Discuss the Merger Conference Call LIVE In Our Chat Room[update]
As we mentioned earlier with the merger announcement, there will be a conference call today at 8:30 with Mel Karmazin from Sirius and Gary Parsons from XM to discuss the merger. Listen to it live on channel 122 on Sirius, channel 200 on XM, or at investor.sirius.com.
We will use this post to update you throughout the call, similar to how we do it for quarterly conference calls.
You can also feel free to join us in the chat to talk about the conference call, and get information even quicker. To get to the chat, click on ‘chat’ at the top of any page on Sirius Backstage.
Update: They have added an Investor Presentation to the site(pdf format)
-Onhold music is playing
-Sirius 122 doesn’t have the conference call yet, just a replay of the Afternoon Blitz
-Not on XM 200 either yet
-Tune to CNN 132 or on your telly right now for a story on satellite radio merging(over)
-Sirius 122 saying the CC coming at 8:30(1 minute to go!)
-Music started on 122
-Conference Call will begin shortly. Webcast is 5 seconds behind Sirius
-Conference Call started at 8:35a
-Reportedly still a loop on XM
-Mel doesn’t have any audio; feed went dead
-back to onhold music
-Back 8:42a
-Mel Karmeezee, according to the operator 
-”next logical step in the evolution of satellite radio… will create long term value for the shareholders of both companies”
-bring people from both companies
-see total cost savings of $3 billion to $7 billion
-they will deliver more cash flow faster merged than as a single company.
-expects to offer more diverse programming for underserved interests
-best content from both companies
-will be able to offer radios with signals from both companies sooner merged
-radios will be cooler, lighter, smaller, etc.
-merge the satellite and repeater infrastructure
-offer live video, real time traffic and weather, and “infotainment”
-they can expand the market with more “compelling content”
-only type of transaction that works long-term
-still onhold music online
-more advertiser potential
-147% growth over the last 4 years
-estimated $1.5 billion growth in revenue this year
-if you like corporate buzzwords, listen to this presentation
-confident they have the right strategy
-Still deciding name and location of the new company
-hope transaction to end by the end of 2007[ed note: good luck]
-Hugh Panero will exit at the completion of the merger
-they will remove duplicate channels to make more niche programming
-lots of emerging competition is causing them to do this
-expect shareholder vote in 4-6 months, with regulatory approvals within 9 months
-hope this additional programming will allow them to grow their subscriber base
-there is some other info I’m not covering because it is already provided in the press release from yesterday
-expect all the specialty content from both services such as Stern, Oprah, etc. to be merged onto one service.
-Q&A time
-believe there are synergies in every single line item
-cannot give synergies right now because of anti-trust
-says they would not go into the transaction if they thought it was not in the public interest
-breakup fee: confirms what Orbitcast said earlier of $175 million
-breakup fee paid if one board does not recommend the transaction, so either could be the recipient
-Mel on regulators: “we’re going to corrup, I mean cooperate with them”
-webcast works now
-better value proposition to the consumer and the companies
-research says there are people out there that like both companies’ contents and having two radios is not as attractive as having a single radio that receives both.
-both engineering teams working on radios that receive both systems
-on redundant channels: exclusive content deals can be changed to a shared content deal in the interim but didn’t provide a date on when the new channels could be merged
-both companies will continue to operate as they have been for now
-will the have enough power in the satellites to broadcast 25 MHz of bandwidth? Have the ability to integrate both systems together with additional development
-have the viewpoint that they are not using the repeaters for local programming, and that broadcasting local content nationally is ok
-”NAB putting down everything competitive to them”
-Merger changing the royalty agreements with the OEM auto manufacturers? Retail is the big driver, and will be the first to have interoperable radios. Think the OEM partners see great promise with a combined company.
-Sirius-5 satellite will still launch in 2008
-Pricing: not commenting directly on the issue, but talking about a combination of price and product.
-Unlike DISH and DirecTV, the market is not all pay services right now; only 10%
-advertising line item will “contribute significantly” to ARPU over time.
