I see a lot of people making comparisons to Echostar/DirecTV. This is a completely different animal. Satellite TV companies offer the same content for the most part and in some places are the only option customers have.

Satellite radio for the most part is all original content produced in house. XM/Sirius also doesn't replace local terrestrial radio and I'm sure the NAB will do everything it can to make sure they don't.

I really don't see anyone making a good case for not passing this through.

This will never go through. You can bet the NAB and the FTC and FCC will see to that. And, fwiw, I join a lot of ther other posters here in fearing that commercials galore and big price hikes are ahead. Another new medium ruined (think of the end of the original Napster).

Ryan - Dish and Direct TV. In rural America where sometimes there are 0 cable comnpanies, who is Dish's only competition for access to standard cable TV programming channels - Answer Direct TV. No other competition.

In rural America Sirius and XM are competing against close to 1 million internet radio stations (About 95% of standard terrrestrial radio is currently on the web), terrestrial radio, HD Radio, Ipods, cellphone streaming and wifi, wimax technologies.

I used to think like you did on this Ryan, until I did some research. There is zero comparison to the Direct TV Dish nixed deal. I always implore you guys to follow media businesses.

You're correct, this isn't at all like DirecTV and DISH, but those two have been talking about a merger for a long time. Don't believe for a second that there won't be groups opposed to this, and that this COULD get tied up in a regulatory knot. DirecTV and Dish was just an example of companies that have been hoping on merging, but haven't been able to. That's all I was saying.

...doesn't anyone else see the TIMING of this as being something strange?

Lets bring the argument to the car shall we Ryan. I have read that 70% of new cars will have ipod jacks. Terrestrial radio in every car. HD radio is already has some OEM deals in cars. Wifi and Wimax will inevitably come to the car with a million internet radio stations ready to compete.

Now you tell me Ryan how this satellite radio deal compares to Direct Tv and Echostar?

Tier system? I hate the sound of that. I bought the Sirius service "for life" where I don't have to pay a monthly fee to the company for the life of my radio. If I still get just the Sirius programming in the future, I'm fine. But if I lose channels to the combined company or tier system, this would really suck.

I'm still digesting the whole thing and it's true we are in for a fun/insane ride ahead of us. Ryan you mentioning that it felt rushed rings true. It seems they are doing this in a rushed manner (which is never good). The tiered pricing sounds ok but I can see them not making it so easy getting the content you only want. I'm still thinking negative about this and I hope they will be orgainized in some way.

"though. In the meantime, current subscribers would be able to pick and choose a selection of channels from either service - up to a certain amount so you can manage bandwidth"

Your opinion on this sounds great in the meantime. It would be interesting for everyone if we can currently pick and choose from both services even though I can't see how this is possible with XM or Sirius exclusive recievers. Wonder if the new radios will now take a nose dive of a price drop due to this announcement.

Sorry Ryan. Posted before I saw your last comment. Timing ahead of earnings is a bit of a concern. They said 14 million current subs in the press release. Doesn't bode well for this quarters sub counts does it? I think Nascar probably really affected XM.

Did you ever wake up in the middle of the night Ryan and have to take A poop NOW.

That's how mergers talks( and Union talks ) work, you push, and you push and eventually there are results at untimely times.

The timing isn't suspect and these guys have been on this since the first weeks of December hot-n-heavy IMHO.

Zero comparison to DTV/Dish? Come on. Just by being two media businesses that are in a merger agreement there are comparables there. There are parallels.

IPods=DVD Players. Internet radio = Internet video. Cellphone = crappy coverage in rural areas/crappy radio.

Lobbyists against the merger...DTV/Dish...hmmm...newscorp? nrtca...NAB?...investor lawsuits...how about XM/SIRI...hmmm...NAB...HDRadio...Terrestrial...investor lawsuits...etc...don't discount their power...

don't forget about concessions that may have to be given to the FCC/Justice Dept. DTV/Dish - guaranteed access to local channels to every market in US...XM/SIRI...hmmm???

i give this merger passing muster a shaky 40% chance.

On side note,
Thanks for the insight and personal input, Ryan. Your website has been a great resource for both the sat rad fan and investor.

