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When it rains, it pours at XM

XM Satellite Radio is facing a bunch of problems recently. Earlier this year, XM's director Pierce Roberts Jr. announced his resignation to the company. Roberts said that there was increased tension between him and other executive board members and also warned that XM would be facing a critical situation down the road if costs weren't managed well. Later down the road, XM was taken to court by the RIAA. The company was brought to court because the RIAA claimed that users of XM's service are able to download tunes into portable XM players. XM defended itself by saying that its portable XM players do not allow users to transfer off music to other devices.

Unfortunately, the problems haven't ended for XM. This week, the company announced that its acquisition plans for WCS Wireless LLC have fallen through. Last year, the deal between XM and WCS was being put together so that XM could acquire WCS and obtain its technology as well as its frequency spectrum. Unfortunately, that deal took longer than expected and time has not been good to XM. The company's stock prices have dropped significantly since last year and unfortunately, this has negatively affected the acquisition. XM was to purchase WCS for 5.5 million shares of XM stock, which at the time was valued at roughly $200M USD. Now, the same amount of shares are worth less than half the original amount. From the official announcement:

At the time of the acquisition agreement between XM and WCS Wireless, announced July 13, 2005, the parties had expected to close their transaction by this time, with the timing dependent on receipt of necessary government approvals. Despite both parties' efforts to obtain that approval, it has not been forthcoming to date. Accordingly, XM and WCS Wireless have agreed to terminate the acquisition agreement in order to free WCS Wireless to pursue other alternatives for its spectrum licenses.

XM said that it originally wanted to acquire WCS to expand its network offerings. Audio, video and other content was in the works. XM has also been competing heavily against Sirius, which also offers competitive satellite radio services. WCS says that it hopes to find other companies to sell its technology to.


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RE: Notice?
By eXprOg on 5/26/2006 2:36:24 PM , Rating: 2
Yeah HD radio is free and is CD quality, but you don't have the dozens of genres to choose from. Not to metion free speech. I personally subscribe to Sirius and can not imagine going back to terrestrial (standard or HD).


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