Sirius XM: Not Just Satellite Anymore

Detractors of Sirius XM are fond of pointing out that its biggest weakness is being satellite based, as opposed to competing music providers that are web based.

Clearly, Sirius XM has figured out that they need to play ball in that court.

TWICE: Sirius XM iPhone App Due In Q2

Sirius XM plans to offer an iPhone/iPod Touch application in the second quarter and outlined today a number of other plans to grow its business now that the headwinds of the merger and refinancing are behind it.
The upcoming iPhone application would stream Sirius XM to iPhones and iPod Touch devices and is now in “rigorous testing,” said chief financial officer David Fear during a conference call with analysts. He added, “This will permit an estimated 7 million iPhone users and iPod Touch users to access Sirius XM content if they are paid subscribers.” And if they become a new subscriber, they won’t have to purchase a new radio, he explained.

Good idea, but is it too little, too late? I guess that we'll find out.

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Sirius XM Not Out Of The Woods Yet

Good news, but not great news for Sirius XM.

Clusterstock: Sirius XM Growth Hits The Wall (SIRI)

Sirius lost $248.5 million on $644 million of Q4 sales, better than the $405 million (pro-forma) loss on $558 million of sales during Q4 '07. The Street had expected Sirius to report $616 million in Q4 sales, so it beat by about $28 million, or about 4%.

CE Pro: Sirius XM Sales Up, But Subscriber Growth Slows

Sirius XM beat expectations for its Q4 sales but still lost nearly $250 million, according to the Associated Press.The satellite radio service's sales on a pro forma basis hit $644 million, up from $577 million last year. "In the fourth quarter 2008, the company's first full quarter of combined operations, SIRIUS XM made remarkable financial progress," says Mel Karmazin, CEO of Sirius in a press release.

Despite still being sorely wounded financially, Sirius XM still has some fight left in it. If you want to use hate mail as a metric of success, whenever I've posted about Sirius XM, I get deluged by comments from transparently pro-terrestrial radio astroturfers. If Sirius XM wasn't threatening to them, the bashers wouldn't work so hard.

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XM/Sirius Merger Still Lurching Along: Does It Even Matter Anymore?

As the proposed merger between Sirius and XM grinds its way through the wheels of government, one has to wonder if it's really worth it. 24/7 Wall St.'s permabear Douglas McIntyre thinks not.

Tearing The Guts Out Of The Sirius (SIRI) Merger With XM Satellite (XMSR)

Over the year-and-a-half that the merger has been pending, the two companies have gone from being in bad financial share to being in a dire set of circumstance. Each company has well in excess of $1 billion in debt. Neither has ever made a dime and their losses last quarter were not encouraging.
Satellite radio has lost much of its appeal for consumers. The slowing subscription growth rates at the two companies show that. HD radio and the Apple (AAPL) iPod, which can be plugged into a car sound system, have taken away much of the uniqueness of getting music, Howard Stern, and Oprah off the big bird in the sky
The merger may go through. It may be killed. Either way, satellite radio has a dim and perilous future.

I'm in favor of seeing the putative merger die, if only because a united XM/Sirius would pose a humongous hassle for AV hardware manufacturers.

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XM and Sirius shareholders give their blessings to the union

And now, a story so monumental, that TWICE felt compelled to run two different headlines!

TWICE: Sirius Shareholders Approve Merger

Sirius Satellite Radio today announced its stockholders approved the pending merger with XM Satellite Radio with more than 96 percent of the shares voting in favor of the transaction. The vote was held at a special shareholders meeting today.

TWICE: XM Shareholders OK Merger

XM Satellite Radio shareholders joined their cousins at Sirius Satellite Radio today by giving their approval of the proposed merger of the two companies.
The stockholders voted overwhelmingly in favor of the move, with in excess of 99 percent voting to OK the merger during a special shareholder meeting held this afternoon. Sirius shareholders voted earlier today, with 96 percent giving their approval.

Notwithstanding the spam comments I will get in my inbox from paid astroturfers in the employ of the National Association of Broadcasters, this is a banner day for Satellite Radio.

On the other hand, this merger is going to be a wee hassle for consumers, owing to the need to transition to new hardware, not to mention a hassle for hardware manufacturers.

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Is the XM & Sirius deal really going to go through?

Or is it all just rumor and turmoil?

