Sinking feeling hits sat radio

After merger, shares tumble 16% on first day of Sirius XM trading

The U.S. satellite radio companies completed their merger Tuesday and renamed the combined company Sirius XM Radio — then watched as their stock plummeted to a multiyear low.

Sirius XM now trades on Nasdaq under the ticker symbol SIRI, as Sirius has since changed its name from Satellite CD Radio more than eight years ago, and shares shed 16% on Tuesday to $1.58.

Sirius XM will be run by CEO Mel Karmazin, formerly the Sirius CEO, and chairman Gary Parsons, formerly XM's chairman.

Wall Street on Tuesday dismissed Karmazin's enthusiasm for the merger, including his expectation of $400 million in synergies and $300 million in earnings before interest, taxes, depreciation and amortization next year.

Karmazin also noted that with 18.5 million subscribers, Sirius XM is the second-biggest subscription entertainment service behind Comcast and the second-largest radio company trailing only Clear Channel.

Sirius XM will be headquartered in New York, where Sirius is, and XM, considered a wholly owned subsidiary, will remain in Washington.

Sirius shares have fallen 41% in the past five trading days, with much of the bearishness focused on recent financial maneuverings, including XM issuing $550 million in notes before the merger and Sirius issuing shares as a hedge.

For the second straight day, Sirius was the biggest loser on The Hollywood Reporter Showbiz 50 stock index Tuesday. (partialdiff)
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