Sirius - XM to merge

[Martin]

http://www.nypost.com/seven/02192007...ter_lauria.htm

HEAVENLY DEAL
SIRIUS, XM SET TO CONFIRM MERGER PLAN TODAY

February 19, 2007 -- Satellite radio operators Sirius and XM are expected to announce their long-awaited merger today, according to a source familiar with the deal.

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., where XM is based, this source said.

Talks were still going on at press time and the deal could fall apart at any time. With antitrust issues of paramount importance, this source said lawyers for both companies were working overtime to fine-tune the language of the agreement and frame the discussion around the deal itself and not regulatory concerns.

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.

According to the source, XM Chairman Gary Parsons will retain that title in the combined entity, with Karmazin likely taking the CEO role. It is unclear what role, if any, XM CEO Hugh Panero will play.

Combining Sirius and XM would result in a single satellite radio operator with more than 12 million total subscribers. A deal would also marry Sirius content, such as Howard Stern, Frank Sinatra and Nascar with XM's Oprah Winfrey, Bob Dylan and Major League Baseball.

More important, analysts widely predict that a deal would also save the two companies nearly $7 billion annually.

Karmazin and Parsons have been dropping hints since last summer about a possible tie-up, believing that competition from terrestrial radio, online radio and mobile music devices such as iPods have not only expanded the marketplace but also lowered the regulatory hurdles to a deal.

In a note on Friday, Bear Stearns analyst Robert Peck speculated that Sirius and XM needed to move quickly before their window of opportunity closed.

Gaining regulatory approval "could take up to 15 months; hence, we think any proposed deal needs to be announced by the end of March to close by mid-2008," Peck wrote.

On Friday, XM shares hit their lowest point since early November while Sirius shares were approaching 52-week lows. Shares in both companies did trade on heavy volume and ended the session higher, with Sirius gaining 10 cents to close at $3.70 and XM jumping a dollar to $13.98.

House of Representative wants to take a look at the merger first...

House Gets First Crack At XM-Sirius Proposal
Wednesday, February 28, 2007; Congress and federal regulators need to get with the times.

That's the message that Mel Karmazin, chief executive of Sirius Satellite Radio, plans to deliver today at the first public hearing on a proposal to merge the nation's two satellite radio companies, Sirius and XM Satellite Radio Holdings.

Karmazin, who will face skeptical members of the House Judiciary Committee's newly formed antitrust task force, says satellite radio is in stiff competition not only with free, over-the-air radio but also with such newer products as MP3 players, Internet radio and music-downloading cellphones. "What I need to do is lay out the realities of the marketplace as we see it," Karmazin said in a telephone interview yesterday.

He can expect resistance. "What I'm concerned about now is whether we're creating a monopolistic situation," Rep. John Conyers Jr. (D-Mich.), who will chair the task force hearing, said in an interview yesterday. "I don't think it will stimulate competition, and it could very well take away from the competition taking place now in the industry."

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Is XM-Sirius Good for Consumers?
February 27, 2007 - The proposed merger of XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. would end years of bitter rivalry by combining the only two companies licensed by the Federal Communications Commission to provide satellite-radio services in the U.S.

XM and Sirius executives said the deal will lead to more programming for consumers and help the money-losing firms better compete with radio broadcasting giants as well as iPods, Internet radio and others. But consumer advocates worry the merger will result in less choice and higher prices.

Regulators have promised to closely examine the combination, which comes five years after antitrust enforcers blocked the merger of satellite TV rivals EchoStar Communications Corp. and DirecTV Group Inc. The scrutiny begins Wednesday, when the House Judiciary Committee's new antitrust task force will hold a hearing on the XM-Sirius merger.

Is the deal good for consumers? Should it be approved? The Wall Street Journal Online invited longtime consumer advocate Mark Cooper, who will testify at Wednesday's hearing on behalf of Consumer Reports publisher Consumers Union and the Consumer Federation of America, to discuss the topic with antitrust lawyer Donald Russell, who spent 24 years at the Department of Justice and later represented EchoStar and DirecTV in their failed bid to merge. Their conversation, carried out via email, is below.

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