TWICE: Analyst Says DoJ May O.K.Sirius/XM Merger

Cowen and Company analyst Tom Watts reports today that Thomas Barnett, assistant attorney general for the Department of Justice, (DoJ) will approve the Sirius/XM merger sent Sirius and XM stocks up four percent.
Watts also concluded in a report to investors that the DoJ might discuss the Sirius/XM merger as early as next week.
Watts said Barnett’s approval “would come despite a [DoJ] staff recommendation against the deal” and added that the pattern of the Antitrust Chief acting against his staff’s recommendations occurred, as well, in 2006 in the DoJ’s approval of Whirlpool’s acquisition of Maytag.

It will be nice when this deal is either done and put to bed, or dead and buried. Either way it's all good.

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XM/Sirius Merger Getting Down To The Wire

TWICE: XM, Sirius Merger Vote Set

Washington — XM Radio and Sirius Satellite Radio will hold shareholder meetings on Nov. 13 to vote on the proposed Sirius-XM merger.
An XM spokesman said, “The shareholder meeting represents another step forward in the merger process.”Sirius and XM claim they still expect the merger, which must be approved by the Federal Communications Commission (FCC) and the Dept. of Justice (DOJ), to be approved by the fourth quarter.The FCC is charged with determining if the merger would be in the public interest and the DOJ determines if the merger would be anticompetitive.

Whether you think that this is a great idea or not, it looks like it's gonna happen.

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Sirius XM Radio sidle ever so closer to making a deal, Financial Times goes for broke on headline

FT.com: XM/SIRIUS regulatory approvals said to be in final phase; lawyers skeptical about positive implications from Whole Foods/Wild Oats approval

The two main regulatory approvals needed to clear the XM Satellite Radio Holdings and SIRIUS Satellite Radio merger are believed to be in their final phase, it is understood. It is also understood, however, that the process could still take several months.
Meanwhile, lawyers interviewed for this article are skeptical as to whether the recent green light given to Whole Foods and Wild Oats by anti-trust regulators has any positive implications for this transaction.
The Federal Communications Commission, or FCC, must approve the transfer to SIRIUS of control of XM and the subsidiaries of XM holding FCC licenses and authorizations, as well as the deemed transfer of FCC licenses and authorizations held by SIRIUS and its subsidiary to the combined company. In addition, XM and SIRIUS each filed notification and report forms with the Department of Justice (DoJ) in March.

FT writers Nadia Damouni and Bhavna Kaul appear to have been getting paid by the word, but the short form is this: the Sirius/XM merger seems to be in a patch of smooth sailing towards becoming a realized deal, but there's still more work ahead. Also, Whole Foods hasn't gotten enough good press out of their successful outmaneuvering of the FTC with regard to buying competitor Wild Oats.

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FCC chairman on-side with satellite radio's proposals

The proposed XM/Sirius merger is far from a done deal, but does seem to be edging closer to recieving FCC approval.

TWICE: FCC Chairman Pleased With Proposed Satellite Radio Pricing Plans

Federal Communications Commission (FCC) chairman Kevin Martin told reporters today he was pleased with the XM and Sirius decision to let customers choose which channels they wish to receive if the two satellite companies are allowed to merge, according to an AP report.
The comments were made at a monthly FCC press meeting where Martin reportedly said he was “pleased any time companies come forward with proposals that would give consumers more control over what they pay for.”
Martin would not say when the FCC might decide on the merger.

I read the National Association of Broadcasters' rebuttal to this proposition so you wouldn't have to. I can summarize their position thusly:

"Waaaaah!"

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XM/Sirius considering a la carte channel bundles

The three-ring circus struggle to achieve regulatory approval of a combined XM/Sirius satellite radio entity entered a new phase this week, with the satellite radio companies offering to mix up their programming to placate the FCC.

TWICE: A La Carte Packages Could Help Sirius-XM Merger
XM and Sirius said they hope the a la carte options starting at $6.99 per month, almost half the price of a current subscription, will demonstrate a merger would be in the public interest and help the merger win federal approval.

Of course, none of this has phased the opposition of the National Association of Broadcasters, who would sell their own grandmothers if they thought that it would scuttle the proposed XM/Sirius merger.

The National Association of Broadcasters issued a statement in response to the a la carte announcement, claiming, “Policymakers should not be hoodwinked by today’s announcement, since nothing is stopping either XM or Sirius from individually offering consumers a more affordable choice in limited program packages.”

