SIRIUS and XM to combine in $13 billion merger

The press release verbatim:

XM Satellite Radio and SIRIUS Satellite Radio today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company.

Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. The new company’s board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger.

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.

The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts’ consensus estimates. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies, including:

• Greater Programming and Content Choices — The combined company is committed to consumer choice, including offering consumers the ability to pick and choose the channels and content they want on a more a la carte basis. The combined company will also provide consumers with a broader selection of content, including a wide range of commercial-free music channels, exclusive and non-exclusive sports coverage, news, talk, and entertainment programming. Together, XM and SIRIUS will be able to improve on products such as real-time traffic and rear-seat video and introduce new ones such as advanced data services including enhanced traffic, weather and infotainment offerings.

• Accelerated Technological Innovation — The merger will enable the combined company to develop and introduce a wider range of lower cost, easy-to-use, and multi-functional devices through efficiencies in chip set and radio design and procurement. Such innovation is essential to remaining competitive in the consumer electronics-driven world of audio entertainment.

• Benefits to OEM and Retail Partners — The combined company will offer automakers and retailers the opportunity to provide a broader content offering to their customers. Consumer electronics retailers, including Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit from enhanced product offerings that should allow satellite radio to compete more effectively.

• Enhanced Financial Performance — This transaction will enhance the long-term financial success of satellite radio by allowing the combined company to better manage its costs through sales and marketing and subscriber acquisition efficiencies, satellite fleet synergies, combined R&D and other benefits from economies of scale. Wall Street equity analysts have published estimates of the present value of cost synergies ranging from $3 billion to $7 billion.

• More Competitive Audio Entertainment Provider — The combination of an enhanced programming lineup with improved technology, distribution and financials will better position satellite radio to compete for consumers’ attention and entertainment dollars against a host of products and services in the highly competitive and rapidly evolving audio entertainment marketplace. In addition to existing competition from free “over-the-air” AM and FM radio as well as iPods and mobile phone streaming, satellite radio will face new challenges from the rapid growth of HD Radio, Internet radio and next generation wireless technologies.

“We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers,” said Gary Parsons, Chairman of XM Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint statement. “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.”

“This combination is the next logical step in the evolution of audio entertainment,” said Mel Karmazin, CEO of SIRIUS Satellite Radio. “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. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders.”

The transaction is subject to approval by both companies’ shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.

More details in the full press release here.

Related articles:
Sirius shares spike in volume on ‘chatter of potential Apple partnership’ – October 18, 2006
Apple iPod+Sirius Satellite Radio? – July 06, 2006
Sirius would like to work with Apple; Howard Stern Sirius podcasts for sale via iTunes? – December 09, 2005
Apple iPod combined with Sirius Satellite Radio would be a music revolution – May 27, 2005
Sirius Satellite Radio CEO Karmazin discusses Sirius-enabled Apple iPod – May 25, 2005
Sirius CEO Karmazin looks to add satellite radio to Apple iPod; no deal – yet – February 10, 2005
Sirius has approached Apple on adding service to iPod – February 09, 2005
Analyst throws cold water on Apple iPod – Sirius Satellite radio deal – December 16, 2004
Analysts: Apple iPod + Sirius Satellite Radio ‘technologically unfeasible right now’ – December 15, 2004
RUMOR: Apple to add SIRIUS Satellite Radio (and Howard Stern) to iPod in mid-2005 – December 10, 2004


  1. This is relevant because 1.) Satellite radio devices, especially those that double as MP3 players, are iPod competitors; and 2.) There have been rumors that a future generation of the iPod would feature one of the satellite radio services.

    Personally, I like XM better and don’t really want the merger to go through. But it’ll be interesting to do see how they pull it off.

  2. Allen–

    Current satellite radio receivers are capable of handling additional stations. The programing will merge, and eventually all programming from both services will be accessible by legacy receivers.

    I work at a Honda dealership, and this was explained to me by an XM rep a couple of years ago. Believe it or not, he actually mentioned this merger back then. At the time, the FCC was creating an obstacle for them.

    MW: Corner. As in, cornering the market.

  3. Side note:

    Honestly, I’m surprised that no one else has said this before, but I recently had an epiphany…

    Satellite radio is accessible over the internet. If you’re a subscriber, you can tune in via their websites. Here’s where the epiphany comes in…

    iPhone will be shipping with a full version of Safari. See where I’m going with this?

    You heard it here first folks, iPhone will be satellite radio-compatible.

    iPhone bitch!

  4. We’ll see what the FCC says. I wouldn’t bet on this merger being approved. The FCC originally prohibited having one company hold both available satellite radio licenses. The proposed merged company may have a hard time proving that a monopoly is better for consumers than competition.

  5. Apple Hey needs to stop these Ads I have said this before now!

    Can email me to say thankyou apple.
    Stop these ads they will stop apple Sales I should not have to keep telling people for f-sack I wqas fired from apple and I am the one who knows what to do!!!! Any ways stop the ads

    Pissed of Anthony.

  6. I’ve been hoping for this for a long time.

    I have a lifetime Sirius membership which is a great deal. Paid about $600 but the break even point was around the 3 year mark. Anything beyond that is “free”, at least in terms of monthly subscriptions fees.

    I also use itunes on a daily basis and would love to see Apple release an ipod that has satellite radio integration (with a subscripton of course). Let me “bookmark” songs I hear on Sirius to purchase in iTunes!

    Sirius already had Howard Stern, NFL, NHL and Nascar. Once the two merge MLB will also be combined so all of your music, talk radio and sports are covered!

  7. Anyone Apple can help with this big too problem of misunderstanding posts.

    Help with theOxycodone overuse, I did.
    Not needing guidance, Apple should let the iPhone idea go. For f-cksake there’s no good reason to obliterate women who wear pasties over red nipples.

    Any ways drink my medicine.

    Happy on thorazine cocktail Timmy.

  8. I have both Sirius and an iPod. Even though they’re “competitors”, the Sirius unit can’t compete with the Ipod for ease of use and capacity. Not even close.

    I use it strictly for Stern. I’m sure I’m not alone.

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