Mergers, Acquisitions and Takeovers Case Study

XM and Sirius Merger : Potential vs Pitfalls

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Abstract:

The US Satellite Radio industry in 2006 was defined by XM Satellite Radio Holdings Inc. and Sirius Satellite Radio Inc. with subscriber base of about 7 million and 5 million respectively. During the same year, Sirius initiated a merger proposal with XM quoting “significant benefits” out of a combined entity. But, XM turned down the idea of merger stating that both the companies could co-exist in the market as the industry was still in the nascent stage.

The refusal of merger move by XM evoked mixed responses from industry analysts. There were many exchanges of ideas regarding the likelihood of a merger. It was also debated whether the potential merger would benefit both the companies. Industry experts made an attempt to project the post-merger scenario. Analysts were also trying to grasp whether XM was justified in refusing to merge with Sirius.

Pedagogical Objectives:

• To study the dynamics of the US satellite radio industry
• To understand the advantages of a potential merger
• To analyse the reasons spelt out by XM Radio for not supporting the idea of a merger
• To comprehend the post-merger scenario and the pros and cons for the industry and the market.

Keywords : Mergers,Acquisitions,Alliances Case Study;Merger; satellite radio; XM; Sirius; FCC; Broadcast; Entertainment; Music; Subscriber; Monopoly; UBS; DirecTV; Wall Street; EchoStar; Dish Network

Contents : 
The US Satellite Radio Industry
XM & Sirius Satellite Radio – An Overview
Sirius Proposes to Merge
XM and Sirius in Debt Trap and Losses
Overlapping Services to the Market
Deals with Automakers and Various companies
Bottlenecks for the Sirius-XM Merger
The Federal Communications Commission (FCC)