RSSSirius predicts post-merger strength
By Tim Conneally | Published July 2, 2008, 3:31 PM
Responding to an unfavorable analyst outlook for post-merger Sirius and XM, satellite radio network Sirius this week published its guidance for 2009, predicting a full year of profitability if the merger is completed.
Just under two weeks ago, Goldman Sachs analyst Mark Wienkes wrote, "While the FCC draft circulation signaling the merger's likely ultimate conditioned approval generated a short-term lift to the stocks, we think any imminent merger-related strength has passed." He went on to add, "With core demand for satellite radio falling amongst the younger demographics, versus rapid increases for MP3 players and other new technologies, and declining core ARPU, we see long-term risk to the outlook."
Subsequently, shares in both XM and Sirius fell dramatically under selling pressure.
On Monday, however, Sirius posted its earnings forecast, anticipating a strong beginning for the combined company, assuming the merger gets approved. Currently unresolved, Sirius and XM have the joint honor of being the subject of the longest merger review in history. This is thanks in large part to opposition from lobbying groups and related legislators. Earlier this week, a group of democratic senators petitioned the FCC to enforce stricter policies regarding Sirius and XM interoperable radios, an issue which opposition has sedulously pushed.
Though no developments in interoperable radios were specifically mentioned, Sirius' CEO Mel Karmazin announced that if the merger takes place in the third quarter of this year, Sirius and XM together can expect positive cash flow for the entirety of 2009, something neither company has done individually.
Karmazin will be the CEO of the combined entity, of which Sirius will be the parent and XM the subsidiary. Net synergies -- or the increase in revenue and reduction in costs due to the merger -- have been projected at a total of $400 million. Similarly, adjusted 2009 earnings (EBITDA) are expected to be in the neighborhood of $300 million.
BTW... didn't Sirius and XM predict pre-merger strenght since 2000 also?
The market says "wolf" has been cried too many times. Balloons, hype and confetti no longer work Mel.
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Today is day 500 since the intent to merge was announced. Regardless of your stance on this merger, pro or con, here's the letter I sent to the FCC that sums it up for me!
FCC Chairman and Commissioners,
As a student of history, it’s ironic that we approach the Independence holiday waiting for word on a merger that was proposed more than 500 days ago. Honoring our founding fathers and this nation reminds us of the conviction, the courage and the wisdom it took to do the right thing despite the political pressures and personal risk of the day.
These were men and women of strength who accepted the responsibilities as well as the rights of their office.
The examples of a Washington, Madison or a Jefferson are lost in the politics of these times. The principles of institutions like this FCC are ruled not by the will or benefit of the people, but too often by the self-serving fortunes of those entrusted. I’m embarrassed for you five FCC leaders. I’m embarrassed for the America that both encourages and condones the politicizing and deliberate procrastination before public service.
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Many are not aware that FCC Commissioners take the oath of office by pledging that they will support the Constitution of the United States of America. At this Fourth of July, and regardless of your stance on this merger, do you see the principles of our Constitution and the spirit of our founders represented by the actions of these five leaders?
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satelite radio is in competition with terrestrial radio, online streaming radio, mp3s, cds and cassette tapes (if there are still some being produced). calling a combined xm-sirius radio a monopoly is a misnomer, because while surely both companies were in competition with each other in one form of radio, both are competing with ground based radio and other forms of audio only entertainment.
i have a real problem with side interests trying to delay/deny this merger and for the fcc commissioner for even listening to the arguements. andd trying to cede some of the combined bandwidth for demographics who aren't going to listen anyway is a very stupid thing to do. the nab (national association of broadcasters, people who have no involvement in satellite radio and is pushing for no merger) is running scared of this merger.
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LOL so what if its a monopoly. there not forcing you to use the product. A merger will be good cause it will be one service and all XM and sirius radios will work with it
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A full year of profitability and a monopoly to boot!
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"With core demand for satellite radio falling amongst the younger demographics, versus rapid increases for MP3 players and other new technologies, and declining core ARPU, we see long-term risk to the outlook."
I wish I could argue with that....
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