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Weird-Mart: Tales of the Bizarre from the Walmart AislesWell the long anticipated merger looks like it's finally going to happen. Today XM Satellite Radio Holdings, Inc. (NASDAQ XMSR) and Sirius Satellite Radio, Inc. (NASDAQ: SIRI) announced that they're combining and Mel Karmazin, SIRI's CEO will end up as CEO of the new firm.
Both satellite radio companies have been losing money as they tried to gain new customers. Now, they estimate that combined they will be able to save $7 billion annually in marketing and other costs. If you just add the two companies together you have $1.4 billion in revenue and $1.9 billion in losses so those costs savings better happen.
The new home of Howard Stern, Frank Sinatra, NASCAR, Oprah Winfrey, Bob Dylan and Major League Baseball will have 12 million subscribers.
Since SIRI's market capitalization of $5.2 billion is $1.45 billion bigger than XMSR's $3.75 billion, it makes sense for Mel to come out on top. But it will take about 15 months for the deal to get approved.
Now let's hope that the new combined company can make money.
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm, He also teaches management at Babson College and edits The Cohan Letter. He has no financial interest in SIRI or XMSR.
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Reader Comments (Page 2 of 2)
2-25-2007 @ 6:03AM
David G said...
I have been trading with siri for the past six months or so. |have made a few thousand short selling by buying and selling with 10000 shares. This sotck is owned by short sellers. It is worth nothing to the, but the trends that they think that they can manipulate. Siri stock value will continue to go down slowly having brief pump ups that the short sellers will cash in on. If this merger goes through this "mega" conpany will be a lot more stable and I predict that you could see it staying at a constant eight to nine dollars with respect to siri value. Within the next few years. Until the merger happens the shares may increase they may decrease they probibly wont go below three but they will be played with by the short sellers. I would give anyone with the shares a hold and anyone planning on buying the go ahead in about a year.
2-28-2007 @ 8:10PM
mark said...
well first off howard stern is not a slob he is a great personality second the siri stock will probably double in the time frame of this merger satalite is the only way to go every truck driver will have it in the next year and do you know how many truckers are out there??? also the guys with the broken radios sirius doesn't own the radios it is the manf. liike pioneer sony etc that needs to warranty them!!!!!! not sirius!!!!!!! some people are jusr retarded i guess plus you don't get billed per month idiots you pay for it in advance for 6 mo 1 yr 2 yr lifetime etc!!!!!
howard stern owns alot of siri shares and i don't think he is letting go of any he is already rich but will be extremely rich when this merger goes through
and as for the buy sell hold questions now is the timed to buy if you want to make some sirius money in the soon to be here future!!!!!!!!