Whatever you do, don't ask them what kind of choices they offer listeners...

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Congress doesn't support an XM/Sirius merger

This deal is like teeter-totter: it's looking good, it's not looking good, it's looking good, it's not looking good. Gosh, this is all so dramatic.

TWICE: Congress Voices Opposition To Sirius/XM Merger

Washington - Seventy-two members of Congress expressed opposition to the merger of Sirius and XM in a letter to the Justice Department, the Federal Communications Commission (FCC) and the Federal Trade Commission (FTC).
The six paragraph letter stated the merger of Sirius and XM would create a monopoly that would harm consumers and in it they claimed there is “scant evidence” that a merger would produce any cost savings to subscribers.
XM, Sirius and even Wall Street analysts have asserted the merger would create a savings of $3 billion to $7 billion for the companies. Sirius CEO Mel Karmazin, in testimony before Congress, has said the savings would be passed on to consumers in the form of lower prices and increased programming.

The lesson here is not that analysts scoff at Mel Karmazin's convenient fiction that a combined entity would cost consumers less, it's that both companies need to seriously increase their political campaign contributions if they want Congress to smile on the proposed deal.

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Satellite radio monopoly no threat to anyone, study finds

TWICE: XM, Sirius Merger Will Benefit Listeners: Study

Washington — Thomas Hazlett, the former Chief Economist of the Federal Communications Commission (FCC) released a study commissioned by XM and Sirius that found a merger would benefit consumers.
The study was submitted today to the FCC, said XM and Sirius.
The study noted that the $3 billion to $7 billion that investment analysts predict will be saved by a merger, “will permit more aggressive investment in satellite systems and products and prompt competitive responses from terrestrial broadcasters and other rivals.”
The study claimed “By any measure, satellite radio is dwarfed by terrestrial radio,” noting that terrestrial radio had revenues of over $21 billion in sales in 2006 compared to $1.6 billion for satellite radio.” In market value, terrestrial radio weighs in at $82 billion compared to $9 billion for XM and Sirius combined.
The merger would also result in a wider array of popular programming to subscribers and in lower prices for the service and receivers, the study said.

One more time: we live in an era where consumers have a jillion sources of entertainment, information, and noise vying for their attention. Really, how can a unified satellite radio company be any more of a threat to another media company's livelihood than any other competitors?

It can be pretty silly to cry "Anti-trust" sometimes.

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Citizenry lobby FCC on behalf of XM/Sirius merger

Apparently the proposed merger of XM Radio and Sirius has grass roots support.

TWICE: Sirius Merger Gets Support

Washington — XM and Sirius said that many organizations have filed comments with the Federal Communications Commission (FCC) in favor of an XM and Sirius merger.
The organizations supporting the merger include the League of Rural Voters, the National Consumers League, the National Black Chamber of Commerce, the Hispanic Federation, The Latino Coalition, the League of United Latin American Citizens (LULAC), the New York State Federation of Hispanic Chambers of Commerce and Women Involved in Farm Economics (WIFE)XM and Sirius said that the organizations voiced support for satellite radio’s program diversity and the merger’s potential to strengthen or expand programs supporting diversity.

Who are all these guys?

Are these the lobby group equivalent of the Quote Whores of the Movie Critic business? Just like some critics will call any movie "...the MUST SEE film of the Year..." just to get their name in print, are there some special interest groups who will get behind any cause just to get some press?

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Karmazin not keen on chances of Sirius XM Radio merger

In the words of George Carlin, "It's always darkest before going completely black!" The CEO of Sirius Satellite Radio is starting to doubt the likelihood of Sirius and XM getting together.

TWICE: Sirius Calls Merger ‘Uphill Battle’
New York — Sirius Satellite Radio CEO Mel Karmazin told shareholders this morning that the Sirius/XM Satellite Radio merger is an “uphill battle.”
While stating that he continues to believe the merger merits approval by government regulators, Karmazin admitted that Wall Street estimates there is an “80 percent likelihood that the merger is not going to happen.”
This contrasts with a comment earlier this month by XM CEO Hugh Panero stating, “We continue to believe we will ultimately receive the necessary approval to continue with the merger.”

