Sirius' and XM's merger presentation revealed

Brace yourself: corporate speak ahead. We normally aren't in for all this "cost synergies" and "roadmap" hogwash that all the suits seem to get so hot for, but when it comes to a merger of two cutthroat competitors like this, we couldn't help but take a peek. Other than the technology improvements we mentioned, there isn't much talk about consumer benefits in here, and there's absolutely no mention of creating some sort of single satellite radio provider, just the power of combined resources. Most of the talk is directed at shareholders and those "synergies" that help out the bottom line -- to the tune of an estimated $3-7 billion in savings, though a $4 billion "flex" does seem to cast a bit of doubt on those numbers. The rest of the slides deal with plans for getting regulatory approval, which basically amount to arguing the case of intense competition from radio, iPods and other emerging wireless standards (see above). That said, XM and Sirius seem quite confident of success on the regulatory end of things, and look to have put a quite a bit of thought into it. Pending approval from the feds, along with respective shareholder go-ahead, XM and Sirius plan on sealing the deal by the end of 2007.

Gallery: Sirius and XM's merger presentation revealed

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[Thomas Trautman @ Feb 21st 2007 4:46PM]

It took Mel and Howard a solid year to bring XM to the table.

The merging companies have plenty of resources to grease the rails and get regulatory approval. I'm sure that it will not take long to get everything finalized.

[Lion @ Feb 21st 2007 4:56PM]

> OprahDust @ Feb 21st 2007 4:35PM
> do they have a name yet?

I put my vote in for XM-Sirius ... Or, even better: RU-Serious

So long as prices don't go up for customers (you know, to finance their billions of dollars in savings) I'm all for this merger. Just think: Soon I'll be able to buy a GM car and listen to the Seahawks play from Chicago.

[nutzareus @ Feb 21st 2007 6:17PM]

If this merger happens, I bet there will be NEW equipment forced down our throats, both Sirius *AND* XM subscribers. Not to mention higher prices since it will be a monopoly. How does the consumer win in this situation? FCC, say NO to this merger!

[Matt @ Feb 21st 2007 5:01PM]

There was no internet in 1997?

[John Bunka @ Feb 21st 2007 5:07PM]

there is no way the feds will allow this; unless they can prove that the customers won't get screwed in the long run

[Rick Lyon @ Feb 21st 2007 5:14PM]

Both companies are bleeding losses, now there's a rumor that they may raise subscription fees? Ah, if very few people actually buy your product, how will raising rates attract more buyers?? Sounds like the new Chrysler strategy. If they want to make money, they need subscribers, if they want subscribers, they need to make the subscription $5 a month, one kit for home and auto with included internet stream. One subscription to work effortlessly and without additional costly equipment everywhere I go, office, home, car, HT, etc.

[BAMF @ Feb 21st 2007 5:19PM]

Engadget's post states:

"...and there's absolutely no mention of creating some sort of single satellite radio provider, just the power of combined resources."

I saw several indications that they intend to merge their programming. Slides 5, 6, 7, and 15 all make mention of offering both sets of programming or "best of both" to customers. Slide 15 also mentions deleting duplicate channels to free up bandwidth. One thing I really don't like is in slide 10, they state that having a larger subscriber base will make the company more attractive to advertisers. Sure, ok, if you're gonna stop charging me for my subscription!

I'm still uneasy about this whole thing, but I have realized one way that this could work out somewhat ok. If they keep broadcasting all of the current channels with the setup they have now (frequency and codec) they could start releasing dual-tuner receivers that would pick up both XM and Sirius feeds. Then they could slowly start phasing out duplicate feeds (traffic/weather, CNN, NPR, BBC, Fox News, etc.) This way they could free up bandwidth without making anyone's receiver (completely) obsolete and then they could entice the owners of older receivers to upgrade by offering video feeds or something else new in the extra bandwidth.

[Z @ Feb 21st 2007 5:29PM]

So essentially, this merger is about us paying more for no changes, other than both companies' ability to stay afloat and not go under.

Maybe if Sirius hadn't promised Stern half a billion bucks, they'd be in better shape. And I don't know what XM's problem is.

How about instead of a merger, they each find more qualified people to run their businesses, so that the customers don't have to suffer financially in order to keep their egos on high.

