Sirius and XMSR Merger Murmurs Continue

Over the holiday, The New York Times warmed up the speculation about a Sirius/XM Radio merger. 

Every time this story gets rehashed, I'm amused at the enthusiastic quotes from the Sirius side.  This time it was the CFO saying, "Clearly, a merger makes sense from an investor's point of view to reduce costs."  XM is observing radio silence on the subject.

Both services are losing lots of money. One radio industry analyst suggests the problem is, "There are not as many people willing to pay for radio as these companies thought there would be in the '90s" when the FCC was allocating licenses.  Allen Sniffen, who is Webmaster of a New York City radio message board, also has a suggestion: sell the razors, give away the blades.

"Give away a chunk of programming for free," he wrote.  "Make people buy the radios ...give them a chunk of (channels) ... put commercials on those channels."  Advertisers won't object.  As Holland Cooke, a radio programming consultant wrote in his latest client newsletter, it's all 'radio' to the sponsors ... AM, FM, HD, satellite. If there's an audience, they will come.

Then Sniffen says, after people have gotten use to sat radio, since they have the receivers, they'll want some of the premium stuff, like maybe the NFL, or Howard Stern, or Oprah.  "In the end," Sniffen says, "I think you’ll have more subscriptions than you have now and an additional revenue stream from the free channels with commercials."

No question that free works.  Over the holidays I began listening to XM because its holiday music was available as part of my DirecTV subscription.  I kept listening New Year's eve, when Wolfman Jack played 60s tunes for our party.  A modest number of commercials would not have been unacceptable.

Comments

[Glenn Beste...:]

In reading their PR news numbers 2.7 Million "NET" and Postive Free Cash Flow...WOW!

SIRIUS Exceeds 6 Million Subscribers and Achieves First Cash Flow Positive Quarter NEW YORK, Jan 02, 2007 /PRNewswire-FirstCall via COMTEX News Network/ -- SIRIUS Satellite Radio (Nasdaq: SIRI) today announced that it ended 2006 with approximately 6,024,000 subscribers, an 82% increase over the company's 2005 ending subscriber base of 3,316,560. SIRIUS added a record 2.7 million net subscribers in 2006. Based on preliminary financial data, SIRIUS achieved its first ever quarter of positive free cash flow in the fourth quarter of 2006.

2007 Jan 02 04:02 PM

[Riverboat:]

Yes!!!! Way to go Sirius. I'm celebrating; 2007 starts off right.

2007 Jan 02 07:54 PM

[Patrick Bre...:]

Mel's merger comments have got to be posturing. Sirius would be nuts to merge at this point given XM's likely demise. Wait for the firesale.

2007 Jan 03 12:05 AM