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Mergers, Acquisitions and Takeovers Case Study

Case Title:

Sirius XM Merger in US Satellite Radio Market: Missing Tunes of Profit

Publication Year : 2010

Authors: A Naidu, B Gopal, K Suresh

Industry: Entertainment


Case Code: MAA0211IRC

Teaching Note: Not Available

Structured Assignment: Not Available

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The only two players in the satellite radio industry in the US, Sirius and XM merged on 29 July 2008 after a prolonged battle with the regulators on anti-trust laws and monopoly. At the time of the merger Sirius and XM were confident that their synergies would cater to a wider market. However, two months after the merger in September 2008 the company forecast a lower subscriber growth and lower profit projections for the financial year 2008-2009. After the merger, the company was confronted with several problems such as declining stock price, huge debt, and cut-throat competition from other radio and music formats. On the other hand during the same time period many of the terrestrial and web radios registered a decent profit. These issues raised many questions on the survival of the satellite radio industry and Sirius XM.

Pedagogical Objectives:

  • To understand the main reasons for the merger of Sirius and XM.
  • To analyse the post-merger scenario.
  • To discuss the major problems faced by Sirius XM radio after the merger.
  • To analyse the future prospects of the satellite radio industry in the US.

Keywords : US radio industry, Satellite radio, Sirius, XM, Satellite based digital audio radio service, Merger, US Federal Communications Commission, Regulators, Original equipment manufacturer, Revenue model, Cost structure, Media players, Market penetration, Growth projections, Competition

Contents : 
Satellite Radio Industry in the US
SDARS Technology
Cumulative subscribers of Sirius and XM
Market penetration of the major players
Quarterly net subscribers of Sirius and XM
Sirius-XM: Post Merger Blues
Conditions put up by FCC for clearing the merger
FCC Conditions on the merger of Sirius and XM
Internet Radio Growth Estimates 2005-2020

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