Like Sirius yesterday, XM Satellite Radio (XMSR) chair Gary Parsons struck an optimistic note on the proposed combo, but said the Department of Justice would have to rule within the next week to 10 days to make it happen in 2007.
While both SIRI and XMSR are banned from looking at each other’s business deals, XM is already devoting substantial engineering resources to tackle challenges of the combined company, including making sure they can implement a la carte packages with cheaper, child-friendly options of the merger is approved. Also, the engineers are looking at using the SIRI platform for video and XMSR for audio. Notes from Parsons’ talk to the UBS Global Media conference after the jump.
3:11: Talking royalty rates set by the Copyright Board. Says rates established were roughly within expectations. More than what sat radio wanted, but less than the record labels asked for. A balanced decision, Parsons says. In line with what most analysts said they expected.
3:09: Says post-merger the SIRI platform will be used for video service, XM network for audio.
3:07: Any area of the business were you under-invested in anticipation of the merger? Parsons: We tried to approach it from the standpoint that the merger was plan B and running the company was plan A. We have turned our attention to the alternatives. We have started shifting engineers to work on a la carte, to make sure we can deliver the subscription packages in the timeframe.
3:01: On those supporting the merger: “We have a very deep and very diverse group of supporters, including our program parnters, car partners, retail, minority groups, rural groups, truckers, etc.” Those opposed: “the NAB, groups the NAB has funded or created, and organisations that aways oppose mergers.”
2:57: Parsons says he’s hopeful the merger would happen before the end of the year but says they would have to hear something from the DOJ with the next week to 10 days to make it happen.
2:54: Parsons recounts editorial support for the combo, including WSJ, WashPo, etc. Q&A about to start…
2:52: Parsons on post-merger programming packages: $9.99 for an all-music package or $9.99 for an all-sports package. “Both XM and SIRI have invested substantial resources and effort in building unique content and programming which can now be combined for a best-of set of alternatives.”
2:45: Softness at retail “has been with us for four quarters and has not been accelerating,” Parsons says. Yes, softness in economy impacting retail. Lower auto sales, obviously impacts XM. But those with enough discretionary income to buy a new car, “doesn’t have a problem with $13 a month for XM.”
2:40: SIRI-XMSR combo will have deals with virtual all makes/models in the U.S. Uptake in-car faster than the CD player. XM new car marketshare 30% this year; 40% next year. Car sales is XM’s growth driver while retail has been soft.
2:36: Most new subscribers will come from the automotive channel–pre-installed and activated. US auto sales usually in the 16m to 17m range. Toyota/Lexus gearing up on factory installs of XM. Toyota several years behind other XM partners like Honda, etc.
2:34: Talk underway. Parsons reminds everyone that combined SIRI-XMSR will have 17 m subs.
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