 3-5 free (no subscription required) on there device. I really never felt like ever paying $15 a month to listen to a radio. I would not mind a radio that has commericals and has a couple of stations with pay-per-listen options on commerical free stations.

[John @ Feb 19th 2007 4:41PM]

I think this is a good idea. I've held off on satellite radio because I wanted something from both networks, and now this is possible.

And it really isn't a monopoly, because other satellite radio companies could spring up, plus you still have a choice between regular radio and satellite radio.

I wonder what the new name will be... SiriusXM?

[PEZ @ Feb 19th 2007 4:49PM]

XIRIUS

[Bradley @ Feb 19th 2007 4:50PM]

If this goes through I wonder what effect it will have on people like me who have an XM Ready/ Sirius Ready CD player in their car. Is one group going to be left behind? Or is this going to be a case of two technologies that will operate separately for several years before combining. I personally have an XM ready deck, but I prefer the content on Sirius so I haven't made the leap yet.

[Eh @ Feb 19th 2007 5:27PM]

They will indeed raise prices. They HAVE to raise prices. Why? Because you will be getting more channels and channels cost money. You arent going to get twice as much content at the same price, thats crazy.

If this goes through then expect to pay a lot more for satellite radio. Or see package deals like cable tv, getting less valuable content for the same price with the "basic" service or pay double for the "premium" which has all the popular channels. My money is on the package deal, people will have some of their favorite channels bumped to the premium package so people are forced to "upgrade," then they will release a nice PR statement saying the packages offer maximum value to the customer with 2 great options to enjoy.

[nubi78 @ Feb 19th 2007 9:02PM]

Great, now I will hear more bitching from O&A about Howard now that they will be working for the same company.

[Jonhimslf @ Feb 19th 2007 5:08PM]

Can't wait to see it happen. I would name it Sirius XM. Anything else is hard to pronounce and ruins any brand recognition they have built

[bsic @ Feb 19th 2007 5:08PM]

lol big government Bush White House?

Big govt is a democrat agenda, not republican. Republicans, FYI, want small government. "Big business", well, i guess, republicans want capitolism, which can result in big business. As opposed to socialism...

[Guse @ Feb 19th 2007 5:52PM]

you are as confused as they are

[Giltronic @ Feb 19th 2007 7:30PM]

its funny how you tried and started out strong and smart, but ended slowly rambling my time away.

way to look up some terms on wikipedia before posting; i don't think anyone will dispute your expertise...

[freddy red @ Feb 19th 2007 8:20PM]

you are confusing today's republican party with one from 50 years ago. Any party that runs up record setting deficits, creates trade imbalances, couldn't balance a budget to save it's life, increases the size of a bloated internal bureaucracy, and tells administration scientists what and what not to say can hardly be said to promote "small" gov't. Nice try dreamer.

[Vince D @ Feb 20th 2007 2:35PM]

bsic, you are joking, right? Having a right old laff at all our expense, good show old chap!
(NOTE: Guess who just submitted a $3 TRILLION dollar budget to Congress? HINT: It ain't Hillary Clinton)

[Scott @ Feb 20th 2007 4:11PM]

I love how this has evolved into a political debate...

And since nobody is paying attention to this anyway I'll throw in my two bits... both political parties are crooked. It's really about who sucks less. And as a whole Democraps have raised taxes on the middle class more than Repubicans. I know most of the readers live in their parents basement smoking pot all day playing WoW but any working class man with kids will tell you, it's all about taxes! The less there are the better.

Now back to the show....

[Maestro @ Feb 19th 2007 5:09PM]

I think a lot of people are missing the point. They are not just competing against each other. They are competing against every music subscription service, FM, HD-Radio, and so on. I don't see how this is a monopoly. A monopoly in satellite service? Maybe. A monopoly in music subscriptions? No way.

[Philip S @ Feb 19th 2007 5:44PM]

"so don't get your celebratin' started just yet."

Don't worry, there won't be any celebratin' from me if this happens.

[Jonhimslf @ Feb 19th 2007 5:23PM]

This is also weird because there is no other examples that I can think of that compare. I mean, the closest would be Dish v. DirectTV in that they both provide (basically) the same cable channels. The difference with satellite radio being that they each have exclusive content. There is nothing from stopping another company from providing another satellite music service (the music is essentially the same.. at least they all have access to the same music). The only difference, again, comes in exclusive content I guess

[Sam @ Feb 19th 2007 5:24PM]

My truck has Sirius and I've never used it. I listen to podcasts mostly, sometimes music mp3, and occasionally radio (music or sports). The only use I would have for satellite radio is to hear NFL or college games, but its rare that I'm driving on game day (and its usually on the radio anyway). If they sold 1-day or 1-week passes, I might occasionally use them. But since their month-to-month plans require you to buy at least 3 months of service, I probably never will.
That being said, I'm still in favor of this merger. Even though I'm not a subscriber, I still want satellite radio to survive.

