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More Merger Questions

Glad you're enjoying your satellite service, rallen13; there's a lot to like, you're right.
A lot of talented people are behind the seemingly easy task of putting all those channels with their playlists
and special programs together. When the two companies become one, many of those people will be lost to
the bottom line, the remaining staff will "be thankful to have their gigs," so won't be seeking increases
...and crates of money will go into the pockets of comparatively few.
Let's just hope the quality, diversity and variety you're now enjoying don't get lost in Mel's Merger.
 
I see your point Skyrocker. It's just that I am hearing what I can't hear on Houston radio. I kind of feel that if I had Sirius, I would probably say the same thing about their 40's, et. al., programming. I certainly don't want a merger to cost jobs, although I know it will. All mergers do, no matter the industry. I'm just enjoying music and programs I haven't heard since I was a kid, and it's nice.
 
What I want to know is when will the procedure to get Government approval begin?

It's been a few days into the new year and there has been no new news about it.

I know it's has to get approval, but at the rate their going it will be another 20 years before anything gets settled.
 
I;m thinking that there won't even be a final decision by the 2nd anniversary of the announcement.

Not only does the FCC have to approve this, but another government agency as well. (I believe the Federal Trade Commission) and then if both of those agencies approve it, the N.A.B. will certainly appeal any merger approval and then it will go to the courts.

Also don't forget this is an election year and since this issue isn't as relevant as the economy, the war, health care etc, it's just not going to get much attention at any level, except on the message boards.

Of course, I could be wrong and it could be approved tomorrow! :)

Being an XM subscriber, I really don't see any advantages in a merger, but I'm am afraid many of the XM channels would be axed in favor of the Sirius version of the same channel and I prefer the XM music lists etc., which is why I choose XM over Sirius.
 
drt said:
I;m thinking that there won't even be a final decision by the 2nd anniversary of the announcement.

Being an XM subscriber, I really don't see any advantages in a merger, but I'm am afraid many of the XM channels would be axed in favor of the Sirius version of the same channel and I prefer the XM music lists etc., which is why I choose XM over Sirius.
Click to expand...

I agree with you I'm happy with XM as it is, I don't see how the merger will benefit me. My one year subscription is up in August we'll see where things stand then. If I don't like what I hear I won't renew and they'll be gone. I don't have a big investment in hardware so it won't be difficult to walk away.

I'm impressed with the deep playlists on XM I hear songs that I've never heard anywhere else or haven't heard in a long time. They program for the ACTIVE listener. Makes sense since it's the actives that will pay for radio.
 
Here's a new article on CNNMoney.com:
http://money.cnn.com/2008/02/18/markets/morningbuzz/?postversion=2008021810

Excerpt:
"In addition, Sirius and XM have already satisfied one of FCC chairman Kevin Martin's key concerns by agreeing to offer consumers a so-called a la carte offering if the merger goes through - the ability to pick and choose programs instead of being forced to pay for a more expensive package that includes all channels."

Does anybody honestly believe that eliminating competition will result in lower prices? If you buy that one, please contact me about a great deal I have on some beach property here in Atlanta.
 
DashRiprock: Does anybody honestly believe that
eliminating competition will result in lower prices?
Click to expand...
Not me.

I've witnessed the patterns reappear time and again. They've never added up
to lower prices.

When the Golden gate Bridge was originally built in the last century, they
promised it would be free after the building debt was paid. Never happened.
Now they're trying to toll the roads approaching it as well. Where did that
promise of free go?

In our business of broadcasting, as soon as the merger takes place, the owners
begin the cutbacks. (In the case of XM, the cutting back has been peremptory)
Then, having established that procedure as "one that works," they repeat it over
and over again. The only time customers and quality programming come into the
equation is at the very beginning, when promises can be extracted.

Do you think customers could unite and render an agreement that holds the
suppliers to their promise of "lower prices" for more that four quarters?

Not me.
 
A different perspective,

Why is it so essential that the government protect us from higher prices on a service we "Choose", yet they do nothing about the outrageous price of gas and the amazing profits of oil companies? This merger will improve the financial health of 2 companies,and keep a fledgling industry alive, yet they do absolutely nothing about the huge profits the oil companies are making at the expense of the American consumer. if it costs 5 dollars extra a month for half XM and half Sirius,, big deal, it still beats the hell out of terrestrial radio. 6 years ago I paid under a dollar a gallon for gas,, today its around 3 dollars a gallon, wheres my protection from that?

I guess oil companies really know whose palms to "grease".
 
I could not begin to explain oil company methods and profits, but the satellite radio issue seems clear enough.

