SIRIUS XM SATELLITE RADIO
Md. Motaher Hossain
Major: Finance and Banking
OVERVIEW OF THE COMPANY
Name: Sirius XM Satellite Radio
It is an American Broadcasting company that
provides three Satellite radio and online
radio services operating in the United
States: Sirius satellite radio, XM satellite radio,
and Sirius XM Radio.
Headquarter: New York City, New York,
Sirius satellite radio:
Sirius satellite radio was a satellite radio and online
radio service operating in North America.
Established: 17 may, 1990.
Employee: 1514 (According to their Website.)
Headquarter: New York City, New York, United
XM satellite radio:
XM satellite radio was one of the three satellite radio
and online radio service in united states and Canada.
Headquarter: Washington D. C.
REASON FOR MERGER
1. It is being touted as a "merger of equals," but in fact,
Sirius is buying XM for nearly $4.6 billion in stock. (
Source: Bloomberg )
2. Sirius and XM's receivers are incompatible: it won't be
elementary to combine the two services, and to get both,
you'll probably have to buy a new receiver. The companies
have promised to merge channel lineups, however, letting
customers pick and choose on an "a la carte" basis.
3. Sirius offered one-time payments for a lifetime
subscription, but tied it to a receiver. These users could be
offered deals to add XM or upgrade their receiver, or could
be told that one-time payment forever applies only to
Sirius-branded content on the original box. What deal will
the merged giant offer?
4. The merger effectively creates a local monopoly in digital radio
(excepting that provided through cable television services.) Under
scrutiny from the Justice Department and FCC, Sirius and XM may
claim to be competing not with each other, but with iTunes and other
music download services. If they do, might it have consequences for
XM's claim that they aren't a download service, in regard to an RIAA
lawsuit? However it pans out, the phrase "regulatory hurdles" could
haunt the deal for months.
5. Channels will die. There's a lot of duplicated content across the two
networks. It'll be interesting to see how closely culling is tied to ear
count and ego.
6. Though XM has more subscribers (XM has claimed 7.6 million to
Sirius's claimed 6 million) and had more than double Sirius' revenue in
2005, Sirius recently boasted about its economic performance and
climbing subscriber base. Both companies have been losing money
hand-over-fist for years, however: Shares for both declined about 50
percent last year. Sirius is worth $5.2 billion, while XM was recently
valued at $3.75 billion. (Compare the buyout price!)
7. Sirius was originally called Dog Radio, and was founded in
1990. XM was originally called American Mobile Satellite Corp,
and was founded in 1988.
8. The elliptical orbit of Sirius's satellites causes trouble for
customers who receive their Musak-like business music service
through stationary antennas. Sirius is launching a geostationary
satellite just for them.
9. Sirius' and XM's press release contained a boilerplate legal
disclaimer about "Forward Looking Statements," listing the
words "anticipate," "believe," "plan," "estimate," "expect,"
"intend," "will," "should," "may," as ones that predicate
statements the reader should take with a pinch of salt.
10. World star serves satellite radio to Europe, Africa and the
rest of the world. With about a hundredth of the merged giant's
revenues, it doesn't compete in its home market, instead
licensing a few select channels to XM.
REASON FOR SUCCESS:
“The two companies, which have a combined 14 million
subscribers, said they had not yet determined a new
name for the combined company or where its
headquarters would be located.” —CNN Money
Therefore, if these numbers can be believed, XM had
13.4 million subscribers and Sirius had 0.6 million
subscribers when the merger happened.
You can judge “successful” a lot of ways; they were both
losing money before the merger and the new company is
reportedly solidly in the black now.