XM-Sirius to merge?

[Swaggs]

Just heard this on Imus.

They are in "preliminary, but accelerated" talks to merge.

Worth posting and following.

[Ksyrup]

Saw this mentioned this morning. I'm shocked more people haven't thought this was going to happen (or at least an attempt). The biggest issue in my mind is anti-trust.

[Swaggs]

What would happen to all of the "exclusive" contracts (like NFL, MLB, etc.)? Can they renegotiate or are they just absorbed?

[Samdari]

The contracts would likely be absorbed. This is normal, when a company is bought, the contracts go with them - this is often why defense companies are bought, to acquire a certain contract.

I don't know if this will go through or not. The DirecTV/Dish Network merge was scuttled a couple of years ago for antitrust reasons, despite customers from both generally wanting the merge. I do think the combined capacity will benefit customers, although perhaps not for the owners of current equipment.

[Ksyrup]

I hope they merge because I hate having to choose between exclusive contracts. I was going to get one or the other with my BB gift certificates (see BB thread), but since it costs so much and appears to be a big hassle to get it operable in both cars, I've decided to wait until I get a new car in a couple of years. Hopefully by then, this will all be sorted out.

[CamEdwards]

first i've heard about this. I feel so out of the loop.

[Ksyrup]

Sirius, XM in merger talks?Newspaper says the satellite radio providers are eyeing antitrust concerns that could block a deal.
January 26, 2005: 7:44 AM EST


NEW YORK (CNN/Money) - Sirius Satellite Radio and XM Satellite Radio are holding preliminary talks on a possible merger, according to a published report.

The New York Post said the discussions between the two players in the growing satellite radio market are in early stages.

Executives have not yet discussed price, according to the newspaper. But discussions have been held about potential antitrust concerns, the Post reported.

<TABLE style="PADDING-LEFT: 10px" cellSpacing=0 cellPadding=0 width=220 align=right border=0><TBODY><TR><TD>
</TD></TR></TBODY></TABLE>

A deal would create a monopoly in the segment. But the newspaper said that XM (http://money.cnn.com/quote/quote.html?shownav=true&symb=XMSR) (Research (http://cnnfn.multexinvestor.com/Reports.aspx?ticker=XMSR)) and Sirius (http://money.cnn.com/quote/quote.html?shownav=true&symb=SIRI) (Research (http://cnnfn.multexinvestor.com/Reports.aspx?ticker=SIRI)) are hoping a deal would be allowed if the Federal Communications Commission considers satellite radio as part of the broader industry delivering music and other content through mobile devices, such as cell phones.

Sirius has a market capitalization of $7.9 billion, compared to XM's market cap of $6.9 billion, despite the greater revenue. XM had forecast sales of $80 million last year, according to First Call, compared with an estimated $70 million for Sirius. Sirius is set to report results Wednesday.

Both providers have exclusive content to provide their customers. Sirius made news late last year giving controversial radio host Howard Stern a $500 million contract (http://money.cnn.com/2004/10/06/news/newsmakers/stern_sirius/index.htm) to move to its service in 2006. The Post reports that Merrill Lynch analyst Laraine Mancini said one of the chief risks of investing in the companies' shares is a potential price war and "irrational bidding" for content.

The newspaper said that a possible merger got a lift from Sirius (http://money.cnn.com/quote/quote.html?shownav=true&symb=SIRI) (Research (http://cnnfn.multexinvestor.com/Reports.aspx?ticker=SIRI))' decision to hire (http://money.cnn.com/2004/11/18/technology/sirius_karmazin/index.htm) former Viacom (http://money.cnn.com/quote/quote.html?shownav=true&symb=VIA) (Research (http://cnnfn.multexinvestor.com/Reports.aspx?ticker=VIA)) President Mel Karmazin as CEO in November.

"Mel is a roll-up guy, a deal guy," said one source close to Karmazin.

The Post said Sirius would not comment on the report and XM did not return a call seeking comment. http://i.cnn.net/money/images/bug.gif (http://cnnmoney.printthis.clickability.com/pt/cpt?action=cpt&title=Sirius%2C+XM+in+possible+merger+talks+-+Jan.+26%2C+2005&expire=&urlID=13004467&fb=Y&url=http%3A%2F%2Fmoney.cnn.com%2F2005%2F01%2F26%2Ftechnology%2Fsatellite_radio_talks%2F&partne#TOP)

[Logan]

first i've heard about this. I feel so out of the loop.