-Sirius today doesnt’ want to do anything that will slow down the growth of satellite radio
-SIRI opens at $4.04; XM at $16.30
-With millions and millions of radios out on the current spectrum, it would not be in the public interest to give back spectrum in order to get the deal approved
-The surviving platform is “both”, very quick to answer that
-process of getting the waiver from the FCC on the spectrum for the merger: within 25 days from the signing of the merger agreement, they will file their application at the FCC, and then the five commissioners will vote on it after they go through their red tape
-$26 people have to pay to get both services right now can be lowered
-transaction will give more significant free cash flow
-asked if they will buy back shares, Mel just provides options of what to do with free cash flow
-team in Boca Raton working on the interoperable radio
-conference call ends at 9:40a
Quick analysis:
-They did not mention how long it will take to consolidate into one service. This could mean several years until that happens. They also did not comment on future pricing of the service once it does combine, or what will happen to older radios. It seems those might be questions down the road to look at.
-It is surprising to see that they will continue development on the Sirius 5 satellite. I thought that to be an area we would see significant cost synergies of at least $100 million if they stopped development of that.
-There is a website coming together that will be ‘coming soon’ called http://www.selectsatelliteradio.com
BUT THE WORST! They put it on 122, which is not available on the internet! So I get out of the car, go to my office, and ....
These 2 clowns sound so clueless. It amazes me that EITHER company ever got opff the ground. This conference is all corporate speak and blah blah blah. "leverage, cash flow, innovate, a la carte (grab your ankles).
Mergers of equals seldom work, if any ever have worked. Look at Synoptis/Wellfleet, Sprint/Nextel, I could go on.
Sirius was nice while it lasted,though could have been much better.
I'm sure many of you also noted Mel's fixation with advertising. Waht do you bet no ad music is one of the first casualties? by bmcwilli
WE ARE SCREWED!!!!!!!!!! Ya lowered to $19.99. If this happens ... im out. by Fasmo
WE ARE SCREWED!!!!!!!!!! Ya lowered to $19.99. If this happens ... im out.
WE ARE SCREWED!!!!!!!!!! Ya lowered to $19.99. If this happens ... im out.
After all the talk of synergy and cost savings and more access to advertising, you'd think they could offer both services for LESS than we're paying now.
I don't know if I'll be out with a minor increase, but if it does get around 20 a month for the full tier service, then I see an iPod in my future
edit: found it...firefox didn't open the popup window... by syphix924
1) Price increase (they hinted to it because according to them we pay $26)
2) More commercials!!! (they said with over 14 million subscribers they will increase their advertisers!!) woo hooo!! Good for us!!!
Looks like Howard Stern fans are going back to 20min of commercials.
This is bad news my friends by Fasmo
Here's what I predict/hope:
Level 1: Music only: $9.99 (for both online & satrad)
Level 2: Music + Talk/news: $12.95
Level 3: Music + Talk/news + sports: $14.95
Level 4: Music + Talk/news + sports + Howard: $16.95
Family Plans:
Level 1: $4.99
Level 2: $5.99
Level 3: $6.99
Level 4: $7.99
I don't think either SIRIUS or XM really know how this is going to shake out yet. Regulatory approval is first, THEN they work out all the "kinks". by syphix924
I'm so tired of talking about content, content, content. If the quality of that content is sub-par, what good is the content?
I was listening to channel 122 before the Conf call kicked in, and it was a sports station? It sounded HORRIBLE! Even if I loved those sports talk guys, how could I listen to a show that sounded like it was coming from the Moon circa 1969?
Granted, Sirius was starting to get Music SQ under control, but it was still not where it needs to be for a pay service.
They are talking about "tiers" and "price hikes" for what? More crap for me to not listen to because thee SQ is grating?
Video in the backseat? Screw that. Wal-Mart, $99, no monthly fee, theres your video in the backseat. Good Lord!
Just like the NAB, I'm waiting to see what the actual customer benefit is to this buyout. by cornflakeguy
Now, lets say you want additional content that what you already have. Like major league baseball. Sirius will offer that to you, for an additional price. You don't want it, you don't have to take it.
