The BusinessWeek electronic publishing has covered the developments of XM and Sirius Radio Companies which have been close competitors in satellite radio broadcasting.
Recently, the competition has ended by the merging of the two companies. However, some perceptions points out unprofitability of the merging. Thus, this paper will briefly discuss and examine some points of considerations, relating the capital structure and the short-term and long-term implications of this structure.DiscussionsRelatively the mergers Sirius-XM Radio has indicated “swing of momentum” leading to its profitability. Based on the 2008 Consolidated Statements of Operations, it manifested about 5% increase in the first quarter of 2008 valued at gross revenue of $578.8 Million and adjusted from operation losses.
The indications of upswing capital performance can be noted from the independent revenue generations prior to the merging. This can be traced from the year 2003 financial-audit reports that indicated the consistent independent performances of both companies, as shown below in the significant ‘Return of Revenues in US Million Dollars from year 2003 to 2007’:Company20032004200520062007XM91.8243.5469.77901,138Sirius12.
4Source: Securities and Exchange Commission, (2009)With the above illustrations and to the most recent financial performance update, the short-term financial performance upon the merging signifies capital liquidity, accordingly achieved substantial cash flow and recoupment from losses (Grover, 2009).It may be recalled that the previously strong competition of Sirius and XM have attributed to their losses in operations. This can be exemplified by the long planning expansions of XM and Sirius that favored the small competitor AM/FM radio companies which gradually acquired their customer-subscribers way back in 2004.It can be perceived, the indicated net revenue of $108.
8 Million could restructure the capital budget under the current merging of Sirius XM Radio Company. On the other hand, the cost of operations can be “fluidly” maintain within new capital structure, referring to one-time earmarking on the cost of expense, such as in incurring services retention costs on advertising, marketing, subsidy to equipment suppliers, customer care programs and royalty fees to shareholders.Partly, it can be recommended that long-term financial or capital restructuring must first recoup the operating costs and consistently maintain the financial liquidity or cash flows. On the other hand, the merging must likewise jointly defray the outstanding indebtedness of the two companies, referring to settle the previous financial liabilities at the time prior to the merging. Moreover, what could be then the bottomline of a long-term achievement of capital structure is to recover and reconsolidate the volume of customer-subscribers by promoting competitive services amidst the new set up of emerging competitors. From this point of view, it may be on time for Sirius XM Radio companies to pursuing their infrastructural development plans of expanding satellite units and setting up of latest technologies.
ConclusionThe merging of Sirius and XM radio companies have finally settled their “divisive” competition, in a sense that the long time competitions have divided their once captured customer-subscribers which gradually switched to their competitors. In conclusion, the operational losses would mean long-term planning for sustainable capital structure and revitalize the competitive stance in the new trends of marketplace and genre of customers.ReferencesGrover, R.
(2009). ‘Dish Network Moves On Without Sirius XM’. BusinessWeek.Com.Retrieved 08 May 2009 fromhttp://www.
businessweek.com/technology/content/mar2009/tc2009032_598666.htm.Securities and Exchange Commission (2009).
‘Sirius XM Radio, