Xm and Sirius to Merge, Leaving One Big Question: Who Survives?
Now that satellite radio companies Sirius and XM have finally confirmed plans to merge their operations in a $13-billion deal, there's a serious detail left unknown.
Who's going to lose their jobs?
Well, okay, there's all the technical and clerical folks whose jobs suddenly became redundant because some joker at the Company Formerly Known As the Competition now shares their same corporate parentage.
But the big question -- besides the issue of whether federal regulators will approve the deal, or whether the technologies of the two systems can be merged or whether this really will improve their financial fortunes -- is which high-profile (and not-so-high-profile) on air personalities will get their walking papers.
In my conversations with Bubba's people around the time of his wedding, they expressed mostly confidence about the merger. They are, after all, significant colleagues of the best-known and highest-paid employee at either company. Surely, their talents will be required for a while?
Perhaps. the only person who definitely is losing a job is XM CEO Hugh Panero, who is getting jettisoned for Sirius CEO Mel "friend of Howard" Karmazin. Because XM shareholders will trade their stock for Sirius stock under the proposed deal, and it's the underperforming company of the two, I'm assuming the new company would be called Sirius.
But since all of this is so new, and there's an 8:30 a.m. conference call convened tomorrow morning to discuss it all, I don't think anyone knows much -- not even how many channels the new and improved company might offer subscribers.
A press release issued today predicted he merger would be complete by year's end. But it seems like an awful lot of loose ends to tie up in 10 months -- including a government review process which is known for everything but its speed.
As a Sirius subscriber and fan of satellite radio, I'm torn. I'm hopeful we listeners will get access to XM's 170 channels along with Sirius' 65 or so. But I'm cynically confident it will involve some extra purchase or loss of services that will frustrate me as well.
Here's the release:
SIRIUS and XM to Combine in $13 Billion Merger of Equals
Provides Consumers with Enhanced Content, Greater Choices and Accelerated
Enables Satellite Radio to Better Compete in Rapidly Evolving Audio
Extraordinary Value Creation for Shareholders
Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as
Chairman of Combined Company
WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ -- XM Satellite
Radio (Nasdaq: XMSR) and SIRIUS Satellite Radio (Nasdaq: SIRI) today announced
that they have entered into a definitive agreement, under which the companies
will be combined in a tax-free, all-stock merger of equals with a combined
enterprise value of approximately $13 billion, which includes net debt of
approximately $1.6 billion.
Under the terms of the agreement, XM shareholders will receive a fixed
exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they
own. XM and SIRIUS shareholders will each own approximately 50 percent of the
Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become
Chief Executive Officer of the combined company and Gary Parsons, currently
Chairman of XM, will become Chairman of the combined company. The new
company's board of directors will consist of 12 directors, including Messrs.
Karmazin and Parsons, four independent members designated by each company, as
well as one representative from each of General Motors and American Honda.
Hugh Panero, the Chief Executive Officer of XM, will continue in his current
role until the anticipated close of the merger.
The combined company will benefit from a highly experienced management
team from both companies with extensive industry knowledge in radio, media,
consumer electronics, OEM engineering and technology. Further management
appointments will be announced prior to closing. The companies will continue
to operate independently until the transaction is completed and will work
together to determine the combined company's corporate name and headquarters
location prior to closing.
The combination creates a nationwide audio entertainment provider with
combined 2006 revenues of approximately $1.5 billion based on analysts'
consensus estimates. Today the companies have approximately 14 million
combined subscribers. Together, SIRIUS and XM will create a stronger platform
for future innovation within the audio entertainment industry and will provide
significant benefits to all constituencies
"This combination is the next logical step in the evolution of audio
entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio. "Together, our best-in-class management team and programming content will create
unprecedented choice for consumers, while creating long-term value for
shareholders of both companies. The combined company will be positioned to capitalize on SIRIUS and XM's complementary distribution and licensing
agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders."
The transaction is subject to approval by both companies' shareholders,
the satisfaction of customary closing conditions and regulatory review and
approvals, including antitrust agencies and the FCC. Pending regulatory
approval, the companies expect the transaction to be completed by the end of