The two companies were awarded spectrum just like satellite TV. The feds said they could not merge because there must always be competition within the satellite service. Competition from other places and the 'a la carte' thing are feeble PR efforts.
 
The sale/merger contract between XM and Sirius can unwind without any breakup fee the first week of March, 2008. Since this date is fast approaching, it will be interesting to see if XM decides to back out of the deal at this time without any cash penalty. Stay tuned.
 
drt said:
Not only does the FCC have to approve this, but another government agency as well. (I believe the Federal Trade Commission) and then if both of those agencies approve it, the N.A.B. will certainly appeal any merger approval and then it will go to the courts.[/b]
Click to expand...
DRT-

There are only 2 agencies involved in this particular merger, the FCC and the DOJ. The FCC is needed to approve the license tranfers(s) of XM to Sirius; and the DOJ is needed to define the market for satellite radio.

Once the merger was announced, XM and Sirius had 30 days to file their HSR Forms over antitrust issues to the DOJ/FTC. After that, either the DOJ or the FTC will open an official investigation into the effects/impacts of the proposed merger -- but not both. During the investigation, the group that opens it may make a "second request" within 60 days or so of the HSR filing, which is when they essentially open all the books of the merging entities and ask a million questions -- you've never seen so much paperwork. Once both companies have certified that they have "substantially complied" with the second reqest in full, the requesting agency typically comes to their decision within 30 days after that... then they will either close their investigation; or reach a settlement agreement with the merging partners requiring divestitures; or file a lawsuit and injunction in Federal Court attempting to block the merger.

In XM and Sirius' case, they filed their HSR Forms in March last year; they received their "second request" in the summer; they certified compliance of the second request on September 4 last year -- and have been waiting ever since. XM and Sirius certified their compliance of the Second Request, 175 days ago.

It is possible that the FCC and DOJ may be jointly announcing the outcome of this investigation. On several occasions, FCC commissioners have mentioned that they are "co-ordinating" their efforts with the DOJ. It is thought that the DOJ may be ready to close their investigation, but may be stalling the announcement until the FCC concludes what concessions they are going to impement -- some believe that the FCC may be negotiating these concessions now with the companies and that once this concludes, the FCC and DOJ will jointly announce the decision... in which case the merger would close pretty quickly since the companies have shareholder approval and have had over a year to prepare for it.

The NAB can certainly slow the process -- and has greatly. But they really can't appeal the process. They can file their own antitrust lawsuit/injunction as a 3rd party, attempting to block the merger. However, Courts are very reluctant in such cases... if the Feds aren't willing to attempt to block it, then private (and interested) parties will be given little leeway in such an attempt. Not to mention that it would be a VERY expensive proposition for the NAB to undertake -- with a high probability of failure. And (NAB) forget about challenging at the FCC level, once they've made their decision there. Those of you in radio know how difficult it is to challenge a license transfer. Once the ruling agencies make their decision, it will pretty much be done.
 
TheGreenskeeper said:
This is not a merger. Sirius is buying XM.

If it happens, XM customers loose.
Click to expand...

Not exactly. Current Sirius shareholders are giving up 50.3% of the equity in the company they own to merge with XM. An "acquiring company" doesn't give up the majority of the equity in their company to "buy" the competitor -- and be seen as the acquirer.

This is a 50/50 merger, in which current Sirius shareholders will hold 49.7% of the equity of the newly merged company, and will retain 5 of the 12 seats of the Board of Directors; current XM shareholders will hold 50.3% of the equity of the newly merger company, and will retain 7 of the 12 seats of the Board of Directors.

On the surface, it appears as if Sirius is aquiring XM, due to the fact that Sirius capital stock is being used for the currency and because Karmazin is remaining on as CEO; however, it is XM shareholders that will retain the majority of the equity and more seats on the new Board of Directors, including the President of the Board.

This is pretty much as close as you can get to being a true 50/50 merger... and certainly not one acquiring the other.
 
DashRiprock said:
The two companies were awarded spectrum just like satellite TV. The feds said they could not merge because there must always be competition within the satellite service. Competition from other places and the 'a la carte' thing are feeble PR efforts.
Click to expand...
This is partially true... but not exactly. The companies weren't "awarded" the spectrum... their bids were the winning bids at auction -- CD Radio and American Mobile Satellite collectively paid the FCC well over $170 million for the use and licensing of this spectrum. Money talks these days, especially on auctioned spectrum.

