If Merged XM-Sirius Fails, Who Wins?

Most Wall St. observers now think that the merger between Sirius Satellite Radio (SIRI) and XM Satellite Radio (XMSR) will go through. The FCC, pushed by some members of Congress and the radio industry, may insist on a cap for subscription fees so that the new company cannot use its "monopoly" status to jack up rates. But, increasing subscriber fees may be necessary to the success of the venture. Both Sirius and XM carry debt loads well in excess of $1 billion. XM recently refinanced part of its debt, and was forced to pay a high interest rate because the company does not make money and because of existing leverage already on the balance sheet. The question now is whether satellite radio will ever be a good business at all. Subscription growth at both companies has slowed considerably. These companies rely, to a large extent,... [read full story]