Given the amount of pressure from the terrestrial radio lobby, not to mention the myopic approach the regulators have towards what consititutes a "monopoly" (hint, in this day and age, no one has a monopoly on any one medium), it's not looking good for satellite radio's attempt to bolster themselves by sticking together.

It might be for the best, since as reported earlier, the merger looked like it was going to be a major pain in the ass for manufacturers of devices with compatible tuners. I'm sure many HiFi companies are breathing a sigh of relief at the prospect of not having to offer awkward upgrades.

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XM Radio sued, again

TWICE: XM Named In Suit
Washington — The National Music Publishers' Association (NMPA) filed a lawsuit against XM Satellite Radio for copyright infringement by the XM+MP3 service on such XM/MP3 players as the Pioneer Inno and Samsung Helix.
The suit accuses XM of operating an illegal download service because the XM+MP3 service lets users record and store songs on a portable player that can be permanently maintained and individually accessed, "without fairly compensating" music publishers and songwriters.

...

XM responded to the suit by claiming, "The lawsuit filed by the NMPA is a negotiating tactic to gain an advantage in our ongoing business discussions. XM pays royalties to writers and composers who are also compensated by our device manufacturers. We are confident that the lawsuit is without merit and that we will prevail."
A similar suit against XM was filed last year by the Recording Industry Association of America.

Yet another fishing expedition by the recording industry. It would be nice if instead of trying to litgate their old business paradigm back into life, they could dust off their thinking caps and figure out how to play well with others, and profit as a result.

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Proposed XM/Sirius merger not looking likely

Reported in Dealbreaker's Opening Bell

F.C.C. Chief Questioning Radio Deal (NYT_After Sirius and XM announced their intent to merge, various analysts tried handicapping the deal. Many put a 55%-60% of it being approved, and some have already lowered their odds to closer to 50%. Another round of downgrades may be in order, as apparently the chief of the FCC is pretty skeptical on whether there will be any benefits to consumers. In particular, Mel Karmazin's recent testimony to Congress has done little to win him over.

I don't feel too heartbroken about a merger not occuring, as it was going to end up being a major pain in the ass for everybody who makes satellite radio equipment. Still, we shall see what we shall see.

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XM and Sirius already taking a nosedive without yet merging!

Bloomberg: Slump may seal satellite radio deal, reported on Dealbreaker's Opening Bell

Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. are expected to forecast slowing subscriber growth when they report earnings this week, a slump that could help build support for their proposed $4.6 billion merger.
Analysts expect XM, the bigger of the two, to predict 21 percent growth in 2007, to 9.27 million users, down from a 29 percent gain last year. Sirius is forecast for a 40 percent increase, to 8.45 million, after 82 percent growth in 2006. XM is scheduled to report results Monday, followed by Sirius Tuesday.
The reports could shore up the case for a deal, as Sirius Chief Executive Mel Karmazin and XM Chairman Gary Parsons seek to convince regulators that their companies have to compete with products such as the iPod, Internet-based music, AM and FM radio and new technology such as HD radio."A slowdown could be seen to demonstrate their lack of pricing power because of alternative ways of getting audio entertainment and information," said Blair Levin, a Washington-based media policy analyst for Stifel Nicolaus & Co.

Another way to look at it is that both companies are such dodos that they both might file Chapter 11 before even making it to the table to begin negotiating the merger. In fact, there are strong economic incentives for both companies to limp across the finish line to a merger before going belly up together. Think of the cost savings of only having to pay for one set of lawyers, one accounting firm, and one bankruptcy trustee!

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Loose talk about the proposed XM/Sirius merger

Earlier this week, I asked sources at various manufacturers for both their official and unofficial views on XM and Sirius getting together.

The official statements were boring, boring, boring! Lots of fence sitting, and wait-and-see-ing. Frankly, you can read those anywhere on the net. Instead, I'll distill and exerpt the best comments from industry insiders who absolutely, positively refused to go on the record.

Anonymous Insider #1:
Don't know yet [what the implications to our hardware are]. The two systems are not compatible. Who knows how long it'll take for the FCC and the CRTC to make up their minds? The XM subscriber base is larger but at the end of the day that might not count for much in the eyes of the regulators.

