Stock Market News: XM and Sirius See Stock prices Rise on Merger News
Today’s stock market news involves XM (XMSR) and Sirius (SIRI), the satellite radio providers, both enjoying increases in their stock prices. This is due mainly to the fact that the Federal Communications Commission (FCC) is said to be leaning toward allowing their proposed merger to go through.
Satellite radio has been plagued by issues in profitability, since subscribers have been slow to adopt the technology. (Disclosure: I have XM radio. My husband got it for the Major League Baseball stations so that he can listen to Yankees games when he can’t watch them.) XM and Sirius are hoping that by combining forces, they can become more profitable together, since their subscriber base will be combined.
This is actually a good idea for the satellite radio providers. Right now, the offerings on each are pretty split. It is hard for listeners to get all of what they want, and many do not want to subscribe to both services. Plus, each service has its own equipment that is incompatible with the other. Since Sirius is doing the acquiring (in a stock swap deal), one would hope that it would also ensure that XM technology would remain valid.
At any rate, Kevin Martin, the chairman of the FCC, does have some conditions. The two main issues are these:
- Price caps so that consumers don’t end up with huge rate hikes.
- Other manufacturers of electronics have to be allowed to make products that work with the new satellite radio service.
The Department of Justice has already approved the merger, and there are just a few more wrinkles to iron out.
But the real question is this: Even with a combined force, can satellite radio compete solidly with personal music devices, Internet radio, and even regular, local radio?
image credit: Courtesy Ronald Reagan Library
Disclaimer: I am not an investment professional. This should not be construed as investment advice. All investment carries the risk of loss. Before investing, do your own research and/or consult with an investment professional.
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SIRI, investments, satellite radio merger news