In summery, your subs are not going to cost $26. In fact, what Mel said was if you wanted content from both companies right now, it would cost $26. He's suggesting, you will be able to get all that content in the future for less than that. He's not saying if you only want what Sirius offers now, that you will have to pay $26. If that were true, Sirius/XM would have no chance before the Department of Justice. by NFL-Fan
Advertising should drive most of the revenue with a little of the subscription rate. by jojopuppyfish
You guys all talk about why they wouldn't do certain things because it wouldn't make sense. Well, if there's anything you should ever be 100% certain about, is that NOTHING in the business world is done because it makes or does not make sense. It happens because someone's wallet is going to get heavier.
1. Clear Channel, if clear channel is any part of this merger of equals, my days of satellite radio are over. I will not pay even 1/10000000th of a cent to those music ruining jackholes.
2. Will commercials be included on the music channels? Why anyone would be ass stupid enough to PAY for commercials is beyond me. Plenty of pay cable networks do not have commercials, so why is this any different?
Those two things there are enough to send me packing. by vw mofo
You're really reaching with this. The only thing Sirius doesn't have right now (That's of value) is MLB. So is this why they're doing the merger?? To pick up MLB and to offer it ala carte??? Everything else is marginal. You really think they're going to break it down by having a Sirius basic package and an XM basic package??? Both companies don't exist after the merger!!! by Bluehorseshoe
This is just like in the sports world with Trade Rumors.....wait until it's a done deal, and everything is in print before you get mad, throw a fit, drop your subscriptions, etc. by Mkrucejr
Most interesting part?
No.
More questions ... If I decide to continue using my Sirius receiver that I have now...
I'll be getting what Sirius has to offer + shared content.
Will I still be listening to the Big 80's, while an XM subscriber who kept his XM receiver be listenting to XM's 80's channel? Or, will the overlapping channels merge soon after a merger?
If they will add shared content to what I receive now, What will I lose in return? (assuming I continue to use the receiver I have now)
I'm not expecting real answers, only speculation at this point. Just thinking as I type. by 7Aaron
I know we'd all love to keep our favorite XM/Sirius Delphi/Stiletto receivers and keep getting our favorite XM/Sirius 80's channels on them for the next 10/15 years, but that ISN'T GOING TO HAPPEN!
Yes, the SATELLITES will continue to operate for the next 10 to 15 years, but the PROGRAMMING will be combined.
Even IF the current radios continue to operate forever, you'd end up paying the new, probably higher, subscription rate for at most HALF of the current programming.
If the merger goes through as planned, they aren't going to keep two separate lineups running just so Joe Blow doesn't have to trade in his radio. When they talk about "Synergy" they mean a shitload of channels/people/technology go out the door.
You can cry all you want about how much better your Beta tapes are, but just try and find a new movie for your machine on Amazon. Go ahead. Try. by angrytrousers
But Ala carte savings equals less content then what we have right now for the money.
Say you have a basic sub for just $10 a month and I want some extras. Howard is $3 extra, NFL $2 extra, NBA $1 extra, NHL $1 extra, etc. All things I already have right now for a set price of $13 a month. by Bluehorseshoe
Advertising should drive most of the revenue with a little of the subscription rate.
Quote:
Will current XM subscribers need to buy new radios?
No.
Speculate away...
This would really piss me off. I recently payed the big bucks for a lifetime sub. This included like 3 radio swaps within it (which I think is BS, lifetime should for the time in my life, not the time in their equipment).
Thing is, I just called up and requested it, payed for it, and now have it. I never heard of nor was I sent any sort of contract/warranty stating the parameters of the 'lifetime' sub. Makes me think they could just yank it away if they wanted with this new merger...either that or not allow any xm stations through.
I hope that Sirius recognizes the lifetime subscribers as confident and loyal customers and will reward them with full access to ALL future programming. by dakbala
From their Terms & Conditions Section 6.c (my bolded emphasis)
Which would you vote for:
a) a merger, creating a "monopoly", but retaining your satrad providers "best lineup", or
b) a 50/50 shot at your favorite satrad filing for bankruptcy and closing its doors.
