NEW YORK, Dec 06, 2006 (The Canadian Press via COMTEX) -- A merger of Sirius Satellite Radio Inc. with larger rival XM Satellite Radio Holdings Inc. would "be in the interests of shareholders," Sirius' chief financial officer said Wednesday.
A tie up among the satellite radio operators would deliver benefits for both investors and consumers, and provide substantial cost savings, David Frear said at an investor conference in New York.
The comments echoed Sirius' previous stance on the long-circulating rumors, which began earlier this year when a New York tabloid reported that Sirius Chief Executive Mel Karmazin had been in talks with XM executives. Karmazin refuted that report.
However, he stirred speculation in June when he said he would be interested in buying XM at the right price.
Speaking at a separate conference Wednesday, Karmazin said he wouldn't rule out a possible deal with XM.
However, investors have been hesitant to cheer any talk of a merger since it would likely face high regulatory hurdles. The two companies are the only satellite radio providers in the United States. Competition regulators would have to consider the two part of broader industry before approving any combination.
Frear, who has previously said a merger would make operational sense, said he is "always" talking to XM, but would not specify what the talks entailed.
Speaking separately at the same conference, XM CEO Gary Parsons said he would not comment on the subject.
"If you look at their position, you can see why they would be interested," Parsons told reporters after his presentation, when told about Sirius' earlier comments.
XM finished the third quarter with just over 7.2 million subscribers, but Sirius, with more than five million subscribers, has been closing the gap rapidly in the past few quarters.
Sirius appeared to stumble earlier this week when it cut its full-year subscriber forecast, blaming lower-than-expected retail sales since Thanksgiving.
XM's Parson said the trend of softening retail is continuing, but his company would not pour money into trying to revive it. "We won't chase a weak retail market for growth at any cost," he said.
Both companies stressed that future subscriber growth is most likely to come from deals with car companies that install the radios at the factory.
XM is seen to have an advantage in that area, with exclusive deals with carmakers who account for 60 per cent of total production in North America, including General Motors and Toyota.
Sirius, meanwhile, said it is continuing its drive to deliver video over its car-installed sets.
"The (car makers) want this, they make a lot of money on in-car entertainment systems," Frear said.
Sirius shares retreated two cents to close at US$3.83 on the Nasdaq Wednesday, while XM added 38 cents, or 2.7 per cent, to finish at US$14.70.
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