Sirius Xm Case Study

3198 Words Jul 7th, 2013 13 Pages
Sirius Xm (SIRI) Turnaround post 2007 merger
* Prior to change: Sector: Consumer Services / Industry: Broadcasting - Radio * After change: Sector: Consumer Services / Industry: Broadcasting - Radio
Challenge Years: Pre and Post 2007 (merger)
* Sirius and XM, separate companies, began to compete in the satellite radio business in 2001 and 2002. Target market was car drivers and daily commuters who listened to their local radio stations that they preferred, but were limited to small service areas and less range and would lose frequency once out of that locality. Wall Street believed that satellite radio was the next opportunity in consumer electronics.

* The business was very modest at first with
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Having secured installation deals with automakers including Chrysler, Ford and BMW, Sirius launched the initial phase of its service in four cities on February 14, 2002, expanding to the rest of the contiguous United States on July 1, 2002.

* In November 2001, Margolese stepped down as CEO, remaining as chairman until November 2003, with Sirius issuing a statement thanking him “for his great vision, leadership and dedication in creating both Sirius and the satellite radio industry.” Joe Clayton, former CEO of Global Crossing, followed as CEO from November 2001 until November 2004. Clayton stayed on as chairman until July 2008. Mel Karmazin, former president of Viacom, became CEO in November 2004, and remained in that position through the merger, until December 2012.

•Early days of XM: * XM Satellite Radio was founded by Lon Levin and Gary Parsons. It has its origins in the 1988 formation of the American Mobile Satellite Corporation (AMSC), a consortium of several organizations originally dedicated to satellite broadcasting of telephone, fax and data signals. In 1992, AMSC established a unit called the American Mobile Radio Corporation, dedicated to developing a satellite-based digital radio service; this was spun off as XM Satellite Radio Holdings, Inc. in 1998. Its planned financing was complete by July 2000, at which point XM had raised $1.26
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