Sirius and XM Merging Today?
- February 19th, 2007
- 2 Comments
The NY Post is running some rumors that XM and Sirius are merging today, creating a satellite radio juggernaut that will be nigh unstoppable. The deal would meld XM and Sirius into one 12 million subscriber network and get Sirius out of a major hole. Both of the companies, while offering excellent content, are now learning what old media learned only a few years ago: if you build it, there’s no guarantee they’ll come. Sirius was the worst hit and has the most to gain.
I for one would applaud a merger. I only listen to XM and adding Sirius line-up would make me even happier. We shall see.
Ezekiel (Who am I?)
1 year ago
I thought this was already poopooed by the govt. That’s why Sirius’ stock went from 4.12 to 3.7 in a day a few weeks ago.
I’m all for it. I’m a Sirius listener and would enjoy hearing some XM content. And hey, Stern for all!
Dead 3.0 (Who am I?)
1 year ago
This is a copy of my comment on Mark Evans’ blog with my position on why this merger makes business sense:
I took your advice and dug into the subscriber numbers. In fact, I recently took a B-school final exam on the satellite radio industry, SIRI in particular. First, the business model has heavy fixed costs, meaning scale is the key to profitability. Second, adoption has been faster than any previous consumer tech trends. Third, per subscriber acquisition costs are dropping (2004: $177 from $491; XM 2004 = $62). Fourth, average revenue per customer is rising (2002-04: $7.47 to $10.02). Fifth, XM reports trial subscriber retention rates of 50% (via OrbitCast). Sixth, in 2007 27% of new vehicles will have satellite radio; OEMs will grow this to 55% by 2010. Seventh, economies of scale due to the merger will help spread out fixed costs over a larger subscriber base. Eighth, they have a large amount of cash on hand and relatively low debt.
In my opinion, this merger makes sense. You say, “But just because you build something, doesn’t mean people will come” but I’m going to go with the Field-of-Dreams mentality on this one. The content and the technology are valuable to many consumers, valuable enough for a low monthly fee (compared to cell phone and cable bills). It’s not satellite radio, it’s entertainment. Americans spend a lot of time in their cars, they want to be entertained.
More on my blog…