Proxy Advisory Service Recommends XM Satellite (XMSR) Shareholders Vote For Merger

Three days ago proxy advisory firm Glass, Lewis & Co. recommended shareholders of Sirius Satellite Radio (SIRI) and shareholders and XM Satellite Radio (XMSR) vote for a combination of the two satellite radio operators valued at $4.7 billion.

Today advisory firm ISS made the same recommendation. "From a strategic viewpoint, it appears that combination would allow shareholders of both companies to participate in the expected benefits of a larger entity. Our review of Wall Street research reports suggest that operational and cost savings would yield estimated synergies of approximately $6 billion."

Both firms left out the part about slowing subscriber growth and billion dollar plus debt that could put both companies out of business in the next year. The note also failed to mentioned that the iPod has all but ruined the satellite radio business.

The final observation the reports neglected to add was that concerns over the future of the satellite radio industry have pushed both stocks down over 50% in the last year.

Other than those small omissions, the proxy people earned their money.

Douglas A. McIntyre