Which would you like, because I see one or the other happening in the next 2-3 years. by syphix924
With all the costs associated with the potential merger, if it doesn't go through, then bankruptcy will be real possiblilty for both services. by atlwxman
Which would you vote for:
a) a merger, creating a "monopoly", but retaining your satrad providers "best lineup", or
b) a 50/50 shot at your favorite satrad filing for bankruptcy and closing its doors.
Which would you like, because I see one or the other happening in the next 2-3 years.
You kidding, they could merge and still go bankrupt together. Unlike other companies who are merging together these days to be competitve against other companies who are doing the same....these two are merging just to stay alive in a consumer market that is so small, it's like a satellite in the vastness of outter space. (No pun intended).
Only 10% of the populess of US and Canada subscribe to XM and Sirius???? There will still only be 10% after the merger.
I tell you one thing, if they throw in advertising on the music channels I'm completely 100% done with sat radio. I got sat radio because of the commerical free music. Why the hell would I pay to hear commericals when I can listen to FM that has commericals but I get that for free??? Adversiting companies pay Sirius/XM to advertise on ther radio and I have to pay to listen to them?? Ta hell with that!!!!!!! It's bad enough I have to hear the DJ's blabbing stupid crap every other song much less 5 minutes worth of commericals every few songs.
I don't know what all this 'al la carte' crap intales, but you better believe it's something that's going to 'nickle and dime' everyone. All the good stuff will be an al la carte item and by the time you add it all up for it to be equivelent to the service we already get, it will be 20-30 bucks a month. Like someone else mentioned earlier, the only thing Sirius doesn't have is MLB sports. XM has nothing beyond that. Sirius should have just let XM go under then it would have been the only radio company, no competition by default. Won't have to bid 500 million for a radio personality like Howard to make sure another sat radio company didn't get him. How many new subs did Sirius get from that deal anyway? I bet not enough. by xPhantomx
Which would you vote for:
a) a merger, creating a "monopoly", but retaining your satrad providers "best lineup", or
b) a 50/50 shot at your favorite satrad filing for bankruptcy and closing its doors.
Which would you like, because I see one or the other happening in the next 2-3 years.
My biggest issue with this now is how it seems that even if they keep both slices of bandwith, they are still gonna chop the channels in half so they can simulcast to both sets of radios, that sucks. The only good thing I saw was more channel and better SQ, that doesn't seem likely anymore. by blyons200
1. On the music stations where there are overlap, i.e. both have a 80's channel, there will one feed going to both sets of satellites. The cost saving will be on those stations that have DJ's on both services, one set of DJ will be laid off. Also Program Directors will be let go where there is overlap in genre's covered
2. If you like your current offerings on your particular service then the price will either continue to be the same or raised a dollar or two.
3. The unique content will be offered to the other service subscribers as al carte, but to get it you may have to buy a dual service radio. This takes care of the lifetime subscribers that Mel is not overly fond of. They will not be able to transfer their current subscriptions to these new radios for the $100 fee that I understand is now charged. This bullet item is speculation on my part in regards to trying to get rid of lifetime subscriptions.
4. Believe it or not, each service does have unique programming that is of interest to someone, but maybe not just to you. For example I subscribed to Sirius because of NPR, PRI (although it was recently dropped) and Radio Margarittavile. On the other hand XM has Lex and Terry and now with this merger I may be able to listen on my sat radio. The other reason I got a sat radio was to listen to types of music that is not available on terestial radio, locally, both more or less meets this requirement. I also got tired of listening to commercials on my drive to work.
5. Merger of equals. I agree there is never a merger of equals, someone is buying someone. So far there are not enough details to determine who is the more equal party. If the merger happens, once it becomes official, within the next 3 to 6 month's of that date, it will become apparent who bought whom. by gatour
1. If XM shareholders get 4.6 share of SIRI stock, why don't Sirius shareholders get X amount of XM stock for each of the Sirius stock they own?
