A merger of Sirius and XM may not be necessary right now says Mark Wienkes, analyst at Goldman Sachs.
"We believe that the consensus perception that this merger must be attempted sooner rather than later is misguided," he said in the note.
"Rather, since a large portion of the potential synergies would not likely be realized for three to four years, we think the companies have the opportunity to work together in the short-term to save money on common expenses like marketing and promotion."
So instead of merging immediately - try working together instead? Sounds like a no-brainer, but the egos involved need to be considered.
These two companies have been at war with each other for such a long time, it seems unlikely that something as simple as "working together" would ever happen. Ego is also a huge aspect that doesn't seem to be a consideration to merger-hopefuls. Still, considering the hurdles (and expenses) involved with an actual merger, perhaps working together would be the most cost-effective approach in the near term?
Wienkes added that the companies may be able to "wait out some of the regulatory uncertainty and maximize the expected value of a merger to shareholders."
(Read: Hype it up a bit since that seems to be the leading thing driving the stock value.)
[via Forbes]
I couldn't disagree more. There is little advantage in waiting. More time for RIAA and Congressional opposition, more time to sell more units to convert.... more time to spend money sending ad messages that will be useless.
Anyone still holding the stock at this point really needs to look into the big picture. Neither company is going out of business, and a merger really isn't necessary.
That being said, satellite radio will never achieve a critical mass of 50+M subscribers as once envisioned. Not anymore, thanks to competing technologies. Also, had these two companies not fought and overpaid for content, us (I used to hold the stock) former and current shareholders would be sitting pretty right now. Both companies would be well in the green by now and be able to focus energies on expanding the business.
A merger, while having synergies, does nothing for these guys in the next 2 years, and it certainly won't make the old critical mass go back up to what it once was envisioned.
I wouldn't be surprised if both companies came to a cable-like arrangement in regards to at least OEM...
Sirius takes Ford. XM agrees not to pursue. XM takes Honda, Sirius agrees to stay away. Etc, etc...
Cable companies have created de-facto regional monopolies with this scummy practice. And the FCC allows it! By reducing choice to consumers, they'll save on marketing, etc...
Which is good for the stock price, at least...
Mr. Hunt,
Cable companies are treated like utility companies in many cities and municipalities. Completely different and not comparable in any manner.
I think both companies need to become content providers and not sell or worry about the hardware. I do hope they would try a device with both services for $24 a month. Like cable
For fuck's sake. A merger is the last thing either of these company's need. For all the cost savings people think there may be, the churn rate will sky-rocket. I love satradio but if a merger happens I'm not changing equipment or trying to figure out what I'm left with for content, I'm gone. And there will be millions like me who just say to hell with it, I'll listen to my iPod. I don't think there will ever be a merger but if there is I think it's a sign of the end of the industry. Perhaps it will live on as a knitch product.
Ok for the last time to everyone... Its not going to happen so stop making shit up.
Guys, I've run numbers on this for more than four years.
1. A merger is very necessary.
2. It will happen.
The point is that the product has no real value UNLESS it has the expensive content you mention. WITH that quality product and programing, there is only loss left behind.
Had the economy not sunk, had gas not doubled, had the IPOD not happened a merger would not have been necessary. As it is, it is.
If it doesn't happen, kiss ( only ) one of them goodbye and/or don't plan on having either of them to go up a dime until 2010.
Instead of complaining about it, do something about it! Go to www.c3sr.org. This is the first and only consumer coalition put together to fight against this merger. Be heard!
I think they are running out of time to do a merger. In a Democratic administration the FCC won't allow it. The current Republican FCC is their best and probably only shot for approval and it takes at least a year for approval. My opinion - they have less than a month to make this happen.