Sirius and XM set to merge?

Well, we can't exactly say that we didn't see this one coming, but for the deal to actually get inked would indeed be something special. According to the New York Post, Sirius and XM are all set to announce a merger deal after hammering out details all weekend long. Of course, it was noted that the somewhat shaky agreement "could fall apart at any time," and interestingly enough, both companies purportedly spent the majority of their (and their lawyers) time ironing out the good stuff while leaving "regulatory concerns" on the back burner. Unfortunately, those very issues could be insurmountable hurdles, as the typically stubborn FCC certainly has played hard ball with each company before, and having one overriding satellite provider with no competition in sight is ripe for monopoly arguments. Regardless, you won't find us complaining about a little Howard just a few channels down from Oprah, or a dash of MLB just a dozen notches from the NFL, but considering that gaining that oh-so-critical regulatory approval "could take up to 15 months," we wouldn't count on your lineup changing anytime soon no matter what.

[Mack Swift @ Feb 19th 2007 11:00AM]

Are we all going to have to get new receivers because of this?

[John Doe @ Feb 19th 2007 11:10AM]

Don't bet on this. What other satellite options do people have other then these two? The gov is going to smack this idea down. And down HARD.

[Kenny @ Feb 19th 2007 11:13AM]

This will never happen, Unless a third satellite radio company opens. It would create a monopoly

[Bradly Friskyfritter @ Feb 19th 2007 11:15AM]

You won't be needing any new equipment for now. In the future, if the combined companies were allowed to use all the bandwidth(which might not happen per the FCC), then you would need new equipment.

However, this is a bad thing because our pricing will undoubtedly go up. A merger would suck for the consumer. I'm pissed these guys spent so much money on programming to where they can't even be profitable. Oh well, enjoy your sat radio while the prices are still in check.

[Andrew Hillman @ Feb 19th 2007 11:21AM]

If it would happen good move. Andrew Hillman



Andrew Hillman

[Nick Fury @ Feb 19th 2007 11:21AM]

Would the lack of an alternative actually consistute a monopoly if nobody else is seriously interested in entering this business? I guess I always believed a monopoly only existed if the exisiting business used its leverage to shut out competition, not by simply being the only player available.

It seems to me that if a merger is in serious discussions that a monopoly is an inevitability at some point since one of these two is hurting enough to not be able to survive on their own.

[Jake @ Feb 19th 2007 11:41AM]

"Would the lack of an alternative actually consistute a monopoly if nobody else is seriously interested in entering this business?"

It's not a question of no one else being interested. The thing is, the FCC has specifically allocated radio frequnecies for 2 satellite radio providers. No one else can enter the market. And unless the FCC allocated more spectrum or they gave up half of their own spectrum, no competitor ever could compete.

It would not be a natural monopoly at all, as the FCC created 2 companies and would allow their union. Impossible barriers to entry created by the government, for the benefit of private business. I hope it gets smacked down. Hard.

[Gragg @ Feb 19th 2007 11:37AM]

This idea was already shot down once not too long ago mostly because of spectrum licenses and overlap between them. The ONLY way this might get approved is if one of them gives up the their spectrum license (not likely IMO). The other option is that a third provider comes on the scene...
Long shots at best on both counts.

[Tim @ Feb 19th 2007 11:40AM]

I like my current channel selection on XM, and really don't care for Howard Stern anyway. I liked that I had a choice between providers, and it's terrible if that choice were to go away and be replaced with A higher priced offering.

What I really see happenning though, is a merger of content, a lot of housecleaning to get rid or redundancy and coming up with a solid channel lineup. Then, the part that I dread the most, is the offering of a tiered service. I bet this is going to turn out just like cable with basic Satelite radio, and a sports Package and the Howard Stern package and all sorts of ways to take away from the consumer, unless that consumer is willing to pay more every month.

I've been hoping this wouldn't happen, because I don't think I'm going to like the direction that this takes satelite radio, but maybe I'm just worrying about nothing.

[Nate @ Feb 19th 2007 11:41AM]

They have been trying to do this for a while, they have just had constant legal issues. Both of these companies were tied for the worst market performers of '06 if im not mistaken.

[El Lobo @ Feb 26th 2007 8:44PM]

if the FCC has specifically allocated radio frequnecies for 2 satellite radio providers, and these two merged..would that allow room for another provider to take the place of the other one, or would this merger take BOTH?

[Mack Swift @ Feb 19th 2007 11:42AM]

A monopoly itself isn't illegal, it's using your monopoly power to squash any competition that's illegal.