Anonymous Insider #2:
It appears that eventually subscribers will have to purchase new equipment that can access both systems as XM will carry some of the programming & Sirius will carry the balance. So if a subscriber does not upgrade to a new unit, he/she will lose a lot of programming he/she is paying for & you know there won't be any discounts for partial service.
This merger only affects the U.S. market at this point. The Canadian side will have to jump thru a lot of hoops with the CRTC to get the merger approved & with one of them being a public company & the other totally private, well, it remains to be seen.

Anonymous Insider #3:
We, meaning those companies that build XM Ready receivers, already have a slight compatibility problem. The AudioVox/Terk antennae that are designed to just plug into our units have been discontinued in favour of the XM Passport. The Passport is a small chip about 1 1/4 inches square (looks similar to a SD memory chip) which carries all the XM radio info, including the ESN. Now the customer has to buy an adaptor to fit the chip. The adaptor then plugs into the receiver. The price is not bad, $69.95 CDN for the chip & home kit and it is pretty neat technology, but the old system was only $49.95.
Here's a link to the Passport - https://direct.xmradio.ca/ItemDetail.aspx?ItemID=164
Anyways, jury is out for now in Canada but depending on how it goes, I may cancel my subscription because I paid for XM, not Sirius (I believe XM has better programming) & will not settle for a watered down version.

Anonymous Insider #4
There are significant obstacles in achieving hardware compatibility. I can't help but think that somehow, somewhere, someone is going to get screwed. Whether that someone is the manufacturers of equipment, or the end users, or both, is too soon to say.

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Minor Scoop: what XM is telling their subscribers about the proposed XM/Sirius merger

A friend of mine who subscribes to XM forwarded me this form-letter email that she received, telling her what to expect as a subscriber.

February 20, 2007
Dear XM Radio Subscriber:
We want to share with you some exciting news: Yesterday, in Washington DC, we announced XM Radio will be merging with Sirius Satellite Radio to form the premier digital audio service. The merger will create a satellite radio company that will provide consumers across the country with more and better premium radio programming. The combined company will be able to compete better in what has become a very complex and dynamic entertainment market. Where today our exclusive contracts mean you had to choose between baseball and football or Oprah and Martha Stewart, the new company will seek to ensure that in the future, you will be able to access both companies' programming. And, once we are fully integrated, those of you who have factory-installed satellite radio will no longer be limited to the programming provided by the exclusive satellite radio service chosen by their car manufacturer. This merger should be completed in late 2007 or early in 2008. Throughout the year, we will provide updates on how the merger is progressing and information will be available at our website, www.xmradio.com. Between today and the merger date, as well as during the period immediately after the merger date, all of your services will remain the same. The channel lineup, the customer service number, the great music technology, and the XM Radio web site will all remain unchanged and there will be no disruption to service. But, if you have questions, information will be available and maintained on our website, and you can contact our Listener Care team at 800-XMRADIO, with questions and concerns. XM Radio continues to be committed to providing you the highest quality audio entertainment and customer service available today. After the merger, our new company will be able to offer you the most exciting listening experience in radio.

