Thursday, December 07, 2006

The Merger Issue

December 7, 2006

The merger topic is once again a centerpiece for discussion surrounding Sirius and XM.

What ivestors need to do is strip away their emotions regarding the companies, forget for a moment about the issues surrounding management of a merged company, and ask one very important question:


I don't care what company you are a fan of. I don't care whether you love one company and hate the other. I don't even care if you are a consumer of the product or not. All I care about is whether or not a merge would benefit my portfolio.

If a merge were to happen, it would likely result in a recapitalization of the stock. Outstanding shares would be at a reasonable figure, and the newly formed company could go about it's business with new found synergies.

Think about it:

Double the bandwidth.
A better negotiating position for content negotiations.
A better negotiating position with OEM partners.
A faster adoption rate for OEM installs.
Satellites that can deliver the best of audio content, video content and data services.
Streamlined overhead costs.
Streamlined manufacturing.
Real Estate that could be sold or renegotiated.
No more in sector fighting.
An alligned front against other media delivery devices and systems.
Streamlined marketing.
Higher ad revenue.
Instant value for expansion and growth.
Every major sport covered with one service.
Every major personality covered.
The ability to add additional content.
and more and more and more.

From an investors perspective there is simply no downside. XM shareholders and sirius shareholders would both see immediate value in the merged company. A merger at this point in time has huge synergies NOW, and even bigger benefits going forward. Imagine being able to trim costs while at the same time adding $1.00 or $2.00 to the subscription price. imagine what that would do to the expense line nad the revenue line.

Take your emotion out of the picyure and ask yourself the one important question.....


If you ask yourself this honestly, you can only come to but one answer.

personally, I think that it should be considered by sirius and XM. In fact, I think it should be strongly considered. Lets face it, there are many companies out there with dollars to spend. One way or the other, one or both of these companies will be bought or merged within the next few years......unless they were to combine forces now. If for no other reason, this alone should give people pause for thought.

12/07/2006 10:29:00 PM

SSG Has Merged. You Can Read All Of The Latest SSG Content By Clicking Here


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