FCC chairman comments Ryan. I think this is the #1 reason for the coming tier pricing/a la carte content choice mentioned in the press release.

http://yahoo.reuters.com/news/articlehybrid.aspx?storyID=urn:newsml:reuters.com:20070219:MTFH99401_2007-02-19_23-12-05_N19447221&type=comktNews&rpc=44

70% of all new cars are not getting ipod jacks they are getting aux input jacks. The difference is that these jacks can be used for many devices not just ipods. My new truck will have it and my satellite radio will be hooked up to it.

tiered pricing might be nice but the cable companies do not even offer it yet. I heard they are required to do it in the future but I am not sure where the mandatory requirements lie. HBO, Showtime are hardly considered to be tiered type products.

It is definitely going to be a fun ride and the fact that hd radio, mp3 players and for some reason mobile phone providers are the competition. Lets just hope that the heads of the companies realize that they need to price themselves accordingly. It is odd to me that a lot of mp3 player users can not see the value that sat radio provides why they still continue to share/pay/download music.

I can't wait to hear the many media outlets reporting on this news including, o&a, howard, local terrestrial stations.

Internet radio = Internet TV??? WOW!!! Where did you come up with that jrein. Can you watch every cable TV station in this country for free over the net??? You can listen to just about every terrestrial radio station in this country for free over the net. There are almost 1 million internet radio stations on the net.

I still dont buy it. What if... what If .. thats it What If! what if they "act like its a merger" drive the stock price up during the worst time of the year for the stock price and then.. "oh well the FCC wont let us merge.. but we are both now profitable!" Timing seems odd. XM's refinancing to unsecured debt seems odd. I just dont get it.

The television is no longer considered a luxury and has few valid competitors " in the home ".

Satrad is very much a luxury and has many competitiors in the automobile.

This is why the dish/direct merger failed, and why the XM/Siri merger will pass.

Simple as that.

Plowboy 1 has spoken.

Make it so.

"Why choose a day like today, President's Day when the market is closed, to pop this announcement? And why announce it a week prior to the earnings calls? It seems that it would be much easier to simply time this with the earnings calls themselves since they're just one week away. The whole thing almost seems... urgent."

Probably because they know President's Day is a slow news day, and they're much more likely to get the kind of coverage they're looking for if they announce it today than if they wait a week or so. The announcement was the lead story on today's "Marketplace" show on public radio, and I wouldn't expect that on a "normal" day. You can be almost certain that the papers will use a lot more ink for the announcement than if the two companies had waited a week or so.

I talked to some antitrust lawyers -- they believe it is doable, from an antitrust perspective for many reasons. The bigger hurdle is the FCC -- one issue is that the licenses were issued as long as there were at least 2 companies. Perhaps the tiered/ala carte programming will be the trade off for the FCC.

I see a different issue -- 13 million radios (and growing) get the signal from one of two sets of birds. Once the company whittles down the channels, they really can't take advantage of the additional bandwidth because they have to beam the programming to the XM radios using XM's birds and the same programming using the Sirius birds to the Sirius radios. When they come out with a dual receiver, they can't just abandon all those with one or the other -- until they can all receive signals from both sets of birds, the additional bandwidth will have no impact.

I think in addition to tiered pricing and/or a la carte, additional concessions will include, on the US side, allowing Clear Channel to retain its current amount of bandwidth even as the system merges technologies (not giving CC more than they have now, but giving them additional rights to either keep or sell their chunk of bandwidth to another party rather than back to SiriusXM) and possibly allocating a percentage (like 3 or 4 percent) of bandwidth for Public Interest channels as DBS TV providers have had to do. The satrad PI channels would allow faith-based and other non-profit content providers who don't have attractive enough content to negotiate their way onto the system, a way to pay a reduced (wholesale) rate to buy a channel. It should be limited to one channel per organization, just as the DBS TV PI rule is set up. This would, for example, prevent organizations such as The Word Network from objecting to the merger, and in fact might even bring them on board. It might also potentially be an avenue that the World Radio Network could pursue to get an uninterrupted 24/7 feed. The satrad PI channels could be further divided according to the proportion of music vs. talk carried on the main service, and music PI channels would be required to be carried at a comparable bitrate to other music stations, same with talk. Also, personally, I think stations that only carry traffic, weather, live sports or a low-bitrate loop of sports info when not live should NOT count toward the channel count for determining the percentage of PI channels - it would over-inflate the count too much. (I would count a channel such as XM Sports Nation that does have an obviously established 24 hour schedule and is always at a consistent bitrate.) This would prevent the merged provider from forcing PI channels to all be ultra-low-bitrate talk a la Canada 360 or Traffic & Weather services.

