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Automotive contracts seen driving satellite radio

W

WhiskeyRobber

By Sue Zeidler

LOS ANGELES, May 30 (Reuters) - Whether the two largest satellite radio companies merge or not, the future of the industry is riding on automotive contracts at a time when competition for in-car entertainment is increasing.

Sirius Satellite Radio Inc.'s (SIRI.O: Quote, Profile , Research) bid to buy XM Satellite Radio Holdings Inc.(XMSR.O: Quote, Profile , Research) for $4 billion would help the two companies cut losses, compete more effectively and turn profits faster, the companies have said. But they have also stipulated they don't need the deal to survive since they already have contracts in place to install millions of radios in new cars in coming years.

To date, neither satellite radio provider has yet made a profit. The companies have borrowed heavily to launch their businesses and establish costly contracts with celebrity personalities such as Oprah Winfrey and Martha Stewart, and sports franchises like Major League Baseball.

On a stand-alone basis, analysts project that Sirius will not post a profit until 2010 and XM not until 2011, according to average forecasts from Reuters Estimates.



http://today.reuters.com/news/artic...11Z_01_N30425855_RTRIDST_0_SATELLITERADIO.XML
 
RadioRobbie said:
"But they [Sirius] have also stipulated they don't need the deal to survive since they already have contracts in place to install millions of radios in new cars in coming years.
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It seems like a tough spot to be in. The only reason the Feds have for approving the merger is to preserve service. But if Sirius publicly makes the case to the government that they can't survive without a merger, their stock gets hammered even more. By assuring investors that they don't need the merger to survive, they are at the same time sending a signal to the Justice Department and FCC that there's no pressure to approve it. This tells me that even Karmazin has written the merger off.
 
Automobile makers might keep satellite radio alive, but not for much longer.

Neither of these companies will be in the satellite radio business in 2010
 
Beerking said:
Neither of these companies will be in the satellite radio business in 2010
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I think they might be in business in 2010, but only after migrating to a wireless Internet platform. But then, so will terrestrial radio companies have to migrate at least some of their product to a new delivery system. The days of FCC licenses representing most of the value of a radio company are probably numbered.
 
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