Rivals SIRIUS and XM announce $13B merger

WASHINGTON — Choosing satellite radio in the U.S. just got easier or redundant — depending on how customers end up viewing the $13 billion merger agreement between SIRIUS and XM.

The agreement does not include both independently owned Canadian divisions, however.

Under terms of the all-stock agreement, shareholders of XM Satellite Radio and SIRIUS Satellite Radio 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 CEO of SIRIUS has been named to the same role of the combined company and Gary Parsons, currently chairman of XM, will become chairman of the combined company, which has yet to be named.

The companies will continue to operate independently until the proposed merger is competed.

The future of XM and Sirius got murky today
after both US companies agreed to merge

The merger had been rumored for months, but the chairman of the Federal Communications Commission put a wet blanket on the buzz last month when he indicated a possible merger could not be approved under current FCC regulations.

If the FCC approves the deal — and reports indicate it will still receive a lot scrutiny from the regulators — than it could hurt XM Canada and Sirius Canada. Both are independent Canadian companies with Canadian partners which that rely on the U.S. parents for much of their programming.

Sirius Canada is a partnership between Standard Broadcasting, the Canadian Broadcasting Corporation and Sirius in the U.S. XM Radio Canada is the operating name of public company Canadian Satellite Radio Holdings Inc.

Satellite radio first came to Canada in 2005 when, after much debate, XM Canada and Sirius Canada were grated licences by the CRTC. The Canadian broadcast watchdog demanded 10 percent of the programming be Canadian, and eight of the 80 channels offered are produced here in Canada and feature Canadian artists and content XM, for one, has a channel (171) devoted exclusively to the trucking industry audience.

Among other benefits, the companies say the merger will provide the following:

— Greater programming and content choices and “broader selection of content, including a wide range of commercial-free music channels, exclusive and non-exclusive sports coverage, news, talk, and entertainment programming.”

— The merger will enable accelerated technological innovation with a wider range of lower cost, easy-to-use, and multi-functional devices through efficiencies in chip set and radio design and procurement.

— Also there would be benefits to OEM and retail partners, say the companies, who plan to offer automakers and retailers the opportunity to provide a broader content offering to their customers.

— Enhanced financial performance 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, and combined R&D.”

— The combination of an enhanced programming lineup with improved technology, distribution will better position satellite radio to compete for consumers’ attention and entertainment dollars against a host of products and services.

“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,” SIRIUS and XM said in a joint statement.

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