I also see from the Canadian side, that the CRTC will approve the merger, but will likely require additional CanCon commitments by the providers. My guess is that they will not substantially change the 9 to 1 ratio, but perhaps lower it to 8 to 1 or something like that. This would only be a modest increase of about two or three more channels - depending on which tiers or packages are offered to Canadian subscribers, it may not even be necessary to add that many. Alternatively, I could see them keeping the 9 to 1 ratio, but increasing the French requirement to, say, 35% or 45% of the Canadian channel count (instead of the current 25%) even though this would not require additional French content to be added, it would ensure that SiriusXM would not easily be able to drop it in the future. And I wouldn't be surprised if a new requirement was added to have at least 5% - 10% of the Canadian programming to serve linguistic minorities and/or First Nations populations. Again, particularly if only linguistic minorities were included, SiriusXM would not have to add anything, as RCIplus would likely offer enough of this programming. The CRTC might also toss in a requirement that a percentage of Canadian channels must be produced by a company not owned or controlled by SiriusXMCanada (CBC/Standard/Astral) - this would obligate them to open up the platform to companies such as CTV, Global, or (Heaven forbid!) CHUM. There is an outside chance they might target XM's low-bitrate treatment, and require (at least) NON traffic & weather channels to be carried at the average bitrate of other similar services (i.e. decent sounding). However - I think the merged service would probably not be hurting for bandwidth that much anyway, and is thus less likely to squeeze channels that shouldn't be.
Basically, I think most of the CanCon changes would be CRTC multicultural window dressing that would allow the agency to look like it was seriously increasing requirements while actually having little impact on the combined service, since both services already have invested in CanCon at this point. When you consider the total package, the combined service would offer all NHL and CFL games, plus several CBC/R-C/RCI channels, and 24/7 services covering Canadian headline news, sports, and weather. I think it should be enough to keep the CRTC and Canadian consumers happy.

AT&T and Bellsouth were just allowed to merge. Everyone thought there was going to be an issue with that and it went through. I dont see what the big deal of an XM-Sirius merger is. XM was a monopoly for a year and a half. Now the two are a monopoly again. I think they should let the subscribers decide. Give us a list of terms of the deal(like max pricing, channel lineup changes, etc), and let the subscribers vote.

First of all, they'll never let the subscribers decide if they should merger. They decide because it's the best thing for their shareholders and top executive salaries and payouts. If consumers had a choice in all of this, the talks would have never begun. Instead, consumers would be pushing for another satrad entity to emerge, create greater competition and lower prices. We haven't seen that happen, but rather the oppsite. A merger of this kind is legally misconstrued and will only hurt the consumer in the long run.

folks:

can anybody explain the merger's stock-pricing scheme to me (none of my colleagues seem to know and no business writers have discussed the follwing questions which it seems lots of investors either are or should be asking). Perhaps they're all more savvy than me and this is common knowledge but i'm skeptical to say the least)?

namely:
1) if xm holders get 4.6 shares of sirius for each xm share, which on the day of the announcement was deemed worth 17.02 (4.6 X 3.7), how does that change if sirius stock goes up or down in the future? in other words, if sirius stock is at 8.51 at the merger, do xm holders get but 2 shares of sirius (worth 17.02) or 4.6 shares worth 39.14 (4.6 X 8.51)?

2) how is the date for the sale/exchange of stock determined (is there a formula we know now even if we don't know how yet to apply it)?

3) does the MERGER have any inherent benefits to sirius holders (e.g., xm holders at 13.90 on day of merger get 22 percent premium (17.02)? i know sirius stock may go up or down in the interim but it would have done so anyway...thus, is there any positive or negative effect as a result of the MERGER? Note: i can't see any benefit, at least not a direct one...it seems at best the sirius shareholders can only hope that the merger news and developments somehow propel the stock upwards...is that right or am i missing something...

Note: before i say thanks i must say that the merger news seems to demand a piece or section on these very questions, even if most investors know the answer...for all the "caring" stock writers out there, a piece entitled "how the merger or its failure will affect current shareholders" it would seem such a piece is a must...

Thanks for anyone who can help...

paul

They say there are a combined 14 million subscribers but how many of those are like me, who subscribe to both XM and Sirius?? We have two Sirius radios in our vehicles and I have an XM boombox in the computer room, so I see one or two subscriptions being eliminated if the cost of the new dual radios and/or the new tier system is too high for my monthly budget. I don't see the merger working any better than the two staying separate entities.