Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) may yet get their merger approved after 15 months or so. At that point, who’s going to care?
While Sirius and XM wait for the FCC to rule, the WSJ looks at the deteriorating market conditions taking their toll on both businesses.
- Satellite radios aren’t selling at retail: sales declined 35% across both companies last year.
- Sales of new cars, the biggest source of new radio activations, are also slowing.
- Each company has more than $200 million in cash, but reserves are dwindling.
- Both have convertible bonds, $400 million for XM and $300 million for Sirius, that re-up next year.
- XM said it will tap a $150 million credit facility from GM for the first time this year.
Stifel Nicolaus analyst Kit Spring says he’s looking for added pressure on consumer discretionary spending (higher gas, food prices, etc.) to start showing up in both company’s Q2 churn rates. Makes sense to us. Meanwhile satellite’s competitors aren’t letting up: Combined, the two companies have about 18 million subs. But last year Apple (AAPL) sold 21 million iPods, and 54 million people supposedly listened to Internet radio.