Sirius, XM Continue Optimism For Merger

Publish date:

New York — Sirius and XM executives continued to express optimism at the prospect of their companies merging as XM chairman Gary Parsons told analysts he thought approval from the Federal Communications Commission (FCC) might come as early as November.

In a separate presentation, Sirius CEO Mel Karmazin told analysts at a Merrill Lynch conference, "We are optimistic we will get FCC approval and [Dept. of Justice] approval."

Parsons added, "I think we’re making good progress in moving the merger process forward."

At a conference held by Goldman Sachs, Parsons said XM has spent a "prudent amount of resources" in preparing for a possible merger, including working with Sirius in preparing the a la carte programming menu. "We have preliminary work on a number of fronts to plan for the probability of the merger."

In other topics, Parsons mentioned that he believes combining satellite radio with personal navigation devices (PNDs) will be a new avenue of sale for satellite radio. "PNDs will likely be an area of growth for us," he noted.

When asked which technologies would be the strongest competitors to satellite radio in the future, he said HD Radio will become a strong competitor in the next five years as it gains coverage, and also cited WiMAX, MediaFLO and cellphone technologies such as EV-DO Rev. A and 4G. But he wondered whether any of these services "would be willing to spend the amount of money we have spent to develop unique content." He added, "You have to have fully differentiable, unique, exclusive content, or you’re putting your entire strategic future in the hands of the technology."

Parsons said most new XM subscribers now come from the new car sales channel; however, a portion of these customers also purchase additional retail XM receivers for a spouse or a home or office. XM found that when a new-car buyer is at the end of the auto maker’s free subscription trial period, XM’s direct-sales force can encourage the new subscriber to buy additional receivers. "So each new OEM sale can generate a retail sale," he said.

The XM chairman added that the XM-5 satellite is able to operate on the Sirius frequencies so it is possible, even without the merger, there may be some future synergies the companies might make use of, including a spare satellite.


Related Articles