Not True, Sirius CEO Says of Merger Talks with XM

Jan. 28/Satnews Daily/ ¾ Sirius Satellite Radio Inc. CEO Mel Karmazin denied on Wednesday meeting with top executives of rival XM Satellite Radio Holdings to discuss a merger between the two satellite radio broadcasters.

During the company's quarterly earnings conference call, Karmazin dismissed a New York Post report that said Sirius and XM are contemplating a merger.

"I have not met with the chairman or CEO, so I have no idea where any of this came from," Karmazin said. He added he does not have an idea where the story is coming from.

The New York Post reported earlier rivals Sirius and XM have been cozying up to each other recently. It said talks have not advanced far but executives from both sides have been meeting lately to discuss the possibility of a merger, quoting the Post’s several sources.

Although a merger between XM and Sirius is possible, it seems inconceivable at this time because of antitrust concerns. The satellite radio industry is currently a FCC-licensed duopoly and regulatory authorities would see the merger as creating a monopoly in the nascent satellite radio business.

But according to the report, executives of both XM and Sirius have not yet discussed price but have been weighing any potential antitrust concerns that would arise from a deal.

Both XM and Sirius remain unprofitable. Sirius yesterday reported losing $261.9 million in fourth quarter 2004 compared with a loss of $147.8 million in the year-ago fourth quarter. Sirius currently has 1.4 million subscribers and projects more than 2.5 million customers at year's end.

XM Satellite Radio (NASDAQ:XMSR) has more than 3.2 million subscribers, but during the third quarter of 2004, it reported a net loss of $118 million, compared with a loss of $133.4 million in the same quarter a year earlier.

A merger between XM and Sirius might be good for both companies as it would alleviate a price war for premium content and allow them to save significant amounts of money on marketing costs.

The two companies have talked in the past about merging, but the discussions never got to an advanced stage, according to AP.

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