2008 – merger of Sirius Satellite Radio and XM Satellite Radio
Sirius XM Satellite Radio was the product of a 2008 merger of Sirius Satellite Radio
and XM Satellite Radio. Both Sirius and XM employed a subscription-based business
model to generate revenues. The two predecessor companies had begun operations
in 2001-2002, spending hundreds of millions to launch satellites for broadcasting
signals, arrange for the manufacture of satellite radio receivers and other
equipment, install terrestrial signal repeaters and other necessary networking
equipment, develop programming, conduct market research, and attract
subscribers. The primary target market for satellite radio service included the
owners of the more than 230 million registered vehicles in North America and,
secondarily, the over 120 million households in the United States and Canada.
The heavy expenses incurred by the efforts of the two rivals as each tried to gain an
edge over the other produced gigantic losses every year of their existence, despite
having attracted millions of subscribers. Comparative performance statistics for
2005–2007 are shown in Exhibit 1 . Executives at both companies concluded that
after six years of battling for subscribers and bidding up programming costs, the
only long-term solution was to merge and bring a halt to the destructive competitive
battle that was unlikely to end short of bankruptcy. The executives and boards of
directors of the two companies hammered out a planned merger agreement that