[adin @ Feb 19th 2007 6:44PM]

I know it doesn't exactly fit, but I'd love to see the new name be: SeMtheX; "Blowing away normal radio".

[AwayBBL @ Feb 19th 2007 5:37PM]

How do customers win?

I hope that if the merger is approved, ALL channels will be available to both ex-XM and Ex-Sirius subscribers.

I guess the magic word here is "synergy" (business speak for laying off redundant employees). If I were working in any area other than content, I'd be worried about losing my job. Even with content, they could also cut many duplicate channels, such as all those duplicated "decades" channels.

Personally, even though I'm a Sirius subscriber for my daily dose of The Howard Show, I still find local terestial radio of value (news/traffic/sports/concert info). So, that said, local radio is no where near dead, but satellite is surely going to be a more interesting alternative.

[Jaycup @ Feb 19th 2007 5:39PM]

@bsic

Thanks for clarifying that for picaso. Republicans are all for capitalism/free markets and would like to pull the governments role out as much as possible. I don't really agree w/bush often, but i think he wanted to be trigger happy when it came to bush

[cmc @ Feb 19th 2007 6:22PM]

"Big govt is a democrat agenda, not republican."

Have you looked at what Reagan and Bush II have done vs. what Clinton did? The specter of Dems and big gov't is funny since over the last 30 years, it's really the GOP that inflates the federal gov't.

[wm @ Feb 19th 2007 6:20PM]

The best thing that could happen is if they allow the merger (no more customer confusion) but require the combined company to open up their service to outside content providers. That would be awesome.

[BAMF @ Feb 19th 2007 6:18PM]

Jee-zus Christ! This really sucks.

-Yes, this is a monopoly-- FM radio is not a real competitor to satellite. Do you think anyone int heir right mind would pay $13/month for XM or Sirius if FM had a comparable offering?

-No, I really don't see them keeping all combined channels and not raising the price. Right now, XM and Sirius both have different slices of the RF spectrum and they both use different audio codecs. The only way they could offer all existing programming would be to force all subscribers to purchase new hardware to pick up the new frequencies and decode both codecs. If they make all current hardware obsolete, they're gonna have alot of pissed off customers. Not to mention car manufacturers who have been betting on one or the other by installing their receivers for years. I think they will consolidate their channels and use the newly-found spectrum for arbitrary BS like streaming video.

-As a Sirius customer, this really pisses me off. In my opinion, Sirius' programming is far superior to that of XM. Perhaps it is because Sirius doesn't have ClearChannel telling them what to do. CC invested quite a bit in XM and are calling alot of the shots over there. It was CC who forced XM to put commercials on some of their music channels. Perhaps this is also why XM's lineup lacks diversity and sounds like every (ClearChannel-owned) FM station.

It seems to me that XM is really the beneficiary here. Sirius has Howard Stern, NFL, NASCAR, NBA, NHL, and a handful of other sports, new video streaming (recently demoed, search Engadget), arguably a better audio codec, no commercials... What does XM have? MLB and golf, um, er, more subscribers, and, well, I'm spent. Sirius as a business benefits, since the two will be of equal worth for purposes of the merger, yet Sirius has less subscribers. However, I think Sirius was only a year or two away from catching, and maybe surpassing XM. Either way the subscribers (of both services) get dicked in the long run.

[flamer\\\'s grill @ Feb 19th 2007 6:44PM]

Not sure what to make of this yet. I have XM and love it, and I listen to Sirius at work and merely like it.

Real winners here are sports fans - every sport is now uder one roof.

Losers - talk radio fans. Can O&A and Howard coexist? Hmm... all I know is that if anyone touches my ron and fez, they're gonne get hurt.

[Joe Smith @ Feb 19th 2007 7:36PM]

maybe 6M?

[Jake @ Feb 19th 2007 9:14PM]

Understand a few things. If approved:

1) The monthly cost will go up.
2) They will introduce more tiered pricing options
3) The amount of money they pay for content will go down-- no more price wars
4) XM/Sirius profits will go up substantially.

This would be the classic definition of a government-created monopoly. There would be only one company allowed to offer nationwide (satellite) radio. I think it's a terrible idea. And, if one of them were to go bankrupt, someone else would pick up the assets very cheaply and have a very profitable business on their hands. Both companies are quite profitable on an EBIDTA basis, it's only the capital costs of the satellites that makes them less profitable.

[Vince D @ Feb 20th 2007 2:52PM]

Jake, having a good thought about the merger, hits this clinker;

"There would be only one company allowed to offer nationwide (satellite) radio."

Uh, who said no one else would be ALLOWED to offer satellite radio? Maybe you are thinking of the terrestrial radio monopolists.

[frozenrubber @ Feb 19th 2007 9:23PM]

Boy is everyone wrong about the price issue. With the current competition between the two (and accumulating debt), both services since their inception RAISED prices. The consumer never really benefited from the competition...only the personalities and sports that struck OVER market value contracts w/ either XM or Sirius.