SIRIUS XM Satellite Radio - Merged

Sirius Satellite Radio and XM Satellite Radio merged to form Sirius XM Radio. After more than a year the merger between Sirius and XM is final. The deal was held up due to conventional radio broadcasters as well as the Federal Communication Commission (FCC) fearing that that the merger would break the US 1997 anti-trust rules.

Whose idea was this merger? Both Sirius and XM wanted the merger to be approved. They were both strapped for cash and knew that together they could cut up to $400 million in expenses. There were several issues at play.

• The increasingly struggling economy has caused a down turn in auto sales. New auto sales provided millions of dollars worth of subscriptions for satellite radio
• The same struggling economy effects individuals to the point that subscriptions are down. There are so many options to choose from such as iPods and music services for cell phones that satellite radio finds it hard to compete.
• Both Sirius and XM were deep in dept. Again, the economic downturn and the mortgage crisis have caused creditors to tighten the ease of receiving financing. The satellite radio companies have had to sell assets to investors at low prices.
• Sirius and XM were paying out millions of dollars to lure new performers. Some of the financial contracts include stocks so if they are short on cash and the stock prices are low they no longer have the leverage to attract new talent.

The merger between Sirius and XM could be a downer for talent like Howard Sterns and others. As separate companies they bid against each other for Howard. Sirius ended up with a $500 million contract to support. Stearns is not the only huge contract hanging out there for Sirius XM. The NFL's contract reported to be $220 million over 7 years, the NASCAR's contract reported to be $107.5 million over 5 years and The Major League Baseball's contract that is reported to be $650 million over 11 years.

As far as I am concerned these huge contracts are impossible for any business to sustain over a period of time. Consumers are too fickle to promise these huge amounts of dollars over that many years to so few.

At this point it sounds like Sirius and XM will be able to renegotiate some of these contracts now that they are merged. In any case, once these contracts expire Sirius X M Radio will be in a stronger position when negotiating new contracts.

Sirius XM radio had to make a few deals with the FCC in order to get approval for the merger.

• The promise to make a tuner available to the open market that could access both Sirius and XM.
• They will allow other manufacturers to produce products that can deliver satellite radio - best of all with no restrictions
• They have agreed that their subscription prices will not go up for 3 years.
• They agreed that 4% of their channels would be reserved for non-business and educational use. They further agreed that no one entity can be granted more than one of these reserved channels
• They agreed that no local programming will be allowed as to not interfere with local networks

Satellite radio has great appeal to most anyone that likes to listen to the radio. We all have our favorite programming and it is difficult to find a local station dedicated to those preferences. Listeners are not used to paying for radio - but they were not used to paying for watching television either. Now if we are willing to pay the price we can have what we want.

Sirius XM Radio provides programming for just about any preference. Sports, Music, News, Talk and Entertainment are the major categories. Below I have just highlighted some of the options available to listeners to satellite radio. Full schedules can be seen at Sirius Satellite Radio.

• Howard Stern, Martha Stewart and the late George Carlin have been recognized as Satellite Radio entertainers
• Family Friendly programming includes entertainment for kids such as The Wiggles and Kids Stuff.
• Talk Radio includes political programming with well known talk radio hosts such as Sean Hannity and Mark Levin.
• Sports reporting includes major sports such as football, NASCAR, soccer and horse racing
• Music entertainment includes genres such as Pop, Rock, Country, Classical

Sirius XM Radio can be accessed from your car, from home, over the Internet and over portable satellite radios. If you have a previous version of a satellite radio from either Sirius or XM you can still use it. There are new radios and accessories available as well.

The cost to have satellite radio is not too bad. The $12.95 per month is about a third of the price of my cable TV and I listen to the radio for more hours per day than I watch my TV. Discounts are available for extended subscriptions and for those that have more than one subscription. Why would anyone want to pay for satellite radio? Maybe it would be worth the price not to have commercials, static or rules.

Now that the merger has become official we will all see if it was a good idea. As long as Sirius XM Radio is self sustaining and requires (or expects) no government bail out I am all for their struggle to stay alive.