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.
Wow, I guess they got tired of trying to outdo the other, but no competition isn't usually a good thing.
I never would have believed this would happen.
Bill, what do you think of this?
I noticed specifics weren't discussed so I wonder how they are going to reconcile the players?
I'm not happy. I can't imagine O&A co-existing in a company with Karmazin and Stern.
From my own personal interests, I hope that the FCC or the FTC prevents this from happening. DirecTV & Dish weren't allowed to merge. I don't see how this is any different.
If it does go through, I guess that I'll be getting a pro-rated refund on my 5 year pre-paid subscription.
Come on Bill, don't be so pessimistic. You might be pleasantly surprised with the outcome. After all Howard said years ago that he "didn't want to be in an industry with a Bubba The Love Sponge", and he hired him years later on for his Sirius channel and now they are buddies, at least on the air. XM was in peril the minute Howard went to Sirius, so this might be a good thing anyway. I am not sure how Howard will feel about it either, but the merger may never even happen.
That's just one more instance of Howard's hypocrisy. Besides, Bubba kisses Howard's ass. That's not going to happen with O&A.
I at the same time, they put themselves in peril with the insane amount that they paid him. They didn't learn and have continued to overpay for content.
Their argument against anti-trust is that they are still in competition with terrestrial radio. The NAB is going to argue against this. But that's a pretty hypocritical argument when you consider that for the last two years or so, the NAB has argued the exact opposite when they were lobbying that satellite radio should be subject to the same FCC content rules as broadcast radio is. They claimed that broadcast radio is in competition with satellite radio and that exemption from FCC content regulations gave satellite radio an unfair advantage.
One of the things that either Karmazin or Parsons pointed out during today's Wall Street press conference when asked about what would stop a united satellite company from raising their rates was that less than 10% of the adults in the US subscribe to satellite radio. Their goal is to attract the remaining 90%, who are currently listening to terrestrial radio for free. That's where the money is. Just increasing the rates on the other 10% that makes up their existing subscribers isn't what will make them profitable.
+1 for the Lucy love. Even the station ID promos on that channel are brilliant.
If this truly gives satellite radio a better chance at staying alive, then I'm all for it. The mere thought of losing my XM and having to go back to AM/FM is downright sickening.
Considering that he takes 12 weeks of vacation a year (while working only 4 days during the weeks that he isn't on vacation), it's about a 1 in 4 chance that he will be on vacation any week that big news occurs.
Mergers always make me a little wary. I dunno. Something about eliminating your competition with a low blow like buying them out just rubs me the wrong way. I always wonder if the new company isn't going to be of lower quality than the two separate entities were when they had one another to compete with.
Probably, but they were also competing for 'talent', leading to bidding wars. Neither was signing enough new customers to make that a worthwhile proposition either. The pool of customers was probably enough for one strong company, but not two. The alternative to the "low blow" is simply one or both companies fading away and dying - maybe to be bought out, maybe not. But as each got more desperate, corners would be cut where it could be.
Well, when it's something like satellite radio, it's not really a huge deal. I mean, a drop in quality programming is going to have to be pretty huge before it will be noticed by the great majority of customers.
But mergers also kind of irritate me because the companies will often keep their disparate names as they they hadn't joined and a customer who hasn't been paying attention may not even know that he's now doing business with, say AT&T instead of SBC or whatever.
There are companies, for example, I think Whirlpool and Kenmore washers are essentially the same machines (not sure which company actually makes them) with different brand names on them. The Chevy Nova and the Toyota Corolla were basically the same car for a while.
I guess I just know that all most of this does is serves to add confusion to the market and diminish the customer's number of options....while simultaneously keeping prices up. Less competition will naturally allow a given company more leverage on pricing.
To me, that's the big difference between satellite radio and satellite TV. With DirecTv and Dish, they both have access to virtually all of the same programming if they want to (with the exception of NFL Sunday Ticket). So, they're really competing content delivery companies.
With satellite radio, they're not only competing in delivering content, they're delivering different content. It would be nice if there were 3rd party producers of content and the satellite companies were just competing in the delivery of that content. Then neither company would be overspending on producing content, they would be spending their money on providing better hardware and delivery mechanisms (such as repeaters in areas that can't receive satellite service, like cities and tunnels).
That was a flaw in their buisness plans, but that was a way to distinguish themselves from regular radio. But how many DJs are left that are carried by many different networks? They wanted exclusive material, they paid for it but didn't have solid plans to get paid for it. With a limited market they over competed, or competed incorrectly.
#SDNY he's all yours. -- Michael Steele 5110 Posts 3/03
Posted - Mar 6 2007 : 4:47PM
Sirius still doomed?
Millions of people bought Sirius shares at $6 to $8 for their retirement accounts, and rode them down to $3.50, never losing faith in Stern. At this point, they need to face up to the fact that they're screwed. Stern made half a billion. They will make nothing. They can file SIRI stock certificates away under "S" for stupid. They blew it.
Any investment contains an inherent risk. When they started throwing around too much money for the on-air "talent" you really had to re-examine the buisness models.