LOL :)

I agree with others that if this were to go down, it would really help my decision to eventually go towards satellite radio, once I have a real job and a steady income.

[CamEdwards]

hmm. if sirius and xm merged, I wonder if I could do my show from XM headquarters in DC every now and then?

I've heard they've got a free coffee bar and cafeteria for their employees.

[Logan]

^^^^

Clearly the most important part of negotiations :).

[Logan]

Below is the article I'm sure Imus was referring to. And an FYI...Sirius' stock was down 6% in pre-market trading today.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh06448_2005-01-26_13-11-25_n26442492_newsml

[panerd]

I don't care much for XM's choice of music which is my main reason for choosing Sirius. I wonder what happens with a merger, do they still remian seperate options or does one company dictate what is broadcast?

Plus how long until there is no need for commercial free music? I can see it now... 10 minutes in hour is better then FM, plus we have Stern and Opie and Anthony and Cam Edwards!

[Swaggs]

It seems like it would be in the best interest of the (sat-radio) industry. Although, there might be limited spots for stations and radio personalities. No "minor leagues," if you will, but I guess radio talent is interchangeable with traditional FM/AM.

Would there be any possible way that another North American company could get into the market if they merged?

[panerd]

It seems like it would be in the best interest of the (sat-radio) industry. Although, there might be limited spots for stations and radio personalities. No "minor leagues," if you will, but I guess radio talent is interchangeable with traditional FM/AM.

Would there be any possible way that another North American company could get into the market if they merged?

Going against a huge company that would have 5 satelites, MLB & NFL & NCAA rights, Howard Stern, and a recognizable name? Not unless they were going to offer a significantly lower monthly fee. (And if so, count me in. No offense Cam but the talk portion of satelittle radio doesn't interest me one bit. I want music without commericials or morning zoo programs.)

[Anthony]

I DESPISE morning zoo's. UGH!!!! thanks God for XM!

[Anthony]

personally i don't think a fledgling industry should be having exlcusive content. first they need to build the industry up so that it's an easy decision to make the transistion to satellite radio. how many people are holding off on getting satellite radio because they like both MLB and NFL, both Opie and Anthony but can only get one or the other? with a merger they could have all these commodities. later, when the industry has established itself as the next best thing, better than regular radio, then it can start taking pieces of itself and paving the way for smaller satellite stations to exist.

right now there's no way for a 3rd station to even think of competing. there's only two options and each have the pro's and cons.

[JonInMiddleGA]

From radioandrecords.com
Rumors started swirling this morning that the two satcasters were in talks to join forces, but the Sirius CEO said this morning that those rumors are false. "I have no idea where any of this came from," Karmazin said during his company's earnings conference call this morning. "I've been with the company about eight weeks, and this is about the third rumor I've confronted." Karmazin insisted that he hasn't had any meetings with XM Chairman Gary Parsons or XM CEO Hugh Panero about such a deal, and noted that any such deal might have a hard time passing muster with the FCC. "I would never comment on what our government is likely or unlikely to do, but I wouldn't say that it couldn't get through, or that it could." Karmazin said.

[Loren]

come on, IF the post could lie about a dress, im sure they could make up this story.. I read the article on Karmazin saying the merge talks werent true first, so i'll go with that.

[MrIllini]

http://www.kansascity.com/mld/kansascity/business/technology/10739290.htm?1c

[panerd]

http://www.kansascity.com/mld/kansascity/business/technology/10739290.htm?1c

What? Are you trying to get us to register for the KC star? Seriously though the linked is blocked. What was the jist of this story?

[panerd]

Serious question, not political. If Dan Rather loses his job for the national guard report. Shouldn't the NY post get some punishment for messing with the stock prices or both companies if this story ends up being completly bogus?

[Pyser]

if its not bogus, there go quite a few radio jobs...

[panerd]

if its not bogus, there go quite a few radio jobs...

Greg Brady is going to have to find another airwave to suck it up on.

