XM, Sirius Attempt $13B Merger2/19/2007 11:04 AM Eastern
After months of talks, satellite-radio rivals XM Satellite Radio and Sirius Satellite Radio signed an all-stock merger agreement Monday that would value the combined company at $13 billion.
The deal, which will face tough scrutiny from the Federal Trade Commission and the Federal Communications Commission, would see Sirius CEO Mel Karmazin Mel Karmazin become CEO of the combined satellite-radio firms, while XM chairman Gary Parsons would hold the title at the combined company when the deal closes.
Sirius and XM didn’t reveal a brand for the combined company, which would count 14 million subscribers.
The companies plan to detail their merger plans during a conference call Tuesday, and they said they hope the deal will close by the end of 2007, pending regulatory approval.
XM, which debuted in 2001, and Sirius, which launched in 2002, have fought bitterly for share of the burgeoning satellite-radio market, cutting deals with high-profile broadcasters ranging from Howard Stern (Sirius) to Oprah Winfrey (XM) and cable TV networks . The companies have also forged agreements with auto manufacturers to install their satellite-radio services in new cars.
FCC chairman Kevin Martin denounced a possible XM-Sirius merger in January, when rumors began circulating about a deal. Martin said Jan. 17 that FCC rules prohibit “one entity owning both of those businesses.”
While a proposed XM-Sirius merger may not have had a chance of winning regulatory approval three years ago, the steady growth of mobile music players, audio-equipped cell phones and wireless Internet devices could help XM and Sirius to convince the FCC and FTC that the time is right for a merger.