The two US satellite radio players Sirius and XM have announced a $13 billion merger bringing together the unlikely combination of Howard Stern and Oprah Winfrey. The involvement of self-styled shock jock Howard Stern on the Sirius platform and the queen of daytime chat Oprah Winfrey highlights the stakes that are being played for in the creation of a national satellite network beaming direct to cars.
Under the terms of the agreement XM shareholders will receive a ratio of 4.6 Sirius shares for every XM share they own. XM and Sirius shareholders will each own 50% of the combined company in what the two companies are describing as a “merger of equals”.
Sirius CEO Mel Karmazin becomes CEO of the new company while Gary Parsons, currently Chairman of XM, will continue in the chairman’s role. Further executives and the name of the new company are due to be named in the next few weeks.
Industry analysts estimate the US satellite radio market to be worth $1.5 billion based on a combined subscriber total of 14 million. However, the two companies continue to bleed cash, reporting combined losses of $1.5 billion in 2005.
The deal is subject to the regulatory approval of the Federal Communications Commission, which has previously forbidden any merger, and is expected to close before the end of 2007. (JC)