[Pyser]

is he the one on the surreal life right now?

if so, he is really cool. i like that guy now (plus he got the model on the show. nice).

[rkmsuf]

is he the one on the surreal life right now?

if so, he is really cool. i like that guy now (plus he got the model on the show. nice).

More cleavage, less radio talk.

[digamma]

The contracts would likely be absorbed. This is normal, when a company is bought, the contracts go with them - this is often why defense companies are bought, to acquire a certain contract.

I don't know if this will go through or not. The DirecTV/Dish Network merge was scuttled a couple of years ago for antitrust reasons, despite customers from both generally wanting the merge. I do think the combined capacity will benefit customers, although perhaps not for the owners of current equipment.
Yeah, I'm guessing the contracts require prior written consent of any reorganization, merger, sale of all or substantially all assets, name change, etc., with such consent not to be unreasonably withheld.

[MrIllini]

http://www.forbes.com/2005/01/26/0126autofacescan04.html

[Loren]

is he the one on the surreal life right now?

if so, he is really cool. i like that guy now (plus he got the model on the show. nice).

nooo, thats Peter Brady on the Surreal Life...Greg was the older brother, and he has a show?? :confused:

[CamEdwards]

nooo, thats Peter Brady on the Surreal Life...Greg was the older brother, and he has a show?? :confused:

he's one of the dj's on one of the music channels. Not sure which one, but I think it's the 70's channel.

[Ksyrup]

I didn't want to threadjack in the "which is worse, NASCAR or soccer" thread, so I'm pasting a comment from JIMGA about XM and Sirius...


And, while I'm posting anyway:
Starting in 2007, the auto-racing circuit will switch its allegiance from XM to Sirius, ending a partnership that began when XM launched and robbing XM of one of its premier sports partnerships. The deal, which will cost Sirius $107.5 million over five years, was announced today in a joint conference call with Sirius CEO Mel Karmazin and NASCAR President/CEO Brian France.
from www.radioandrecords.com (http://www.radioandrecords.com)

This is interesting. Not that I'm a big NASCAR fan by any means, but between this kind of shift and XM canceling its Liquid Metal program, I'd be inclined to go with Sirius. As it is, I don't even have satellite yet - probably won't get it until I get a new car in a year or two - but I was always leaning more toward XM when I was thinking about getting it. Even with baseball still on XM, now I'm not so sure I'd go with XM.

[Franklinnoble]

Sirius has the NFL, doesn't it?

That would pretty much do it for me.

[Ksyrup]

That was my first thought too, but the more I thought about it, the more I realized that I'd probably not get much use out of the NFL on radio. I'm usually home on Sunday's watching Sunday Ticket as opposed to driving around. On the other hand, I might actually get more practical use out of the baseball package.

[jamesUMD]

The times when the game I want to see is not on in my market I tune Sirius to that game on the radio while I watch the broadcast of the Cardinals vs. the Bengals both at 4-11, or so it seems that's how they decide what game to air on tv.

[Honolulu_Blue]

The times when the game I want to see is not on in my market I tune Sirius to that game on the radio while I watch the broadcast of the Cardinals vs. the Bengals both at 4-11, or so it seems that's how they decide what game to air on tv.
If I didn't have Direct TV this is the route I would take. Living in DC, you're pretty much subjected to the Redskins and Ravens each week. It's painful. I would have the Redskins or Ravens game on TV and listen to the Lions broadcast over Sirius.

Since I have Direct TV, however, I will be purchasing the NFL Sunday Ticket and will be able to watch all of the Lions' games live.

[JonInMiddleGA]

I didn't want to threadjack in the "which is worse, NASCAR or soccer" thread, so I'm pasting a comment from JIMGA about XM and Sirius...
This is interesting. Not that I'm a big NASCAR fan by any means, but between this kind of shift and XM canceling its Liquid Metal program, I'd be inclined to go with Sirius. As it is, I don't even have satellite yet - probably won't get it until I get a new car in a year or two - but I was always leaning more toward XM when I was thinking about getting it. Even with baseball still on XM, now I'm not so sure I'd go with XM.

The thing is, I'm not sure I see whether this is better for Sirius or XM.

