XM and Sirius Radio To Merge!



It is OFFICIAL! XM and Sirius are merging on an equal stock split and, as of 3:30 pm on Monday, Sirius shares are up 2.78 percent, and XM is up 7.7 percent! Is Mel Karmazin laughin all the way to the bank? Mel Karmazin looks not unlike an empurpled Burgundian King this afternoon after the XM-Sirius merger. Karmazin took a big risk in hiring Howard Stern for the money that it took to lure him away from his cozy perch atop of CBS' terrestrial radio empire (Reportedly: $500 million over 5 years).

Then again, XM has been plagued by some bad press -- like the rats-in-the-studio story, which made it all the way to the august Page Six. Sirius, however, has been treated well by the media of late, as Howard Stern --Did he know something we didn't? -- announced his engagement to longtime girlfriend Beth Ostrosky.

According to Orbitcast:

"XM Satellite Radio (NASDAQ: XMSR) and SIRIUS Satellite Radio (NASDAQ: SIRI) today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

"Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company.

"Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. The new company's board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger."

What does that mean to both The Howard Stern Show and The Opie and Anthony Show -- arch-nemeses -- who will be, ostensibly, working ad majorum glorium the ...same company? And what of anti-trust issues (Quite frankly, we -- as opposed to the "Nanny State Regulators," namely FCC Chairman Kevin Martin -- don't see this as an antitrust issue (neither do the analysts by the way), as an XM-Sirius merger would be competing against HD radio and terrestrial radio. Curious and curiouser ... Whatever the case, share prices are on the rise on all the speculation. According to paidcontent.org:

"So says NYP, citing sources: 'The two sides were locked in negotiations over the weekend trying to hammer out a final agreement with an eye toward going public with the merger today in Washington, D.C.,' the story says.

"The transaction is expected to be structured as a merger of equals, but given Sirius‘ higher enterprise value, shareholders in the Mel Karmazin-led firm will likely come away with a larger percentage of a combined company, it says."

An interesting response from the Orbital comments, "... none of this would've been necessary if Panero and Parsons had stepped up and hired Stern to begin with. We'd be talking about XM buying up bankrupt Sirius' assets today...

"I am officially amused...."

Does this mean commercials?

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