XM, Sirius To Merge?Feb 19th, 2007 | By James Lewin | Category: General
The New York Post is reporting that satellite radio operators Sirius and XM are expected to announce a merger today.
The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C., where XM is based, this source said.
According to the source, XM Chairman Gary Parsons will retain that title in the combined entity, with Sirius’ head Mel Karmazin likely taking the CEO role. It is unclear what role, if any, XM CEO Hugh Panero will play.
Combining Sirius and XM would result in a single satellite radio operator with more than 12 million total subscribers. A deal would also marry Sirius content, such as Howard Stern, Frank Sinatra and Nascar with XM’s Oprah Winfrey, Bob Dylan and Major League Baseball.
More important, analysts widely predict that a deal would also save the two companies nearly $7 billion annually.
The two companies have long struggled with the high cost of acquiring subscribers. In 2007, Sirius missed its goals for subscriber growth. Satellite radio has faced several new challenges in the last year:
- Podcasts are competing for the satellite radio audience;
- Lawmakers may limit the capabilities of satellite radio players; and
- New automobiles are coming with iPod-ready car audio systems.
As recently as December, XM said “no way” on the idea of a merger. As the companies face increased pressure from competitive technologies, merging may be their only way to achieve profitability.