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Sirius Satellite Radio

INTRODUCTION

PURPOSE

To analyze, from the prospective of Sirius Satellite Radio, the effects that the “merger of equals” between Sirius Satellite Radio and XM Satellite Radio will have upon current subscribers, overall success and profits of the company, and potential market share.

COMPANY INTRODUCTION

Satellite radio has been changing the way that people listen to music, sports, entertainment and news for nearly a decade. Sirius Satellite Radio offers listeners commercial free programming across the nation. They provide users a way to listen to their favorite programs even up to 200 miles offshore. In areas where traditional antenna radio is not available, satellite radio is.

The FCC introduced satellite radio in 1992. In 1997, the FCC approved the license application to broadcast using satellite radio to two companies, WorldSpace and CD Radio, now known as XM and Sirius, respectively. The official launch date for Sirius Satellite Radio was July 1, 2002. On February 19, 2007, Sirius announced a merger deal with XM Satellite Radio. The merger, announced as a “merger of equals”, will combine the two satellite companies under one name, which is yet to be determined. Also, the CEO of Sirius, Mel Karmazin, will remain CEO of the combined company, while CEO of XM, Hugh Panero, will no longer maintain an executive position. The merger is awaiting approval by the Department of Justice; which rules on anti-trust matters, and the FCC; which looks out for “public interest.”

ANALYSIS OUTLINE

This analysis will explore the proposed future for Sirius Satellite Radio. The strengths and weaknesses of a combined company will be discussed from both a consumer point of view and the company’s view. Also discussed are challenges that Sirius and XM face as they move forward with the proposed merger.

ANALYSIS

STRENGTHS

In general, the objective of a merger is to combine the strengths of two firms in order to produce a stronger company overall. In...