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FCC says approval is unlikely, but the two satellite radio giants have struck an agreement

Today Sirius and XM announced that both companies have entered an agreement in which the two will merge to form the largest satellite radio service provider in the country. Under the terms of the merger, the single entity formed by Sirius and XM would amount to a total organization value of $13 billion USD. XM shareholders will also receive a fixed exchange ratio of 4.6 Sirius shares for each XM share they own. When the merger is complete, Sirius and XM shareholders will each own 50 percent of the combined company.

According to representatives from both companies, the new combined company will have 12 directors including the current CEOs from both Sirius and XM. Both companies will also continue to operate independently until the merger is complete. As of this writing, a name has not been determined for the new company as is where the new headquarters will be.

DailyTech last reported on rumors surrounding the merger of Sirius and XM. The FCC voiced its opinion early on in the talks between Sirius and XM, indicating that it did not approve of the two companies merging because it would create a satellite radio monopoly. FCC chairman Kevin Martin indicated that an approval of the merger would be unlikely. According to both Sirius and XM however:
The combined company will benefit from a highly experienced management team from both companies with extensive industry knowledge in radio, media, consumer electronics, OEM engineering and technology. Further management appointments will be announced prior to closing. The companies will continue to operate independently until the transaction is completed and will work together to determine the combined company's corporate name and headquarters location prior to closing.
Previous reports on both Sirius and XM indicated that both companies were suffering from losses, especially in 2005 going into 2006. Revenues were dropping and subscribers were leaving from both companies. A merger of the two companies would make sense from a corporate stand point but both companies have to pass grueling anti-trust regulations before the two combine.

Gary Parsons, Chairman of XM Satellite Radio and Hugh Panero, does not seem deterred by the FCC's statements.  "We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers. The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago."


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This was bound to happen
By viperpa on 2/19/2007 7:25:23 PM , Rating: 1
This was bound to happen sooner or later. Both companies wasn't making any money even though they were signing up more customers. The business is a good idea but bad business planning. They would of had to raise rates considerably which means losing customers or one of them would go into bankruptcy. Then you would end up having one player cause no other company would buy them due to the fact they are aren't making money.




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