Furthermore, the "condition" in the DARS license that prevents "one license holder from holding both DARS licenses" was not an adopted rule of the FCC, nor was it a condition of license. It was a policy statement mentioned in the Report & Order for DARS. XM/Sirius challenged the wording of the "policy" and the FCC realized this, so they opened an NPRM on the request. Further, the policy was predicated on the market definition for DARS -- as it was defined in 1997; here in 2008, if the market for DARS is redefined, then that policy statement quite likely becomes moot. As it turns out, the market for DARS is smaller than anticipate and likely not big enough to support 2 satellite providers.
 
busterluck said:
The sale/merger contract between XM and Sirius can unwind without any breakup fee the first week of March, 2008. Since this date is fast approaching, it will be interesting to see if XM decides to back out of the deal at this time without any cash penalty. Stay tuned.
Click to expand...

The closing date for the merger agreement is March 1, 2008 (this Saturday). If the merger is broken up prior to this date, then there is a $175 million penalty; after this date, either party can walk away from the merger. However, given the time and money spent on this merger to date -- it is HIGHLY unlikely either will walk away.

XM and Sirius spent over $2 million last year lobbying Congress; not to mention that the two spent upwards of $50 million in 2007 on other merger related expenses. To walk away now, while waiting for the FCC and DOJ to rule, is not a likely scenario. You will more likely see the two of them mention this week that they have extended the terms of the agreement another 6 months or so.

~~~~~~~~~~

7.1 Termination. This Agreement may be terminated at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating

...

(c) by either Sirius or XM, upon written notice to the other party, if the Merger shall not have been
consummated on or before March 1, 2008; provided, however, that the right to terminate this Agreement
under this Section 7.1(c) shall not be available to any party whose failure to comply with any provision of
this Agreement has been the cause of, or resulted in, the failure of the Effective Time to occur on or
before such date;

(d) by Sirius, upon written notice to XM, if:

(i)(A) an Occurrence with respect to XM has occurred, (B) XM has delivered a Notice of
Recommendation Change to Sirius pursuant to Section 5.4(b)(ii)(II), (C) XM shall have not
withdrawn such Notice of Recommendation Change, and (D) Sirius has elected (by written notice to
XM made by the close of business on the Sirius Election Date) to terminate this Agreement pursuant
to this Section 7.1(d);

(ii) Sirius is entitled but fails to terminate this Agreement pursuant to Section 7.1(d)(i) by the close of
business on the Sirius Election Date and thereafter (A) XM shall have materially breached its
obligations under this Agreement by reason of a failure to call the XM Stockholders Meeting in
accordance with Section 5.1(b) or (B) XM shall have failed to prepare and mail to its stockholders
the Joint Proxy Statement/Prospectus in accordance with Section 5.1(a); or

(iii)(A) XM shall have effected a Change in XM Recommendation other than in accordance with the
terms of this Agreement or (B) XM shall have materially breached its obligations under Section 5.4(a)
(iii);


(e) by XM, upon written notice to Sirius, if:

(i) (A) an Occurrence with respect to Sirius has occurred, (B) Sirius has delivered a Notice of
Recommendation Change to XM pursuant to Section 5.4(b)(ii)(II), (C) Sirius shall have not
withdrawn such Notice of Recommendation Change, and (D) XM has elected (by written notice to
Sirius made by the close of business on the XM Election Date) to terminate this Agreement pursuant
to this Section 7.1(e);

(ii) XM is entitled but fails to terminate this Agreement pursuant to Section 7.1(e)(i) by the close of
business on the Sirius Election Date and thereafter (A) Sirius shall have materially breached its
obligations under this Agreement by reason of a failure to call the Sirius Stockholders Meeting in
accordance with Section 5.1(c) or (B) Sirius shall have failed to prepare and mail to its stockholders
the Joint Proxy Statement/Prospectus in accordance with Section 5.1(a); or

(iii) (A) Sirius shall have effected a Change in Sirius Recommendation other than in accordance with
the terms of this Agreement or (B) Sirius shall have materially breached its obligations under
Section 5.4(a)(iii);
 
clarismae said:
XM and Sirius spent over $2 million last year lobbying Congress; not to mention that the two spent upwards of $50 million in 2007 on other merger related expenses.
Click to expand...

More red ink. A mil here and a mil there starts adding up to real money after a while. Who pays? We do.
 
How could satellite radio-- especially in the light of their diluting listener's
choices by one half in a merger-- possibly make it up to their audience and shareholders?
Just like the terrestrials, it's gonna take vision to fix things. I wonder what would your
ideas be for better performance? Better variety? Better prices? Better choices?
Not according to Lord K. whose solution seems to be charging more for commercials:
"We ought to be doing a better job in selling Howard," Karmazin said Tuesday.
Apparently K is hobbled in his perception of the possibilities of satellite radio --by
his Howard Vision.
 
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