Late Friday, the government finally approved the Sirius (NASDAQ:SIRI) and XM (NASDAQ:XMSR) merger after 17 months of making the market wait. It's been so long that most of the market seems more focused on the agreement's approval rather than whether it really makes sense in the first place.
As a Sirius shareholder for years, I've grown increasingly less impressed with the company. I don't even have an account anymore. There was a time I thought that Sirius was getting some prime real estate in cars and an announcement about plans for kids entertainment in cars in partnership with Microsoft (NASDAQ:MSFT) really had me thinking SIRI might be the next big thing.
But like most others, I've just been focused on whether the merger will get done, not whether I like the stock anymore. If I'm being honest, I probably would have to recognize that the only reason I've held this stock I'm upside down in is because I want to see what SIRI/XM can do for me now.
So, let's look at a few of the issues ahead for the Brotherhood of Satellite radio.
Will the fusion of the content packages from the SIRI and XM universe attract and keep more customers?
- My guess is no and yes. I think the bloom is off the rose. Satellite doesn't sound like the cool thing to do anymore and no one is rushing through the door to sign up and get Howard Stern's daily diatribes... they're already on board. But I do believe that XM users who might have been thinking about cancellation will stick around for new Sirius exclusive content and vice-versa.
Can the company streamline operations and increase revenue?
- I lean toward yes after a painful growing period. I also think that the new company has to benefit in negotiations with new talent by being the only game in town (out of town?). No way in hell Howard Stern gets the deal he got with Sirius not racing to beat XM to the punch. New deals should be more favorable to the house.
Can Sirius/XM do anything to chip away at Apple's IPOD?
- I scoffed at the government's notion that an XM/SIRIUS union would be a monopoly. Nearly everywhere satellite radio goes there is terrestrial radio and heck, I think Ipod runs the audio joint anyway. (Forgive my lack of technical acumen on this issue, but I've always wondered if a giant like Apple couldn't enter the satellite market through an agreement with another satellite company.) Or, would it make sense for the Sirius/XM to create a thingamabob that plugs into Ipods and broadcasts Satellite everything into the Apple device.
That I would pay more for.
I'm interested to see what readers believe the stock will do over the next few months and longer.
