Sirius to buy XM

SIRIUS TO BUY XM
[SOURCE: Reuters]
Sirius Satellite Radio agreed to buy larger rival XM Satellite Radio for $4.6 billion in stock on Monday. The transaction, which faces regulatory scrutiny and objections from terrestrial radio companies, gives XM shareholders 4.6 Sirius shares for each XM share held. The deal has Sirius paying about $4.6 billion in stock for XM, or a 21.7 percent premium to XM's closing share price of $13.98 on Friday. Veteran media executive Mel Karmazin, currently Sirius CEO, will lead the new company as CEO, while Gary Parsons, now chairman of XM, will hold the same position in the new company. It said Hugh Panero, XM CEO, will continue in his current role until the merger closes. The merger would create a company with about $1.5 billion in 2006 revenue and an enterprise value of $13 billion, including $1.6 billion in net debt. The deal will face tough regulatory scrutiny. The satellite radio licenses prevent one entity from owning them, however Federal Communications Commission Chairman Kevin Martin said last month that its rules are open to change.
http://www.reuters.com/article/technologyNews/idUSN1942271820070219

* Combining to meet the iPod threat
[SOURCE: Financial Times, AUTHOR: Joshua Chaffin, Paul Taylor and Daniel Pimlott]
Since they launched this decade, XM and Sirius - the United States’ two subscription-based satellite radio services - have spent hundreds of millions of dollars trying to establish their product, but have yet to record a profit. Together, they have lost about $6 billion over the past five years while building a subscription base of roughly 14m, compared with the estimated 200m people who listen to terrestrial radio stations. But both companies argue that the competition today comes not so much from traditional radio stations, but from new forms of digital audio distribution including portable digital music players such as Apple’s ubiquitous iPod and the launch of new HD (digital) radio stations broadcasting near-CD-quality content. So, while the proposed merger of XM and Sirius would create a satellite radio monopoly, executives at the companies say a financially stronger single operator would still face substantial competition ­ something they hope US regulators will take on board when they begin to scrutinize the deal. In addition, both companies are likely to argue that reducing duplication between their channels would free up satellite bandwidth and other resources that could then be used to produce more differentiated programming.
http://www.ft.com/cms/s/61897754-c074-11db-995a-000b5df10621.html
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* XM, Sirius Announce $13B Merger
http://www.broadcastingcable.com/article/CA6417425.html?display=Breaking...
* Satellite Radio's XM and Sirius to Merge (Associated Press)
http://www.tvnewsday.com/articles/2007/02/19/daily.1/
* Merger Would End Satellite Radio’s Rivalry
http://www.nytimes.com/2007/02/20/business/media/20radio.html
* Satellite Radio Firms Plan To Merge
http://www.washingtonpost.com/wp-dyn/content/article/2007/02/19/AR200702...
* Satellite radio competitors agree to merge
http://www.latimes.com/business/printedition/la-fi-satradio20feb20,1,609...

LET XM AND SIRIUS MERGE
[SOURCE: Los Angeles Times, AUTHOR: Editorial Staff]
[Commentary] Within hours of XM and Sirius' announcement of their intention to combine operations, FCC Chairman Kevin J. Martin reacted, saying that XM and Sirius "would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices." The two-pronged test sets a nearly insurmountable bar. It's hard to argue that "more choice" results when the only two suppliers of a product combine, or that the merged entity will be deterred from hiking the fees paid by its subscribers (14 million at last count). In addition, when the FCC issued two licenses for a national satellite radio service in 1997, it said that they could not be owned by a single company. The goal should be to promote choice not in the niche occupied by XM and Sirius but in the general market of audio entertainment. That market is very competitive, particularly among national players.
http://www.latimes.com/news/printedition/asection/la-ed-radio20feb20,1,4...
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* Statement of the National Association of Broadcasters:
"Given the government's history of opposing monopolies in all forms, NAB would be shocked if federal regulators permitted a merger of XM and Sirius. It bears mentioning that regulators summarily rejected a similar monopoly merger of the nation's only two satellite television companies -- DirecTV and DISH Network -- just a few years back. When the FCC authorized satellite radio, it specifically found that the public would be served best by two competitive nationwide systems. Now, with their stock prices at rock bottom and their business model in disarray because of profligate spending practices, they seek a government bail-out to avoid competing in the marketplace. In coming weeks, policymakers will have to weigh whether an industry that makes Howard Stern its poster child should be rewarded with a monopoly platform for offensive programming. We’re hopeful that this anti-consumer proposal will be rejected."
http://www.nab.org/AM/Template.cfm?Section=News_Room&CONTENTID=8256&TEMP...