Basically, the math works out to 21.5 million dollars a year that Sirius is going to pay for the NASCAR satellite rights, and I just don't see how they makes fiscal sense. Both companies have been bleeding money since day one & continue to bleed. I can see a line of reasoning that says "we'll be fine once as soon as we bankrupt the competition by taking all their programming", but I stil think there's "serious" doubt (get it? Serious/Sirius) whether Sirius will survive their own attempt to run XM out of business. $20m + for NASCAR satellite rights? That's nearly as stupid as the amount of money announced for the Stern deal. A few more "successes" like these & I believe XM might just outlive Sirius in spite of the lost programming.

[henry296]

The 21.5 million equates to about 150,000 subscribers per year in fees. I am not sure how much Sirius gets from each receiver purchased. That would change the math somewhat. I am curious what kind of ratings Nascar gets nationally on radio. Whenver I am in the car you can find the race on some channel so people do listen to the race on the radio.

Todd

[JonInMiddleGA]

NASCAR on Radio (at least on MRN, PRN ratings probably vary with fewer affiliates), pretty much tops out a little under 4.0 for M25-54, I'm not sure what the numbers are in other demographics. Still, that 4.0 = about 2.5 million M25-54 listening in the average race.

The problem is how on earth they can convert 5% of all NASCAR listeners into new subscribers, even though they already have the exact same coverage on over-the-air radio. Finding a NASCAR broadcast affiliate isn't really that tough, there's nearly 700 of them around the country.

I'm just having a tough time making this pricetag make financial sense for Sirius.
I know there are plans for commercial sales on the satellite networks, but given what the rates are for MRN's entire network, I can't imagine spots would generate a significant amount of revenue for Sirius (assuming they eventually sell the inventory that's available for local broadcast stations). The likely numbers wouldn't really support a rate of more than $1,000/spot, and even that would be pushing it.

We're so focused on the Cup races themselves, I think you also have to look at the rest of NASCAR on radio (talk shows, update shows, etc.). Those shows only pull about a 0.1 rtg nationally with the same M25-54, so we're talking about a relatively small audience & one that is almost certainly duplicated during the races themselves.

Like I said, I just can't see the math working on this one.

[JonInMiddleGA]

Talk about timely
from www.radioandrecords.com
According to a study conducted by Bridge Ratings, one in five Howard Stern listeners are prepared to follow him to Sirius Satellite radio when he joins the satcaster in January 2006. However, many Stern fans remain undecided as to whether they'll subscribe to Sirius come next year. When Bridge did not bring up the cost of Sirius' service, 22% of Stern fans said they would sign up with Sirius to stay with Stern. However, 41% of the respondents were undecided. When the costs of buying hardware and paying a monthly fee for Sirius were fully explained, the number of those saying they'd definitely sign up dropped to just 7%. But 49% said they were undecided, while 44% said they would not pay for the satellite radio service. Close to 40% also said they were aware of what costs are involved in joining Sirius. Bridge's survey of almost 1,900 people was conducted in Los Angeles, San Diego, Phoenix, Boston and Detroit over a three-month period ending Jan. 31.

[Crapshoot]

The thing is, I'm not sure I see whether this is better for Sirius or XM.

Basically, the math works out to 21.5 million dollars a year that Sirius is going to pay for the NASCAR satellite rights, and I just don't see how they makes fiscal sense. Both companies have been bleeding money since day one & continue to bleed. I can see a line of reasoning that says "we'll be fine once as soon as we bankrupt the competition by taking all their programming", but I stil think there's "serious" doubt (get it? Serious/Sirius) whether Sirius will survive their own attempt to run XM out of business. $20m + for NASCAR satellite rights? That's nearly as stupid as the amount of money announced for the Stern deal. A few more "successes" like these & I believe XM might just outlive Sirius in spite of the lost programming.

See, I think you hit the nail on the head there. If you're familiar with the 3g Auctions as they happened in Europe - company and company bid itself silly because it thought the market would severly punish it for being out of touch with the "growth" segment - to the point where no one could pay the fees associated with it. This is a case where Wall Street has inflated the shares of these companies to ridiculous levels, and its on the old "revenue first, profit later" model that worked oh so well for the dot coms. Sirius, in the position of the minority, had to make the expensive offers - to justify the valuation of the company.