When two companies merge, the Stock Market does not add a premium to
combined value, but simply reflects the market value of stock prior to
merger. Here is what happens....


On Friday January 12th SIRI closed at 4.10, with 1.41 billion shares
outstanding or 5.78 billion (Mkt Cap) value.


On Friday January 12th XMSR closed at 17.12, with 2.69 million shares
outstanding or 4.60 billion (Mkt Cap) value.


The market has valued SIRI higher than XMSR by a 1.2553 percent margin
(5.78/4.60).


Notwithstanding all other less important factors, the holders of XMSR
stock would have to pay the holders of SIRI a 25 1/2 percent premium
for the merger or 5.15 per share. REMEMBER, XMSR shareholders must be
willing (With a shareholder vote) to pay this premium.


Again, remember, the market does not add value to stocks....only
shareholder add value to stocks. For example, the combined value of
the merger will be 10.48 billion (5.78 + 4.60) any way you look at it.
If potential stockholders believe that the merged company is more
valuable and are willing to pay more for the stock, the price of the
stock will rise.


The probability of a merger between these two companies is remote at
best.


Sirius has spent every cent that stockholder have given the company
(200 Negative shareholder equity) This means the Liabilities exceed
stockholder equity by 200 Million dollars. The company is in effect
valueless. XMSR shareholders will NEVER approve the merger that would
require it to take on the Billion dollar debt that Sirius has built
over the years.


The only resonable alternative is for Sirius to close its doors, and
transfer it subscribers to XMSR.

Operating Two Business' As one--Cetainly Has Economies Of Scale--But The Growth Of This Medium Is Based Around The Spirit Of Competition--Which Is Mandated--In this Case--By Law--The FCC only Allowed two licences--for that very reason--If That Were Not The Case--We Would Have One Giant satelite--With Programming By Any One--Who Could Afford To Lease One Channel--Or More--Which May Not Be A Bad Idea-
The Current arguement Is--They Do Not Compete With Each Other--They Compete With The Other Forms Of Media Now Flooding Into People's Homes And personal Media Devices--That Very Same Arguement--Could Apply To Virtually Every Other Media--TV And Terrestrial Radio Noted.
If Ther Were Only One SAT Service--Would Howard Have Gotten 5000 Million?--Now That's The spirit Of Competition--The Dual Providers--Are Expected To Provide To The Market--The Free enterprise System Requires Competition--Remember this--These Two opposing Companies--Are Still The Only Way To Reach Virtually every Car--Or Radio--That Wishes To Receive Them--Can We Concentrate That Power--Into One Ownership--Or Maybe We Should Sell One Company To the Republicans--and The other To The Democrats
EMIL J KOVACH JR

EMIL GOOD POST INTERSTING.....JUST HOPE THE DEOMOCATS GET THE BEST ONE.....

Michael,
That is mostly correct, but not 100% true.
Otherwise, LBOs would never occur.

The value of SIRI (and any stock) is based on future cash flows, and its expected future value would grow based on less competition in the sat radio market, which would allow the combined company to compete more effectively in the RADIO market, or audio-entertainment market more broadly.

Shareholders would approve this, as would the FCC.

If they don't merge, both companies alone are effectively financially worthless, and will be out of business in less than 5 years.

Has anyone considered the fact that these two companies have radically different software architectures and chip sets? It's not just the satellites. How would these technology bases be merged? If one was used and the other cast aside, how would the company which used the latter support its existing customer base?

that's a technology question that can be answered with money. it's pretty immaterial as to whether or not they would merge.

as an example, AT&T Wireless and Cingular Wireless merged, and their network technology, though similar, was not the same from a business standpoint where efficiencies could be immediately gained the date of the merger.

You can thank Panero (XM) for his decision to give exclusive content (Opie and Anthony) to terrestrial radio as one of the main reasons for a softer retail market. CBS and affiliates were reeling with no talent. Why on Earth would you help them out? Panero thought this move would favor XM, but it has backfired. Sirius continues strong sub growth thanks to superior content and low churn. XM on the otherhand is now experiencing stagnant growth and high churn due to less desirable non-exclusive content. I think if Panero were to step down, we could see a nice little gain in both equities. I don't believe a merger could occur with him at the helm of XM. He must go first. If a merger does not occur, Sirius will emerge as the clear winner. XM is the stock with the big merger risk premium. XM's overall sub advantage is shrinking quarter by quarter. They could surrender this advantage in 12 to 18 months. Those that cite XM's OEM advantage are being misled. If you do your research you will find that it is Sirius that has the OEM advantage albeit a very slight one. Most investors do not know that Sirius actually added more OEM subs than XM in the last reported quarter. We also must not overlook the radio/tuners for the home and the potential of portables. This is an area where Sirius is dominant. One final note to the gentlemen above. Satellite radio is a proven and desirable technology. It will be around for a very, very long time.