2. When I first heard of of the Merger the first positive thing that came to mind is the sharing of Terrestrial Repeaters. We all know XM has a better repeater network and how great it would be if Sirius subs had access to it to pull in better signal with that Stellato 100. BUT!!! If they do not do a hardware change of the actual units we own then most likely we will not be able to use the XM repeaters since they probably are of different frequency. Someone correct me if I'm wrong cause this is a very big thing for us if we look at this from the glass is half full point of view. by waverider969
No.
Most interesting part?
Speculate away...
The end result will be consumers getting screwed with higher price and fewer options. Layoffs for both companies. Consolidation out the ass that looks good on paper with the end result being huge pay bonuses for higher up management and higher subscription rates for consumers.
Bottom line is how_will_this_attract_more_customers.
It appears the high payout for Howard Stern, Oprah, and others have not helped the satellite industry and maybe these higher expense loads should be dumped.
Poor sound quality is compromised for more channels offered in hopes of gathering a wider listening audience. Obviously this strategy did not work and now we are faced with this merger.
Instead of making tough decisions like these, we see it time and time again where mergers take place giving upper management a false feeling of accomplishment (but a true pay bonus) and stock holders a false "spike" in their stock holdings.
The happy go feeling of false excitement over new channel selections, new equipment, satellite and repeater mergers, more bandwidth, are all smoke and mirrors.
This is truly a sad day for Satellite Radio if this merger should occur.
Look at Clear Channel and what they have turned into. by 80_Listener
The end result will be consumers getting screwed with higher price and fewer options. Layoffs for both companies. Consolidation out the ass that looks good on paper with the end result being huge pay bonuses for higher up management and higher subscription rates for consumers.
Bottom line is how_will_this_attract_more_customers.
It appears the high payout for Howard Stern, Oprah, and others have not helped the satellite industry and maybe these higher expense loads should be dumped.
Poor sound quality is compromised for more channels offered in hopes of gathering a wider listening audience. Obviously this strategy did not work and now we are faced with this merger.
Instead of making tough decisions like these, we see it time and time again where mergers take place giving upper management a false feeling of accomplishment (but a true pay bonus) and stock holders a false "spike" in their stock holdings.
The happy go feeling of false excitement over new channel selections, new equipment, satellite and repeater mergers, more bandwidth, are all smoke and mirrors.
This is truly a sad day for Satellite Radio if this merger should occur.
Look at Clear Channel and what they have turned into.
Most cases when a merger like this takes place (and notice I said merger) the CEO will come from one company and the Chairman will come from the other then the rest of the board will be filled with a mixed bag of both companies. In takeovers it doesn't work that way. Sirius people will say they won and XM people will say that they won but the truth is nobody knows who won yet.
And the competition isn't about XM vs Sirius it is about XiriusM vs the consumer. Mel has been a proponent of raising rates and going with a tiered structure similar to cable. I can already see it now.
Basic content + XM and Siri Premium content + Video + Sat Nav
could get expensive.
I am a fan of getting the additional channels and I am holding out for a new radio assuming this merger goes through. I just hope the XM exclusive content of Ron and Fez, Opie and Anthony, (screw oprah), MLB, NCAA sports, and varios others are merged with the Sirius content into what would easily be far more entertaining then cable coudl ever be. by Kurto2021
When all the channels are available from both services, I exepct Opie and Anthony to be gone unless they go to afternoons (unless they alredy are on afternoons, I don't give a flip about O&A).
Howard will want to be the mainstay morning talk show on the new SelectSatelliteRadio. by cornflakeguy
O&A probably doesnt either, but he doesn't like them, so he may not want them around.
I dunno. I'm just spek-a-lating. by cornflakeguy
They're promoting it as a merger of equals. Hmmm, what's equal...not number of subscribers, not coverage area, not losses, not market cap, and they priced XM stock at 4.6x that of SIRI, which is not equal and can't be made equal just by saying its a merger of equals. About the only think I see as equal is the stupidity of both companies to attempt this. They're going to get creamed when they don't win approval. by HomieG