XM and Sirius Merger Vote Set
Posted on Oct 08, 2007 - 6:51am by E. Phil Haley in Lifestyle
In a filing with the Securities and Exchange Commission on Thursday, October 4th, Sirius revealed the fact that shareholders for both Sirius and XM Satellite radio will be voting, November 13th, on a proposed merger of the two companies. The merger, if approved by shareholders of both companies, would result in Sirius issuing 4.6 shares of stock for each XM share and XM would become a wholly owned subsidiary of Sirius; current shareholders of each company would be getting a roughly 50/50 share in the combined company. XM shareholders will be voting on whether or not to approve the buyout while Sirius shareholders will be voting on the issuance of stock to use for the purchase.
Even if the deal is approved by both company’s shareholders, though, there’s still one huge hurdle to clear before a merger can occur; FCC approval. So…what does all this mean for people like you and me; the subscribers?
The two primary issues to be decided by the FCC are, first, whether or not a successful merger constitutes a monopoly and, second, whether consumers are better served by two competing satellite radio companies or one merged company.
Who Stands to Lose?
Well, let’s take a look at whether or not the merger does, indeed, constitute a monopoly. At first glance, it might seem so; and this is the position that’s currently taken by the National Association of Broadcasters. The NAB, representing AM and FM broadcasters, has adopted the position that Sirius and XM are the only two satellite radio broadcasters and, as such, their merger would constitute a monopoly. They’ve even gone so far as to hang a banner on their building stating “XM + Sirius = Monopoly.”
But a having a monopoly means that you have no competitors and that simply isn’t the case. XM and Sirius, whether operating separately or as a merged entity, face plenty of competition; beginning with the terrestrial broadcasters and extending to Internet radio, iPods, and other MP3 players. In fact, according to an Arbitron report from the Fall of 2006, Satellite Radio accounts for only 3.4% of all radio listening and, about the same time that report was making the rounds, NAB president David Rehr confirmed the competitive state of radio in a speech to the National Press Club when he said: “Who are our newer competitors? On the radio side, we have satellite radio, Internet radio, iPods, other MP3 players, cell phones, and others.”
More recently, in comments filed with the FCC on January 16, 2007, the NAB stated “…there can be no reasonable doubt that the current media marketplace is robustly competitive, and indeed exploding at the seams with consumer choices for both delivery mechanisms and content.”
There is also no doubt in my mind that the NAB sees two things: 1) Satellite radio is a competitor and, 2) Since XM and Sirius have combined losses nearing $2 billion, due, at least in part, to a massive duplication of effort, that a failure to merge their resources will result in the demise of both companies; eliminating extra-terrestrial competition.
Who Stands to Gain?
In my opinion – everyone; media providers, shareholders, and, most especially, the subscribers to satellite radio. Current intentions, assuming the merger is approved by both regulators and shareholders, are to provide several service packages including ala-cart programming that will allow us some freedom, within limits, to pick and choose the channels we want. Additionally, this combined “best-of” programming will be available at a cost lower than two separate subscriptions.
Of course, there are other benefits. According to both XMmerger.com and SIRIUSmerger.com they guarantee that “no radio will become obsolete. Your current radio will continue to provide you with the programming you enjoy, whether you keep your current service or change to a new subscription plan.” Oh, and one other thing, like I said a couple of paragraphs earlier I don’t really see a long and prosperous life for either XM or Sirius without a successful merger. That’ll turn your satellite radio into a piece of equipment about as useful as a Betamax videocassette player and, without that extra-terrestrial competition we’ll all be stuck with terrestrial radio that has a little less of a reason to cater to its audience.
RSS feed for comments on this post | Trackback URI
We're on Twitter!
Wish they would hurry up and finish it. I’ve had both for a couple of years. I kept XM for a few shows, but had to get Sirius for the NFL. For some reason I prefer some of the music channels over XM.
Yes, hurry it up. I lost Nascar on XM (but still kept Claire B. Lang thank God!). I’m not real wild about buying a Sirius radio and subscription, too.
Yep, I think “hurry up and get it done” is the most common response to merger question and, most often, its from folks who have either subscribed to both or could see themselves doing so. The merger, at least in the way its set to be implemented, would seem to solve all kinds of issues for current and future subscribers. I don’t see any problem with getting “yes” votes from the shareholders, especially since the two companies don’t seem to be viable in the long run as separate entities, but there’s no guarantee that the FCC will approve the deal. Everybody who desires a completed merger should make their views known by contacting the FCC. If you visit XMmerger.com or SIRIUSmerger.com they offer a simple method of doing so at the top of the index page.
I have a Sirius sitting in my living room that I don’t use and am still paying for. It was the cheap one that looks like a Bird Dog. The F.M. transmitter in it is worthless so you have to use the modulator with it. I really don’t care if they merge or not anymore as I am off the road now, but at one time I did have both systems. I had XM for Opie and Anthony, and I had the Sirius for Nascar. I did find that the music channels were much better on the sirius radio than on xm. Right now I am a backup dump truck driver, and when I get my own truck, which may happen soon, I would like to get another satelite radio. With that in mind it would be nice to have to only buy one system. No merger? I’ll stick to Sirius.
Got the XM unit three years ago because it was the cheaper of the two companies. I’d love to keep my XM stuff but being able to get NFL would be a great plus. “Hurry up and get it DONE!”