XM and Sirius to merge.

[capone0]

So much for competition in the satelite markets. Don't know what it means for the customers.

http://www.usatoday.com/money/media/...us-talks_x.htm

Doesn't really bother me all that much. I have Sirius. Hopefully this "monopoly" doesn't increase the price.

[youtalkfunny]

I have Sirius, and I'm hoping beyond hope that this means we get MLB.

I can't imagine that the subscription price would go up. The intent of the merger is to REDUCE costs.

(Glad I checked the front page one last time before starting a duplicate thread.)

[bernie]

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The intent of the merger is to REDUCE costs.


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To the company, or to the consumer? [img]/images/graemlins/grin.gif[/img]

b

[bonds]

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I can't imagine that the subscription price would go up.

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I'm trying to remember the last time industry consolidation was actually beneficial to the consumer, price-wise.

This might take a while.

[youtalkfunny]

Actually, the subscription price is such a bargain now, I wouldn't mind an increase. If the price doubled tomorrow, I'd still pay.

Of course, almost nobody else feels that way, so if the price doubled tomorrow, the customers would flee and industry would fold.

[Mother Mucker]

If you bought a subscription for a couple of years and the price goes up, you're not screwed, right? You don't owe them more money?

[Mondogarage]

There are only about a million things that could either a) derail this deal, or b) make it not beneficial to customers.

For one thing, your current XM & Sirius head units are incompatible, and will not be able to receive transmissions from the other, under any circumstances.

Two, there are major antitrust implications here. Unless both companies can show that both will end up going out of business without a merger, it is highly unlikely this deal can pass antitrust muster (regardless of what the FCC says).

I hold shares in both companies (and am down a lot on XM, only down about 15% in Sirius), so I kinda hope it does go through, but I'm not holding my breath.

[DesertCat]

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For one thing, your current XM & Sirius head units are incompatible, and will not be able to receive transmissions from the other, under any circumstances.


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That doesn't matter, it means they'll have to pick one system as the future system and new users will only be able to buy one type of head units, but they'll still keep the old satellites running and provide all the same programming on both systems.

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Two, there are major antitrust implications here. Unless both companies can show that both will end up going out of business without a merger, it is highly unlikely this deal can pass antitrust muster (regardless of what the FCC says).

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This is the other problem, but neither of these money losing companies can continue successfully without being subsidized by more investors. I believe that's going to greatly help their antitrust case.

And I have a theory that if necessary they'll spin out the satellite management business from one entity (Sirius?) and make it a separate company. Then they can merge the entertainment side of Sirius (with all the programming contracts) into XM, while XM signs a long term deal with Sirius Satellite Services to maintain the old satellites. The FCC won't be able say squat about that, since one company won't own both sets of satellites.

[offTopic]

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I hold shares in both companies (and am down a lot on XM, only down about 15% in Sirius), so I kinda hope it does go through, but I'm not holding my breath.

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Lucky you. I bought SIRI @ 7.50. [img]/images/graemlins/frown.gif[/img] Good thing I'm small potatoes...

[DesertCat]

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I can't imagine that the subscription price would go up.

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I'm trying to remember the last time industry consolidation was actually beneficial to the consumer, price-wise.

This might take a while.

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Consolidation can be good if it involves removing duplicative costs. In this case the heavy overhead of two satellite systems and two technology standards can (gradually) be lessoned. But even more so, the heavy marketing costs of signing talent in bidding wars will reduce costs. My guess is they won't need to raise rates for a while, just rationalizing marketing & R&D costs will save them a bunch of money.

Remember these companies are still losing money hand over fist. There will eventually be one satellite radio company, either through merger or bankruptcy.

It's not even clear this merger will save them. They still have to compete against "free" radio in the car, IPODs everywhere, and internet radio in the office. When cities start rolling out WiMax, they'll have to fight internet radio in the car as well.

As a Sirius customer I'm excited about this merger (assuming they can get FCC approval) because it will mean better programming (I'll be able to get all sports events). If it ends up costing me a little more in subscription fees I'll still be happy.