Sirius Satellite Radio Inc. (Nasdaq:SIRI) and XM Satellite Radio Inc. (Nasdaq:XMSR) are billing their deal as a $13 billion merger of equals. That's not quite the case.
Sirius is buying XM for about $4.57 billion, according to Bloomberg News. XM investors will receive 4.6 shares of Sirius stock for each share they own. The deal values XM shares at $17.02 a share, a 22 percent premium over its latest closing price.
Mel Karmazin, the CEO of Sirius, will run the company. His counterpart at XM Hugh Panero will leave. Karmazin, who attracted high-profile talent like Howard Stern and Martha Stewart, clearly won the battle for satelite radio supremacy. But if he doesn't attract significantly more advertising revenue, he will lose the war.
Until now, advertisers haven't really warmed to satellite radio. In fact, they aren't too keen on the medium period. TNS Media Intelligence estimates that radio advertising spending will rise 1.7 percent this year, which is only slightly better than the 0.9 percent decline for newspapers. Meanwhile Internet display advertising is forecasted to jump 13 percent.
The commercials on Sirius (where I am a subscriber) are awful. They seem like the types of spots that you would hear on an AM station in the middle of the night. I can't speak to XM. In their latest quarters, XM and Sirius got a miniscule $17 million from advertising.
One positive thing from a merger would be the combining of the programming staffs. It seems like much of the music programming on Sirius is pre-taped. I realize that staffing such a huge number of channels is expensive. The bigger staff will hopefully create more programming which will attract more of an audience. The audience will follow.
But perhaps the biggest challenge facing Karmazin will be keeping Howard Stern and Opie and Anthony from killing one another. I can' t wait to tune into Howard's show tomorrow.
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Reader Comments (Page 1 of 1)
2-19-2007 @ 5:06PM
Lee said...
I am a Sirius subscriber because that's all Chrysler offered me when I bought my car. I have experience with both services. Not a Stern or Stewart fan so that doesn't sway me. Why I think the XM service is superior is their satellite technology. XM has geosynchronis orbit satellites while Sirius uses the "tundra" orbit track. I have many more dead air events on Sirius than with XM. I do not understand Sirius ending up the power house when XM has more than double the subscribers.
2-19-2007 @ 5:21PM
Scott Huffman said...
Lee does not know what he is talking about. Who cares how the sattelites rotate in the sky and where? If anything Sirius should have better coverage. They are both great services and anyone who likes one that much better than the other does not know what they are talking about.
2-19-2007 @ 5:41PM
Trais said...
XM has better satellite technology, but with increasing commericals on XM, I have just cancelled my subscription to XM (they even offered to give a full year for $79, or 3 months free just for staying... no thanks)as it will only get worse with Sirus!
2-19-2007 @ 5:40PM
Matthew Duffy said...
Actually Lee is correct. XM's 4-satellite geosynchonsis coverage is much more stable and consistant than Sirius' 3 orbiting satellites (which "dead zones" constantly shift relative to your receiver's positon at any given time). If your receiver stays in one place all the time, I would agree that Sirius' coverage could be considered better. However on-the-go or in-car units have a stronger connection with a static satellite signal, versus Sirius' "dead zones" that appear and disappear based on the changing positions of orbiting satellites.
2-19-2007 @ 6:49PM
Frunkis said...
You can't listen to Howard tomorrow as he's on ANOTHER friggin vacation.
Opie and Anthony will be live on Free FM, looks like they're going to get the first word.
I think things will stay as they are for the 2 shows. XM's Virus is a very entertaining channel as is Howards 100.
2-19-2007 @ 6:52PM
Big Al said...
Stop crying and celebrate the wise decision made by both companies to unite. This power move strengthens Satellite Radio as a legitimate entity among media giants and will only get stronger as the years go by. I have been a listener and stockholder longer than most and have never looked back (over 11000 shares). In due time when the service expands to video and better portable multi-media devices with market specific advertising capabilities the advertisers will have to give Satellite Radio it's due respect. Just Enjoy!!
2-19-2007 @ 7:15PM
Lee is Wrong said...
Lee is wrong.
1. XM only has about 1.5 million more listeners than Sirius, while Sirius was gaining and closing the gap thanks to Howard Stern and many other great moves by Sirius (NASCAR, NFL, etc.). Sirius was on it's way to dethroning XM as king,....it was only a matter of time.
2-19-2007 @ 8:39PM
Steve said...
Anyone have any idea as to what the near term and longer term affect this announcement will have on Sirius shares?
2-19-2007 @ 8:57PM
Radio King said...
I think both channels are horrible. Other than less commercials the programming is not that great. The shows are not that creative. It seems to be a carbon copy of new york fm stations especially Sirius
2-20-2007 @ 7:09AM
Terry Jensen said...
I just renewed my subscription for 5 years, because XM had Nascar. When I renewed it in late Nov. 2006, they never said anything about losing the Nascar racing channel. I called them, and all I got was someone that could hardly speak legibly so I could understand, and said that they were sorry. I think the merger would help my sitsuation, because I might get Nascar back. I hope so.
2-20-2007 @ 7:09AM
Greg Lindahl said...
Sirius makes me delirious. $13.00 a month to hear Howard Stern fart is a bargain. I make 10 times that each month.
2-20-2007 @ 11:27AM
todddist said...
does any one have a guess as to the value of siris?