[JP @ Feb 20th 2007 4:26PM]

Kind of how Jake wants the FCC (second worst monopoly right behind the NCAA) to smack down this deal.

I personally would love if they merged, but only if they do not raise the prices or try to sell some crap Tier system like Tim suggested. I think that if they merge and keep the majority of the channels from both companies this would be a great deal for the consumer. IMO

[andrew @ Feb 19th 2007 11:44AM]

This would NOT be a monopoly. Satellite radio has tremendous competition from normal radio. Prices would stay relatively the same since they're competing against something that is free.

[Nobody important @ Feb 19th 2007 11:49AM]

It's not a monopoly until they start abusing it, and even then you still don't have to buy satellite radio, you can use terrestrial or internet radio, or even your iPod.

And I'm not sure this market is big enough for two big fish. Both Sirius and XM are having troubles because neither can capture enough of the market to roll it back in and start turning real profits. They had both been hoping to capture 70-80% of the satellite radio market and they ended up at about 50%. Putting satellites into orbit is expensive.

I think Sirius and XM know that within 10-20 years we will have 'everywhere' internet widely available and we can receive internet broadcasts in our vehicles. So this merger would make a lot of sense, both to make the business model work in the short term and to preemptively slow the bleeding that threatens to obsolete their expensive satellite network.

[Plowboy1 @ Feb 19th 2007 11:50AM]

Long overdue. The XM stock version will exceed 37 bucks per share next year.

Better programing, lowered costs...YUM YUM.

Get-her-Dun Gary and Alan.

[Ichiro @ Feb 19th 2007 11:55AM]

Actually its not a Monopoly, since there is still free terrestrial radio.

I doubt the gov will stop an XM and Sirius merger because they are not operating in a matter that prevents another company from competing against them.

Just the reality is without the Merger it is possible that one or the other will eventually run out of money... then we are down to one company. So why not let them merge and pool their resources, protect the investors and give the consumer a better product.

[Scotty @ Feb 19th 2007 12:03PM]

If I can get Stern and MLB on the same system I would be willing to pay more.

[Mike @ Feb 19th 2007 12:17PM]

It would be HORRIBLE for this deal to be rejected by the FCC. They are not monopolizing radio, who cares if they would be the only sat. radio provider. It would mean better service and more channels for everyone, plus maybe Sirius TV would mature faster. That's capitalism baby, bring it on and go USA. :P

[Tim @ Feb 19th 2007 1:03PM]

I say get the deal done by the time I rotate back to the states in 3 years. You don't know what you're missing on the radio until you live outside the U.S. We get two English speaking radio stations: American Forces Network and the BBC. Hey, at least they are both free.

[chris @ Feb 19th 2007 1:16PM]

Well i see increase pricing if this happens. Since no one else is around to compete. Plus I see alot of my favorite sirius channels being bumped. Also, the same for XM customers. Just my opinion. Take it and run with it.

[bigm @ Feb 19th 2007 1:38PM]

Being a long time Sirius subscriber, I can say that I would welcome the addition of Golf Channel, and some other channels. Rounding out the offering of channels so I wouldn't have to have 2 radios to get Golf channel and Howard Stern would be nice, and even though the pundits would have you beleive they are hurting somehow becuase "Their Market Share is Down". Local radio stations wouldn't be slamming sattelite as "Having to pay for something that's free" regualarly on their advertising if they weren't worried about it. With big companies like Clear Channel buying up every station in site, the FCC is letting happen what they are supposed to be there to prevent, removal of local interest from small communities. At least Sirrius puts on small local shows if they are at all interesting. Hope it happens, but I hope they streamline it. I've heard XM's lineup, and it is generally sucky compared with Sirius. But either beats hearing the same crap from 2 different stations witht the same DJ's on different channels within 100 miles of each other...with different adds but the same exact songs and dj's. Big stations companies suck.

[Jeff @ Feb 19th 2007 1:42PM]

Here's the solution: unify the tech, diversify the service. Let everyone use the same radio gear regardless of the provider, and let competitors offer different service packages and a la carte deals over the same infrastructure. Simple!

[Eric @ Feb 19th 2007 2:04PM]

Better get the Sirius lifetime sub while yuo can! Protect yourself from rising prices!

[Brad Johnson @ Feb 19th 2007 2:26PM]

If this happens, I can see future radios being hybrid to allow both XM and Sirius content and many competing/like channels going away and opening up bandwidth for more Video channels as has been proposed at the CES by Sirius. I doubt prices would go up except for additional services such as video or internet since they are still competing with free analog and digital over the air radio as well as downloaded MP3's and streaming content from internet radio stations coming over cellular networks.

