NEW YORK - XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc., rivals in the fledgling satellite radio industry, have agreed to combine in a deal that investors hope will result in lower costs, assuming it overcomes significant regulatory hurdles.
The companies billed the deal announced Monday as a merger of equals, with shareholders of both companies owning approximately 50 percent of the combined entity. However, Sirius will be giving $4.57 billion of its stock to XM shareholders, a substantial premium to the value of their shares.
Sirius' Chief Executive Mel Karmazin will lead the combined company, and XM's CEO Hugh Panero will stay on only until the deal is closed. XM Chairman Gary Parsons will remain in that role.
The deal faces substantial obstacles in Washington, including a
Federal Communications Commission provision that specifically forbids the two companies to combine.
Analysts have noted that the FCC could change the rule, but in a statement late Monday FCC Chairman Kevin Martin said that the "hurdle" would be "high" to prove that the deal would be in the public interest.
"The companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices," Martin said.
A combination would also have to meet antitrust approval from the
Department of Justice. The companies are expected to argue that they compete not only with each other but also with traditional radio and a growing base of digital audio sources such as iPods, mobile phones and non-satellite digital radio.
The XM shareholders will receive 4.6 shares of Sirius stock for every share they own, valuing them at $17.02 each based on Friday's closing price for Sirius shares. That gives XM shareholders a premium of 22 percent to the $13.98 closing value of their stock on Friday. Markets were closed Monday for the Presidents' Day holiday.
Investors and analysts have been speculating about a deal for months, and are hoping that the cost savings that would result would make up for softening retail demand for satellite radio units. Both services offer dozens of channels of talk and commercial-free music for monthly fees of about $13.
XM radio receivers can't receive signals from Sirius, and vice versa. But Karmazin and Parsons said in an interview that the companies are working on developing a receiver that could receive both signals.
In the meantime, they said, assuming the deal goes through, the companies would make other arrangements to bring programming that's currently exclusive to one provider to listeners of the other, such as getting Major League Baseball games — currently only available on XM — to Sirius listeners.
"We will be taking every effort to find the best possible programming combination," Parsons said.
It's too early to say what the deal will mean for subscription prices. The merger could bring down the cost of providing service, but at the same time give the company more pricing power as the only U.S. satellite radio provider...[READ MORE]
Consumers and fans of satellite radio will have to wait and see if this merger really opens up the material available to satellite radio users, or if it totally blows satellite radio out of the water when it comes to pricing, similar to how cable companies have in certain regions where they are the only provider. If you're a subscriber to either XM or Sirius I'd be greatly interested in your input on this matter.
Music
Featured Album: The Shins Wincing the Night Away
I've finally got around to listening to The Shins third release, Wincing the Night Away, and so far I've really liked what I've heard. The album, which shows the band's deepening maturity as musicians, is full of complex tastes, similar to a really good bottle of wine. I'm not sure there are the same number of hits on this album as in the past, and a few of the songs are a bit of a reach for me (Split Needles, Black Wave), but all in all it's still a good album that shows a lot of growth, perhaps not up the billboard charts, but in depth as musicians.
Here's Pitchfork's take on the album:
On their third Sub Pop full-length, Wincing the Night Away, the Shins take a decisive but wobbly step out of their comfort zone, and in doing so sacrifice much of this musical/emotional proximity effect. While the band has taken a good deal of criticism for sounding "too average" or "boring," the ill-suited sonic punch of Wincing the Night Away throws the singular strengths of their previous work into stark relief. The almost-live sounding Chutes Too Narrow left plenty of room for singer James Mercer's excellent vocals to guide its songs both melodically and rhythmically. But on Wincing, too-loud drums and bass distract not only from the elegant movement of Mercer's melodies, but from the delicate harmonic tensions that underlie them.The Shins - "Girl Sailor"
That said, the first four tracks of Wincing are unerringly solid. Echoing the striking contrast of Chutes Too Narrow opener "Kissing the Lipless", Wincing's lead track, "Sleeping Lessons", builds from sparse, muffled arpeggios to full-on rock'n'roll. While slick and robust production doesn't flatter much of the record, it works well as a counterpoint to the song's quiet initial moments. "Australia" is a peppy rocker in the spirit of Chutes' best, elevated by a newfound confidence and expressive range in Mercer's voice. Single "Phantom Limb" is pure, lush pop, boasting a chorus that plays like the aural equivalent of that optical illusion where a staircase appears to ascend indefinitely.
With the exception of the excellent "Red Rabbits", the more noticeable aesthetic departures on Wincing don't fare as well. "Sea Legs", with its intrusive synthesized drum beat and lackluster arrangement, brings to mind that unfortunate Eve 6 song about putting your heart in a blender, while "Spilt Needles" comes off as sterile and overcalculated, despite its strong chorus. Still, the album finishes strong: "Girl Sailor" surpasses "Phantom Limb" in lyrics and overall structure, making it a likely contender for the album's second single, and "A Comet Appears" is beautifully orchestrated, if not terribly memorable, making it an appropriate closer for a record that often emphasizes texture over form.
There's a time-honored imperative to encourage bands for attempting to develop and expand, and the Shins could certainly take their music in many different directions with great success. But it's hard not to notice that the least adventurous tracks on Wincing the Night Away are generally the most rewarding. In many cases, the album's more experimental touches seem at odds with the natural elegance of Mercer's songwriting, making it hard to read the album as a shoddy blueprint of what a more "difficult" Shins record might sound like. Instead, Wincing the Night Away is a lovely and well-executed album and-- for the first time in the band's career-- nothing more.
-Matt LeMay, January 22, 2007
The Shins - "Turn on Me"
The Shins - "Pam Berry"
Bonus music from We Are Scientists:
We Are Scientists - "Cash Cow"
We Are Scientists - "Worth the Wait"