Beanspants

To the average investor the term "future cash flows" is meaningless, unless of course you are handing in a financial paper to your grad school professor. I do think that want you want to convey is that the value of any stock is the perceived future value (Profit or loss) of the company. Because "future cash flows" are revenue flowing into the company, and expenses flowing out of the company. The result is, profit or loss.

I own, neither stock or the service but if you own XM who will be hurt if Sirus merges.
If u own Sirius then it could be a dream come true cause at $100 per yr plus bonus for Howard and tons of other hugh expense including advertising in contrast to the massive amount of shares. They will also likely will lose 20-30% of customers who do not re-up in the 2nd or 3rd year.

They will never show any substantial profit like say CBS broadcasting or a technology company like say Apple !

Plus XM simple has better Personalities then Sirius. Not even close !


Both these companies however r using a technology that is NOT cutting edge but inferior to a strong FM radio signal and quality playback unit.
When/if HDFM becomes more prevalent then is really will be blown out of the water. Sat. has a poor echo like sound, no real mid range (for music) and that each time u go under an overpass you lose signal for 1-2 sec.
Not to mention a very cloudy sky. Just real cutting edge !

For all of the mariners who work in the Gulf of Mexico, we love satellite radio. We are too far offshore to pick up terrestrial FM radio stations. And with Sirius able to broadcast the NFL, NBA, NHL, and now NASCAR, there are a lot more people switching from XM to Sirius because the content is better and there aren't as many commercials either.

i'm not sure what the purpose of that comment was, Michael.
Ibanks and institutional investors understand what "future cash flows" means, and they are the ones who will be deciding the acceptable merger cost, and therefore, what the merger premium will be.

HINT: Future cash flows has alot more to it than simply 1 year profit or loss. So, no, i don't want to convey each company's current profit or loss. i would have said profit or loss if i had. i'm not obfuscating or trying to hide anything.

Anyways, the "average investor," as you put it will either take it, or burn their shares in protest, to put it nicely.

I ASSUME THIS IS A FREE SERVICE .

I WAS READING THE LENGTHY TERMS OF AGREEMENT OR TERMS OF USE AND IT'S GIVING ME A DARN MIGRAINE,JUST TELL ME IN PLAIN LANGUAGE WHAT IT WILL COST ME.

ALSO WHAT BUTTON OR WHATEVER I HAVE TO CLICK ON,THANK YOU VERY MUCH !!!

Roland
I have no idea what system you have or what planet you're from.
I have XM. I have never lost any signal going under an overpass.
Living in South Fla, where it is overcast quite a bit. I have never lost my signal.
As far as music commercial stations on XM. There are a total of three (3). As far as commercials on sports and weather and the like. There are as many on Sirius.
Roland, I want you to show me and the world how Sirius is gaining customers.
XM is still the King.
It would seem to me, you, Roland, are a salesman or a paid spokesperson for Sirius.
I, and others who have had both XM and sirius will stay with the leader, "XM."
Go sell that to your bosses.

EVERYONE--Seems To think That The Fact That This Is A Legally Separated Licence--Duopoly--And Can Be Combined Into One--Is No Problem--And The Opposing Software Issues Are Easily Overcome --Not So Fast--IF The FCC--Would Allow This--EVERY RADIO AND TV STATION--Would Cry Foul--And Rupert Murdock--Could Own Everything--Since Ownership Constraints--in The Same Market--Would Soon Be Gone.
What's Good For The Goose--Is Good For The Gander--Is The Law Of The Land--In Washington--
The Legal Issues Allowing The Combining These Two---into One Ownership--Is Just Too Far Reaching.
EMIL J KOVACH JR

BY THE WAY--As Sumner Once Said To Mel "What Happens If Howard Gets Hit By A Bus?"
Something For Sirius--To Think About.
EMIL J KOVACH JR

IN A PERFECT SATELITE WORLD--Once Again Rememember--ONLY SAT can Reach Vitually Every Car And Radio And Personal Media Device--In The USA.
The Two Sats Would Be Owned By A Management Co--And Leasees Of Each Channel Would Pay A Fee To A Neutral Sat Owner--Of Both Sat Frequencies-- That Way Howard And Anybody Else--Could Be On Both--And Ownership Constraints Could Apply To How Many Any One Person Or Company--Could Lease--I Still Cannot Figure Out Why XM Needs 800 Plus Employees To Run That Place--
Food For Thought.
EMIL J KOVACH JR

A stock's value is based on the present value of its projected revenue in perpetuity.

It is basically a right to receive a revenue stream each and every year for ever and ever.