What would really be nice is if the audio quality would improve since right now it's good but it's not up to CD or even FM quality in my opinion and the music doesn't have a full frequency range sound.

[PEZ @ Feb 19th 2007 2:54PM]

This isnt for a MERGE, this is about sharing content. Basically, they dont want (XM) going to Sirius because of Howard, so basically they (XM) are going to pay a fee to be able to feed Howard to their customers.

Its as simple as that. And, it wouldnt be a MERGE, Sirius would be buying out XM.

THey will share some programming, thats about it. This will get around the "merger" limitations of the orginal biopoly agreement set by the FCC back in 1998.

[freestufftimes.com @ Feb 19th 2007 3:09PM]

Its official:
http://xmradio.mediaroom.com/index.php?s=press_releases&item=1423
SIRIUS and XM to Combine in $13 Billion Merger of Equals
Provides Consumers with Enhanced Content, Greater Choices and Accelerated Technological Innovation

Enables Satellite Radio to Better Compete in Rapidly Evolving Audio Entertainment Industry

Extraordinary Value Creation for Shareholders

Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as Chairman of Combined Company

WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- XM Satellite Radio (NASDAQ: XMSR) and SIRIUS Satellite Radio (NASDAQ: SIRI) today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

Under the terms of the agreement, 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.

Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. The new company's board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger.

The combined company will benefit from a highly experienced management team from both companies with extensive industry knowledge in radio, media, consumer electronics, OEM engineering and technology. Further management appointments will be announced prior to closing. 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 prior to closing.

The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts' consensus estimates. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies, including:

* Greater Programming and Content Choices -- The combined company is
committed to consumer choice, including offering consumers the ability
to pick and choose the channels and content they want on a more a la
carte basis. The combined company will also provide consumers with a
broader selection of content, including a wide range of commercial-free
music channels, exclusive and non-exclusive sports coverage, news,
talk, and entertainment programming. Together, XM and SIRIUS will be
able to improve on products such as real-time traffic and rear-seat
video and introduce new ones such as advanced data services including
enhanced traffic, weather and infotainment offerings.

* Accelerated Technological Innovation -- The merger will enable the
combined company to develop and introduce a wider range of lower cost,
easy-to-use, and multi-functional devices through efficiencies in chip
set and radio design and procurement. Such innovation is essential to
remaining competitive in the consumer electronics-driven world of audio
entertainment.

* Benefits to OEM and Retail Partners -- The combined company will offer
automakers and retailers the opportunity to provide a broader content
offering to their customers. Consumer electronics retailers, including
Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit
from enhanced product offerings that should allow satellite radio to
compete more effectively.

* Enhanced Financial Performance -- This transaction will enhance the
long-term financial success of satellite radio by allowing the combined
company to better manage its costs through sales and marketing and
subscriber acquisition efficiencies, satellite fleet synergies, combined
R&D and other benefits from economies of scale. Wall Street equity
analysts have published estimates of the present value of cost synergies
ranging from $3 billion to $7 billion.

* More Competitive Audio Entertainment Provider -- The combination of an
enhanced programming lineup with improved technology, distribution and
financials will better position satellite radio to compete for
consumers' attention and entertainment dollars against a host of
products and services in the highly competitive and rapidly evolving
audio entertainment marketplace. In addition to existing competition
from free "over-the-air" AM and FM radio as well as iPods and mobile
phone streaming, satellite radio will face new challenges from the rapid
growth of HD Radio, Internet radio and next generation wireless
technologies."We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers," said Gary Parsons, Chairman of XM Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint statement. "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."

"This combination is the next logical step in the evolution of audio entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio. "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."

The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.

SIRIUS's financial advisor on the transaction is Morgan Stanley and Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal counsel. XM's financial advisor on the transaction is J.P. Morgan Securities Inc. and Skadden Arps, Slate, Meagher & Flom LLP; Jones Day; and Latham & Watkins LLP are acting as legal counsel.

Conference Call and Webcast Information

The companies will hold a joint conference call and webcast on Tuesday, February 20, 2007 at 8:30 AM ET to discuss this announcement. The conference call can be monitored by dialing 800-573-4840 within the U.S. and 617-224-4326 for all other locations, passcode 29490052. The webcast can be accessed at as well as on their satellite radio services by tuning to SIRIUS channel 122 and XM channel 200.

