XM and Sirius Agree to $4.6 Billion Satellite Radio Merger

Telecom News Editorials Reports Glossary

XM and Sirius Agree to $4.6 Billion Satellite Radio Merger

6:35 am on February 20, 2007 | Category: Business, Wireless Technology, Corporate

After a year of merger chatter in the satellite radio industry, Sirius and XM have signed a deal to conduct an all-stock ‘merger of equals’ worth US$4.6 billion.

“This combination is the next logical step in the evolution of audio entertainment,” commented Sirius CEO, Mel Karmazin. “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.”

A joint statement by the two radio providers claims that after the merger, customers will be able to select services on a “more a la carte basis,” allowing for a greater level of flexibility and user control. There are a number of major regulatory hurdles facing the deal, however, including an FCC prohibition that prevents a single company from owning both of America’s satellite radio licenses.

“The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices,” commented current FCC Chairman, Kevin Martin.

There’s no official word yet on how this merger, if approved in the U.S., would affect Canada’s satellite radio market, which is dominated by partners of XM and Sirius, but operates under a separate regulatory structure.

XM Canada released a statement to say that it was “carefully reviewing” the merger proposal, which it expects will be beneficial to both customers and the satellite radio industry.

Investors on both sides of the border appear to be highly enthusiastic about the merger proposal with shares in XM Satellite Radio Holdings and XM Canada rising 7.7% and 27%, respectively, in yesterday’s trading. Sirius Satellite Radio increased in value by a more modest 2.8% on the NASDAQ stock exchange.