XMius or Sir XM?
The new entity will have a value of approximately $13 billion with a net debt of around $1.6 billion. The merger will automatically make the as-yet-unnamed company the #1 satellite radio provider in terms of programming choices, revenue (about $1.5 billion) and total subscribers (approximately 14 million). (Joe's Satellite Radio & Pizza Delivery service will move into the #2 position with one channel and two subscribers.)
Under the terms of the deal, XM shareholders will receive 4.6 shares of SIRIUS common stock for each share of XM they own. But the deal isn't done yet. It's consummation is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions, and regulatory review and approvals of entities such as antitrust agencies and the FCC. If approved, the transaction is expected to be completed by the end of 2007.
One of the benefits touted by the people behind the deal is the promise of greater programming and content choices plus the possibility of offering grateful subscribers the ability to pick and choose channels and content on an a la carte basis. Pro football, hockey, and baseball, for example, might finally be united under one subscription service.
The merger will hopefully bring about accelerated technological innovations that could result in a wider range of lower cost, easy-to-use, multi-functional devices. (Although lack of direct competition doesn't usually spur quick innovations.) The combined entity will attempt to improve on real-time traffic, rear-seat video, and other advanced data services - including that wonderful catchall, "infotainment".
In their bid to allay any antitrust fears, the SIRIUS and XM folks say the current entertainment competition is fierce. "In addition to existing competition from free 'over-the-air' AM and FM radio as well as iPods and mobile phone streaming," the companies pleaded in a statement, "satellite radio will face new challenges from the rapid growth of HD Radio, Internet radio and next generation wireless technologies."
A name for the new entity has yet to be decided. It is expected that whatever is decided upon for the name, the image of a small dog will not be included in the new logo. It's also a pretty safe bet that, in order to cut programming costs, SIRIUS's "Howard Stern, Uncensored" channel will not be combined with XM's "Oprah & Friends" creating a new channel called "SternO".
No announcement was made as to what will happen to all of the current XM and SIRIUS radios already in the market.