With last week's BusinessWeek article expecting a verdict on the proposed merger between Sirius Satellite (NASDAQ: SIRI) and XM Satellite (NASDAQ: XMSR) soon, I feel that it's imperative that the regulators let the deal happen. Without a deal, both companies will continue to incur heavy losses, and the future of satellite radio will be in jeopardy. It's ironic that the antitrust lot are worried about a monopoly, but without a merger, the entire industry could be finished.
With plenty of competition coming from traditional radio, internet radio, and Apple (NASDAQ: AAPL)'s iPods, the government's worry over lack of competition is unfounded. Rather, the money saved by the merger in new customer acquisition will help keep the companies solvent. Doug McIntyre had a nice analysis of the deal a few weeks back, and he feels that with both stocks' recent rise, Wall Street is telling us that 1) they think the merger is going to go through, and 2) it would be mutually beneficial if it does.
If we can get a quick resolution to this, after months and months of foot-dragging by regulators, and the resolution is in favor of the merger, then this will be a defining movement for the satellite radio industry as it moves ahead and becomes a true media force to be reckoned with.
Aaron Katsman is the lead Portfolio Manager and Managing Director of America Israel Investment Associates, LLC. and Senior Editor of IsraelNewsletter.com. Disclosure: Writer has no position in any stock mentioned as of 12/03/07.
Reader Comments (Page 1 of 1)
12-03-2007 @ 7:12PM
Victor said...
Excellent Article... All the stock holders agree by a vast majority vote toooooo....
12-04-2007 @ 5:30AM
aaron.katsman said...
thanks..it makes a lot of sense for the merger to go through
12-04-2007 @ 8:04AM
Stan said...
While I may be in the anti-merger camp.....
Just for giggles, show this article to Doug, stand back and watch his head explode!
12-04-2007 @ 12:45PM
roy said...
A monopoly of these two companies is the worst possible thing in the world, bar anything. They simply cannot be allowed to merge. What if the successor company wanted to charge $13.95 per month instead of $12? Or $1,013.95? There would be no stopping those greedy SOBs if the merger is approve.
I know that I could cancel my service if it got too expensive, but that is not the point. It has to be guaranteed cheap. Only competition can do that. The consumer should not be required to make a decision to buy milk, diapers or satellite radio. Only two satellite companies going head-to-head can keep prices low enough so that I can afford all three!
Who cares that people from both companies will lose their jobs if the separate companies fail? I don't. In my opinion, it is far better to have no satellite radio than to have a single satellite radio company.
And if SIRI and XMSR should fail, surely another company will try to come in to fill the void. But it should be squashed and put asunder until a second company, and perhaps even a third, can be found to compete with it, because otherwise there would be a monopoly.
12-04-2007 @ 11:44PM
dave said...
Not to worry about monopoly...if this does'nt happen, there wont be a chance for anything other than that AWFUL crap on FM.
2-09-2008 @ 2:38PM
spike said...
fm is for losers.crank up the fm roy
12-07-2007 @ 4:03PM
Rachelle said...
I think it would be great if the merge happened because i get alot of calls saying that they loved xm but there are channels from sirous that they like better i think it would bring so many new customers because they would get to choose from both worlds and pay less money for service for what they want to listen to instead of paying more and getting service when they only listen to half the channels i really hope the merge happens it would bring better business and make xm and sirius a bigger family
12-08-2007 @ 1:41PM
will said...
"Only two satellite companies going head-to-head can keep prices low enough so that I can afford all three!"
What planet is this guy from? Didn't he bother to read the new pricing schedules for the merged companies. Funny how he balks about wanting choice, then makes the argument for a decision that would limit his choice to AM and FM.
Must work for the NAB or something
12-10-2007 @ 6:05PM
JoeyJoeJoe said...
I wonder why no one has brought up the addition of HD Radio? I've been hearing advertisements lately all over the place for the "crystal clear" quality of HD Radio. There are apparently minute details between regular radio waves that these new HD receivers can pick up. Of course you have to buy a receiver, but then you get to hear everything ever! Let the companies merge so I can finally decide which company to purchase from. Cheers!
12-10-2007 @ 10:10PM
Famine said...
For those of you saying it will be cheaper... Direct quote from xmmerger.com
"And the best of both XM and SIRIUS will be available at a lower cost than the price of subscribing to both services separately."
Wait... Whats that, your service will stay the same unless you pay more?!?! Read this sentence properly folks. Your plan will go up if you want to hear channels from a provider other than the one you currently subscribe to. So your cost either stays the same, or goes up. It ISN'T going to get cheaper.
1-05-2008 @ 5:51PM
Jerry said...
About the HD radio thing. You are still only going to get the crap that the big companies will try to cram down your throat. Do you think you will get a metal station, or a hard core rap station like on sat radio? Also, it is expensive for the radio comapnies to buy all of the equipment needed to broadcast in HD. I have checked the local stations in Lafayette, LA, and there are only 2 broadcasting in HD. Neither one of which would I ever listen to. Bring on the Merger. I am a Sirius subscriber and my wife is on XM (Her car came with XM). THANK GOD FOR SAT RADIO !!