Thread: Satellite radio

Sirius: Merger or Chapter 11
Filed under: Sirius, XM Satellite Radio
Rating: This post was written by Douglas McIntyre of the blog 24/7 Wall Street:

Goldman Sachs hit Sirius and XM Satellite with serious downgrades today. It knocked down shares of both companies by 5%.

What analysts don't want to say is that the future of satellite radio in the U.S. could already be coming to an end. A merger between the two companies may be the only alternative they have to stay in business. Each company has well over a billion dollars in debt. Sirius had negative operating income last quarter of $106 million on $242 million in revenue. XM was in the red to the tune of $108 million on sales of $278 million. And XM shows only $275 million in cash on its balance sheet.

Sirius had 7.7 million subscribers at the end of last quarter and XM had 8.6 million, but those numbers no longer double year-over-year. That may be because other forms of entertainment have taken over in the car. When satellite radio was launched a decade ago the rear-seat entertainment device was not all the rage. The Apple iPod did not exist.

The market seems to forget that the shares of these two companies trade as if they were going out of business. In early 2000, Sirius traded close to $70. It is now lucky to see $3.50 on a good day.

Sirius and XM are lobbying the FCC to approve their merger on the basis that there is plenty of new digital competition and that a combined company would not be a monopoly. In the strictest sense, it is one, of course. The government licenses the rights to be in the business and, in a merger, there would be only one company with those rights.

But, the FCC may have a more practical reason to give a merger the green light. With limited cash on their balance sheet, tight credit markets, slowing subcriber growth, and huge quarterly losses, both companies could disappear.





-I hope the companies merge because I love my XM radio especially being here in North Dakota where the radio stations suck and when we drive to Wash state, there's nothing in Montana.

I've got Sirius, and enjoy it, if only the tape deck would work. As it is, I have to constantly change my FM channel. Ugh.

But it's great to at least be able to hear the broncos play, when I can't watch them. And between all the NFL talk and Rivals info, who needs music?

But the Christmas music channels are great. Country, classical, you have your choice....and it helps set the mood.

I hope the merger is approved.



P.S. B....don't get caught helping any 'sheep' get unstuck from the fence lines when you're in Montaaaaaaaaaana.....

Originally Posted by rcsodak

I've got Sirius, and enjoy it, if only the tape deck would work. As it is, I have to constantly change my FM channel. Ugh.

But it's great to at least be able to hear the broncos play, when I can't watch them. And between all the NFL talk and Rivals info, who needs music?

But the Christmas music channels are great. Country, classical, you have your choice....and it helps set the mood.

I hope the merger is approved.



P.S. B....don't get caught helping any 'sheep' get unstuck from the fence lines when you're in Montaaaaaaaaaana.....

I would hate to go back to the days of no XM/Sirius. I have Sirius in my car (because of NFL Radio) and XM in my wifes. If I am driving hers, I listen to Fox or ESPN. In mine, it is tuned to NFL radio almost year round, but sometimes switch to Fox or ESPN.

a budy of mine had serious, or maybe xm, cant rememebr what it was, but i sure liked it. any idea how much they cost a month?

Originally Posted by underrated29

a budy of mine had serious, or maybe xm, cant rememebr what it was, but i sure liked it. any idea how much they cost a month?

$35 for 3 months!

Sounds like XM/Sirius will file for bankruptcy within days!

I hope Directv doesn't ever get to this point. I would be lost without my Sunday Ticket!!

I had Sirius for a while and actually liked it, but I just couldn't justify paying money for radio... Now I've got it on DirecTv too, so there's no way in hell I'd pay for it.

Originally Posted by Buff

I had Sirius for a while and actually liked it, but I just couldn't justify paying money for radio... Now I've got it on DirecTv too, so there's no way in hell I'd pay for it.

Being here in North Dakota, you'd find a way to pay for it because XM radio is much appreciated here!

I love my Sirius radio. We have it in both cars.

Since the merger they're in a positive cash-flow situation. I would imagine that if they have to file bankrupcty that they'll emerge from it pretty much intact and be able to continue service.

State Fleet Vehicles we take to Bismark to lobby have XM in them, and it is absolutely awesome. If I had a car and spent a shit load of time driving, I'd invest, but then again I if you have an IPOD with thousands of songs, why bother? Meh.