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Sirius, XM Upbeat On Possible Merger

Sirius and XM claim momentum is gaining in favor of their proposed merger in light of the fact that 4,000 of the total 5,000 public comments recently filed with the Federal Communications Commission (FCC) supported the combining of the satellite radio companies.

In addition, several financial analysts raised their estimates on the chances of the merger passing federal regulation after Sirius and XM proposed seven new program packages, including two a la carte package starting at $6.99 per month.

Sirius CEO Mel Karmazin stated last week, “Momentum for the pending merger with XM continues to build.” And XM CEO Hugh Panero, who announced he will leave the company this month (See TWICE People on p. 6), added, “The volume, diversity and strength of the public comments filed with the FCC during this period demonstrated persuasively that the merger is in the public interest and should be approved.”

Analyst David Bank of RBC Capital Markets noted “the probability of a merger increases” with the newly announced packages and pricing. The plans could also help win FCC approval, as “The FCC is very focused on a la carte … as a way to offer consumers more choice. So clearly, [XM and Sirius] are using the right buzzwords,” said April Horace of Janco Partners.

The eight plans (including the current $12.95 package offered by each company currently) are as follows:

  • An a la carte choice of 50 channels, selected by the user from a pool of either most XM or most Sirius stations. Other channels may be added for 25 cents and some premium channels will be offered at $3 to $6. It will require the purchase of a new satellite radio receiver at prices comparable to today’s receivers.
  • A second a la carte choice of 100 mixed XM and Sirius channels at $14.99 per month. This would also require a new receiver.

The remaining choices do not require a new receiver:

  • A family-friendly package is offered by one service (either XM or Sirius) at $11.99 that includes the best of family aimed programming from that service.
  • A family-friendly package that includes the best family programming from one service but also adds some programming from the “other” service at $14.99.
  • A plan which includes every channel from one of the services plus select channels from the other service at $16.99.
  • A mostly music package from one service that offers mainly commercial-free music programming at $9.99.
  • A mostly news, talk and sports package from one service at $9.99.
  • The user can elect to keep his current XM or Sirius package at the current $12.95 per month.