Will Sirius-XM Cut Talent Costs? (SIRI, XMSR)

Media

Published: July 1, 2008 6:26 am

Last Updated: March 26, 2020 11:41 pm

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We already saw the first projections yesterday from Sirius Satellite Radio Inc. (NASDAQ: SIRI) and XM Satellite Radio Inc. (NASDAQ: XMSR). We also saw the resounding thud that the markets greeted the company’s with.

What is interesting is what is going to happen to costs cuts not just at the base level. We have been trying to calculate the future values, which are very different from the values of 2005, regarding the content from the top talent that both XM and Sirius have generated.

The first such talent question boils down to Howard Stern with his lavish contract. It is 100% attributable that he did garner much of the growth of Sirius. But Sirius has also lost money every quarter along the way. What about Martha Stewart or Oprah? Fortune has a similar piece discussing the contract cost ramifications of a combined Sirius-XM with its top talent.

We already know that the companies have to refinance their existing debt. And Goldman Sachs isn’t alone in believing new monies have to be raised.

The time for this merger to close and get consummated has finally come. Unfortunately there are still more questions than there are answers.

Jon C. Ogg
July 1, 2008

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