[macstibs @ Feb 21st 2007 5:39PM]

Statistically speaking, the $4B "flex" should increase your comfort with the estimate not decrease it. The wider the range - the higher the probability that the observed outcome falls within it.

[Miles Ross @ Feb 21st 2007 5:45PM]

"Maybe if Sirius hadn't promised Stern half a billion bucks"

HA! they paid that idiot $500 MILLION not $500,000, pretty stupid move on their part!

[Z @ Feb 21st 2007 5:52PM]

That's what I said. Half a BILLION, not half a million.


Shoot, Stern would've left for ten million just so he could get away from standard radio and all the limitations they placed on him, so he could spew his filth unbridled on SR. Talk about over-rated entertainment and a bad business move.

[Matt @ Feb 21st 2007 5:54PM]

Why's there an iPhone in there? Hmmm...

[Frankenstein Black @ Feb 21st 2007 6:44PM]

ONE WORD, “CABLE”! How many of us have 2 cable providers in their serving areas? What, 2%? If that? And they (Cable) got their monopolies when there was no competition (sans free TV, VHF 2 to 13 and UHF – um, CH7 was “Hot” on account of having to use my stove knob on that old TV ;^)...

Anyways, in this day and age of big business PAWNING regulators they will have their way, and sure enough like Cable the subscription rates will creep northwards ;^(. Their excuse when those rate hikes start to hit will be “hey you have choices (iPod, streaming, free radio), oh and there is always HD radio. LOL...

[dschwab @ Feb 21st 2007 7:37PM]

So how many of the same type of device can they show in the "Expanding Environment" picture, and why couldn't they show the same number of portable CD player devices in their 1997 shot? It really isn't accurate at all.

[yeminzin @ Feb 21st 2007 7:04PM]

yah

[Antipodeanist @ Feb 21st 2007 7:55PM]

Before people comment and say there is no way this will be allowed to happen and that the customer will get screwed, you should really look at the facts.

The main reason that the companies want to merge is because they are only killing each other and neither one of them is going to survive at this point. They really cannot raise their prices unless they do it together and the last time I checked that is illegal. There are plenty of other options out there, which they state, such as terrestrial radio, MP3 players, and new WiFI devices all of which can be considered competitors. Just because they are the only SATELLITE radio companies doesn't mean that they have no other competitors.

It is for the same reasons listed above, about the competitors, that the customers can not possibly get screwed in this deal because there are still outside forces that regulate price. All that this will enable them to do is consolodate their infrastructure and save a ton of money on operations and things to that extent.

This option appears to be good for both the shareholders, customers, and future customers.

[LC @ Feb 21st 2007 9:27PM]

Z-
"Maybe if Sirius hadn't promised Stern half a billion bucks, they'd be in better shape. And I don't know what XM's problem is."

Stern received a bonus from Sirius for adding subscribers, roughly about 5 million by years end. At 12.96 per month per subscriber. Sirius has already paid for his entire 5 year contract in just under 8 months. From a business standpoint I say it was money well spent and probably saved Sirius.

I think this merger will pass if not for the fact that both companies are losing money. The main reason is that they are competing with terrestrial radio. I believe the regulators will indeed see this as competition.

[fastm3driver @ Feb 26th 2007 1:51AM]

I WOULD APPROVE IF
the FCC forced them to make a free version that is add supported. They already have add supported stations and there would be a upgrade model. I thought one of them would have already done this and crushed the other one. It would appease the casual user and get receivers in the hands of everybody, thus killing FM.

[Z @ Feb 22nd 2007 11:15AM]

If what you say is true, then so be it.

I just don't quite understand how they could consider TR a threat. All the idiotic DJ's, the non-stop commercials, lame, repetitive programming, and the static. It's enough to drive you nuts. I don't even remember the last time I listened to regular radio.

And they consider that competition? Hardly.


On another topic, someone said that XM is beginning to run commercials on some of their music channels. I may not be listening to those channels, but if that's really the case, they better knock that crap off immediately. That's NOT what we're paying for. They start doing that, people will just go back to their iPods (including me) and XM will lose even more business.

We're so inundated with ads everywhere we go, people are sick of it. Ads on TV every five minutes, ads in movie theatres, ads on regular radio, ads that take up half the magazines we read, ads on DVD's, ads on the internet. WE'RE SICK OF IT!!! ENOUGH!!! NO ADS ON SATELLITE RADIO!

