XM, Sirius Agree to Blockbuster Satellite Radio Merger

I am not too happy about this…

From FNC:

XM Satellite Radio Holdings Inc. (XMSR) and Sirius Satellite Radio Inc. (SIRI) have agreed to merge, the two companies said Monday.

The deal would consolidate the only two companies in the emerging business of subscription-only satellite radio, and is sure to face tough scrutiny from federal regulators. Investors and analysts have been speculating about a deal for months.

The two companies said in a statement that Mel Karmazin, the CEO of Sirius, would become chief executive of the new company while Gary Parsons, the chairman of XM, would remain in that role. XM’s CEO Hugh Panero will remain to oversee the closing of the deal, they said.

The deal would face significant regulatory hurdles in Washington, including a Federal Communications Commission rule that clearly states that one satellite radio provider cannot buy the other one. However, that rule could be waived.

A combination would also have to meet antitrust approval from the Department of Justice. The companies are expected to argue that they compete not only with each other but also with a growing base of digital audio sources such as iPods, mobile phones, and non-satellite digital radio.

XM and Sirius have both posted significant financial losses as they built up their programming lineups and recruited subscribers. Both stocks declined more than 40 percent last year on concerns about their continued growth in subscribers and softness in the retail market, but investors have held out hopes that a merger could bring costs down significantly.

Shareholders of XM and Sirius would each own approximately 50 percent of the combined company. XM shareholders would receive 4.6 shares of Sirius stock for each share of XM they own

As a Sirius user I don’t like the idea of a lack of competition. Also, what will happen to the content? Will they keep all the content from both platforms? I want to keep the Sirius talk shows, I am no fan of XMs content.

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