The two of the leading providers of commercial free satellite radio music has announced that they have entered into a definitive agreement that will see the merging of the two companies into one. The merger will put the two companies together with a combined value of $13 billion and a net debt of $1.6 billion. This can become a bigger company with an even higher value since both companies are aiming to develop technologies that will reduce their production costs. The merger will also see the birth of newer and more user-friendly products which will raise the standards of satellite radio.
Mel Karmazin, the current Chief Executive officer of SIRIUS will become the first CEO of the combined companies. Gary Parsons, the chairman of XM, meanwhile will become the Chairman of the combined company which has yet to be named. Karmazin and Parsons will also be members of the 12-person board of directors. Four independent members will be chosen by each company which brings the total number to ten. The two remaining seats will be for the representative of General Motors and American Honda. XM's Chief Executive Officer, Hugh Panero, will carry on his job until the merger is complete.
The combination of the two giants of the industry will greatly benefit their consumers and this would be as beneficial as an is to an engine. Among the significant advantages that the merger will bring to the company's consumer is greater programming and content choices. With the expertise of the two companies being combined, they can offer a wider selection of choices for their subscribers. They will give their customers the ability to choose which programming they like best. The number of commercial-free music stations, sports coverage, news programs, talk shows, and entertainment programming will significantly increase since the two companies both have a wide range of these programming to start with.
The combination of SIRIUS and XM will also facilitate faster development in their field. The development that can be made by the two companies together can significantly lower the cost of production of components and technology used in their operation. This can also lead to the development of more user-friendly, multi-functional devices. The SIRIUS and XM are already making their move to remain competitive in the ever growing demand for high quality vehicle audio entertainment. The merger will raise their reputation as the premium provider of music and other interesting programming.
The merger will also benefit auto manufacturer and retailer with the ability to offer a wholesome feature on their car for their customers. Electronic store will also benefit since they can offer high quality products from the combined company. These products which will be the result of the joint effort of the two companies will make satellite radio more competitive in the entertainment system industry.
The financial performance of the unified company will also become more efficient. This will be the result of the combined expertise of the two companies. Their combined experience and resources will help them manage their production costs. Their development of new technology can also significantly lower their production cost while at the same time boosting their sales.
The SIRIUS and XM on themselves are already competitive in the audio entertainment market. But they are both facing tough challenges from other entertainment system like free over-the-air AM and FM radio, iPods, HD radio and Internet radio. Their combined effort will make satellite radio much more competitive in the said marketplace. Their enhanced lineup of programming and the possibility of development of new products will make this new company a force to reckon with in the rapidly growing market for audio entertainment system.