[Frankenstein Black @ Feb 22nd 2007 12:46PM]

If it could only be that way. Cable TV has commercials despite the hefty subscription fees. The other sure bet that more channels (not just the XM ones) WILL get commercials “post merger”? Melly, Mel Karmazin. The guy is a radio genius, granted, but part (not all) of his genius is based on a simple formula: (1) Exclusive talent/content and, wait for it........ (2) Ad revenue (i.e. commercials).

Your 19.99/29.99 (cause that’s what it will cost in less than 2 years after this happens), just wont cut it. Ad revenue is where the BIG money is! Don’t get all confused every time you see this story. Just think CABLE, which most of us pay for and except as “that’s just the way it is”. Same thing here except with Audio.

[owencorpening @ Feb 22nd 2007 3:26PM]

XM *kindof* "competes" with itunes ... if one records the songs for later playback ... there is a web interface, I think one can use that to get songs, and the artist and album info are listed there for you, not sure about cutting and pasting that when you save the track ... and there used to be a computer interface card which made it more automatic ....

Personally I record talk shows using a MyFi then play them back later, skipping commercials, it actually lists the commercials and the radio show so you can accurately skip to the next talk segment, no need to guess with fast forward/reverse, *nearly* ideal ....

If one recorded a 5 hour chunk of ones music channel one could skip around to the desired songs - that ain't exactly a playlist but it saves you money over grabbing the stuff thru itunes ...

[jkbkwarner @ Feb 23rd 2007 8:41AM]

I just think competition is healthy. If they can merge then maybe they should have to give up one or the other's frequency spectrum and let another provider get into the service to maintain competition.

[Z @ Feb 23rd 2007 11:31AM]

@Frankenstein B

I know cable TV has commercials, but cable TV never started off commercial free in exchange for a fee. However, satellite radio (SR) did. Not to mention, for a long time, there were no other options other than cable if you wanted to watch TV. These days, we have commercial-free shows on DVD, and we have the internet. In regard to SR, there are other options, like CD's (music and audiobooks), and iPods (music, audiobooks, podcasts, etc.).

I would also point out that TV has MUCH more overhead than SR. Content on TV is actually made from scratch specifically for TV - it doesn't exist in some other form of media - which places that expense squarely on the shoulders of the networks. Whereas most all of the content on SR isn't being specifically created for SR. It already exists on CD, so SR doesn't have the cost of creating content, they just peddle it.

SR can't go from no commercials to commercial-and-DJ-interupted content and keep charging fees (and even worse, increasing those fees). That is to say, they can try, but they'll undoubtedly lose a tremendous amount of business because we're all used to not having to put up with all that. Although some of the selling points of SR include clarity, coverage, and content, the BIGGEST selling point is content with no commercials or DJ's. If they kill that, a LOT of customers are going to go, "bye bye", because then SR would essentially become regular radio, except we'd be paying a fee for a little more clarity when listening to the crap, and that isn't enough to demand a revolving fee from each and every listener.

We all know commercials provide a stream of revenue, but SR is going to have to figure something else out to stay afloat. (This merger, I suppose, is a start). Because few people will put up with paying to listen to commercials and DJ's. They certainly won't draw enough new customers and they'll lose a lot of the ones they currently have.

Maybe they can charge less for the people who want the service and don't mind commercials, and charge a bit more for those who want the content with NO commercial or DJ interuptions. But the mechanics of that are most likely improbable, or if it can be done, I'd imagine it would be very expensive, demanding two separate streams and more people to manage the additional stream.

I may not know all the answers, but we customers shouldn't be last in line. We're the one's who allow this industry to exist in the first place and who allow all these people to make a living.

[TheKingOdysseus @ Apr 21st 2007 4:47AM]

And I'm also sure this decision had nothing to do with the RIAA trying to sue XM and Sirius over their units that let users record radio. In a sense you could make your own on the go mix, anyway. Let's hope that the rates don't go up because of the Devil, I mean RIAA, if they do I'm dropping them(Sirius).....
http://www.engadget.com/2005/09/27/sirius-and-xm-in-trouble-for-radio-recording-capabilities/