- The Washington Times - Monday, February 19, 2007

4:27 p.m.

The D.C. company XM Satellite Radio and Sirius Satellite Radio have agreed to combine in a $13 billion stock transaction, the companies announced today.

Under the deal, which the companies call a “merger of equals,” Sirius Chief Executive Officer Mel Karmazin and XM Chairman Gary Parsons will keep their respective positions in the combined company. XM CEO Hugh Panero will stay on until the deal closes — anticipated to happen by the end of the year.

Shareholders of XM and Sirius, which is based in New York, each will own “approximately 50 percent” of the new company, whose name and headquarters have not been determined.

Together, the companies have 14 million subscribers and had 2006 revenues of $1.5 billion.

“We are excited for the many opportunities that an XM and Sirius combination will provide consumers,” Mr. Parsons and Mr. Panero said in a joint statement.

To proceed, the merger must be approved by the Federal Communications Commission and Department of Justice. Despite the companies apparent optimism, many are questioning whether the deal can clear antitrust hurdles.

The FCCs rules on satellite radio licenses appear to bar such a deal because, as Chairman Kevin J. Martin said at a press conference last month: “Theres a prohibition on one entity owning both of those licenses.”

Still, Mr. Martin said the body would consider any proposed transaction.

In apparent anticipation of regulatory concerns, Sirius and XM alluded to changed market conditions, citing the “continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission first granted our satellite radio licenses a decade ago.”

Rumors of a merger between Sirius and XM have been brewing for some time, fueled by analysts speculation and comments by the companies executives. Last month, at the Consumer Electronics Show in Las Vegas, both Mr. Parsons and Mr. Karmazin appeared open to the idea, with Mr. Karmazin noting that “consolidation creates value.”

The companies will hold a conference call tomorrow morning to discuss the deal.


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