Sincerely,
Hugh Panero CEO, XM Satellite Radio

Forward Looking Statements This letter contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the benefits of the business combination transaction involving Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., including potential synergies and cost savings and the timing thereof, future financial and operating results, the combined company's plans, objectives, expectations and intentions with respect to future operations, products and services; and other statements identified by words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "will," "should," "may," or words of similar meaning. Such forward-looking statements are based upon the current beliefs and expectations of SIRIUS' and XM's management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond the control of SIRIUS and XM. Actual results may differ materially from the results anticipated in these forward-looking statements. The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statement: general business and economic conditions; the performance of financial markets and interest rates; the ability to obtain governmental approvals of the transaction on a timely basis; the failure of SIRIUS and XM shareholders to approve the transaction; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of SIRIUS and XM may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; and operating costs and business disruption following the merger, including adverse effects on employee retention and on our business relationships with third parties, including manufacturers of radios, retailers, automakers and programming providers. Additional factors that could cause SIRIUS' and XM's results to differ materially from those described in the forward-looking statements can be found in SIRIUS' and XM's Annual Reports on Form 10-K for the year ended December 31, 2005, and Quarterly Reports on Form 10-Q for the quarters ended March 31, 2006, June 30, 2006 and September 30, 2006 which are filed with the Securities and Exchange Commission (the "SEC") and available at the SEC's Internet site www.sec.gov The information set forth herein speaks only as of the date hereof, and Sirius and XM disclaim any intention or obligation to update any forward looking statements as a result of developments occurring after the date of this press release. Important Additional Information Will be Filed with the SEC This communication is being made in respect of the proposed business combination involving SIRIUS and XM. In connection with the proposed transaction, SIRIUS plans to file with the SEC a Registration Statement on Form S-4 containing a Joint Proxy Statement/Prospectus and each of SIRIUS and XM plan to file with the SEC other documents regarding the proposed transaction. The definitive Joint Proxy Statement/Prospectus will be mailed to stockholders of SIRIUS and XM. INVESTORS AND SECURITY HOLDERS OF SIRIUS AND XM ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION. Investors and security holders will be able to obtain free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC by SIRIUS and XM through the web site maintained by the SEC at www.sec.gov. Free copies of the Registration Statement and the Joint Proxy Statement/Prospectus (when available) and other documents filed with the SEC can also be obtained by directing a request to Sirius Satellite Radio Inc., 1221 Avenue of the Americas, New York, NY 10020, Attention: Investor Relations or by directing a request to XM Satellite Radio Holdings Inc., 1500 Eckington Place, NE Washington, DC 20002, Attention: Investor Relations. SIRIUS, XM and their respective directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding SIRIUS' directors and executive officers is available in its Annual Report on Form 10-K for the year ended December 31, 2005, which was filed with the SEC on March 13, 2006, and its proxy statement for its 2006 annual meeting of stockholders, which was filed with the SEC on April 21, 2006, and information regarding XM's directors and executive officers is available in XM's Annual Report on Form 10-K, for the year ended December 31, 2005, which was filed with the SEC on March 3, 2006 and its proxy statement for its 2006 annual meeting of shareholders, which was filed with the SEC on April 25, 2006. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the Joint Proxy Statement/Prospectus and other relevant materials to be filed with the SEC when they become available.

Please note: this is not a promotional e-mail. As an XM subscriber, you will periodically receive service notices via e-mail. These service notices are intended to provide you with helpful information that will facilitate and enhance your XM listening experience. You are receiving this email because you previously indicated that you'd like to receive email updates from XM Satellite Radio. To unsubscribe, please visit unsubscribe.xmradio.com

As you can see, nothing earth shaking is being admitted to, yet.

More on this as it develops.

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XM and Sirius plan to merge

This news item caught me napping, literally. Blessed are statutory holiday long weekends.

TWICE: XM, Sirius Announce Merger Plan

New York — Capping months of rumor and speculation, XM and Sirius announced today they will merge with Sirius CEO Mel Karmazin to become CEO and XM chairman Gary Parsons to become chairman of the new company.
XM CEO Hugh Panero will continue in his current position until the close of the merger, which is expected by the end of the year, said the companies. The all stock merger of equals will create an enterprise valued at approximately $13 billion, which includes a net debt of approximately $1.6 billion.
A merger between the two companies was openly discussed by Parsons and Karmazin when each spoke at a Citigroup conference in early January. Both men stated at that time that a merger would benefit shareholders.
The new company’s board of directors will consist of 12 directors including Karmazin and Parsons and four members designated by each company in additional to one representative from General Motors and one from American Honda.
XM and Sirius said they will continue to operate independently until the transaction is complete. They will decide on a company name and headquarters location prior to closing of the merger.
The merger creates a company of 14 million subscribers and $1.5 billion in revenues based on analyst estimates.
Consumers will have the opportunity to "pick and choose the channels and content they want on a more a la carte basis." The merger will also create improved products such as real-time traffic and rear seat video, they said.
The transaction is subject to regulatory review from agencies including the Federal Communications Commission (FCC) and stockholder approval.
The FCC said in the past it would examine any merger proposals from XM and Sirius. FCC chairman Kevin Martin acknowledged earlier this year that there exists a prohibition on one company owning both satellite radio licenses, although analysts have noted that XM and Sirius could ask the FCC to modify their licenses to permit a merger.
Karmazin said in a prepared statement, "This combination is the next logical step in the evolution of audio entertainment. Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies. The combined company will be positioned to capitalize on Sirius and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses."
A conference call discussing the merger will be held tomorrow morning.

More analysis when I am more fully awake. In the meantime, this answers the question of whether the market needs or can support two satellite radio service providers.

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