About SIRIUS

SIRIUS, "The Best Radio on Radio," delivers more than 130 channels of the best programming in all of radio. SIRIUS is the original and only home of 100% commercial free music channels in satellite radio, offering 69 music channels. SIRIUS also delivers 65 channels of sports, news, talk, entertainment, traffic, weather and data. SIRIUS is the Official Satellite Radio Partner of the NFL, NASCAR, NBA and NHL, and broadcasts live play-by-play games of the NFL, NBA and NHL, as well as live NASCAR races. All SIRIUS programming is available for a monthly subscription fee of only $12.95.

SIRIUS Internet Radio (SIR) is a CD-quality, Internet-only version of the SIRIUS radio service, without the use of a radio, for the monthly subscription fee of $12.95. SIR delivers more than 75 channels of talk, entertainment, sports, and 100% commercial free music.

SIRIUS products for the car, truck, home, RV and boat are available in more than 25,000 retail locations, including Best Buy, Circuit City, Crutchfield, Costco, Target, Wal-Mart, Sam's Club, RadioShack and at

SIRIUS radios are offered in vehicles from Audi, Bentley, BMW, Chrysler, Dodge, Ford, Infiniti, Jaguar, Jeep®, Land Rover, Lexus, Lincoln, Mercury, Maybach, Mazda, Mercedes-Benz, MINI, Mitsubishi, Nissan, Rolls Royce, Scion, Toyota, Volkswagen, and Volvo. Hertz also offers SIRIUS in its rental cars at major locations around the country.

Click on to listen to SIRIUS live, or to purchase a SIRIUS radio and subscription.

About XM

XM (NASDAQ: XMSR) is America's number one satellite radio company with more than 7.6 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City, Chicago, the Country Music Hall of Fame in Nashville, Toronto and Montreal, XM's 2007 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music, premier sports, news, talk radio, comedy, children's and entertainment programming; and the most advanced traffic and weather information.

XM, the leader in satellite-delivered entertainment and data services for the automobile market through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is available in 140 different vehicle models for 2007. XM's industry-leading products are available at consumer electronics retailers nationwide. For more information about XM hardware, programming and partnerships, please visit

Forward Looking Statements

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., including potential synergies and cost savings and the timing thereof, future financial and operating results, the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," or words of similar meaning. Such forward- looking statements are based upon the current beliefs and expectations of SIRIUS' and XM's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond the control of SIRIUS and XM. Actual results may differ materially from the results anticipated in these forward-looking statements.

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statement: general business and economic conditions; the performance of financial markets and interest rates; the ability to obtain governmental approvals of the transaction on a timely basis; the failure of SIRIUS and XM shareholders to approve the transaction; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; and operating costs and business disruption following the merger, including adverse effects on employee retention and on our business relationships with third parties, including manufacturers of radios, retailers, automakers and programming providers. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' and XM's Annual Reports on Form 10-K for the year ended December 31, 2005, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 which are filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site (http://www.sec.gov/). The information set forth herein speaks only as of the date hereof, and Sirius and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this press release.

Important Additional Information Will be Filed with the SEC

This communication is being made in respect of the proposed business combination involving SIRIUS and XM. In connection with the proposed transaction, SIRIUS plans to file with the SEC a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and each of SIRIUS and XM plan to file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of SIRIUS and XM. INVESTORS AND SECURITY HOLDERS OF SIRIUS AND XM ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC by SIRIUS and XM through the web site maintained by the SEC at http://www.sec.gov/. Free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC can also be obtained by directing a request to Sirius Satellite Radio Inc., 1221 Avenue of the Americas, New York, NY 10020, Attention: Investor Relations or by directing a request to XM Satellite Radio Holdings Inc., 1500 Eckington Place, NE Washington, DC 20002, Attention: Investor Relations.

[adaminc @ Feb 19th 2007 3:26PM]

I was just gonna say I heard it already happened

[Rich @ Feb 19th 2007 3:55PM]

Well... they still need FCC approval...

[dave @ Feb 19th 2007 5:21PM]

My dad wants to listen to his howard on the go. XM has true portables with built in antennas(and until the world is covered in free WiFi, the stiletto 100 doesn't count, so sirius doesn't), sirius has the shock jock. so anything that allows him to get an inno or helix and listen to howard on it, he'd be down for the subscription fee in a heartbeat.


but if NYC blanketed all the streets and trains in WiFi, he'd probably grab the stiletto 100 like it's a vital organ.

[Jake @ Feb 26th 2007 9:15PM]

Yes, but they will raise prices. And introduce a tiered system. It's the natural, logical response to a monopoly provider. OTOH, they won't be bidding against each other for sports & stars anymore, so this should lower their costs. Costs go down + prices go up = profits go way up. Good for XM & Sirius, not sure it's good for everyone else.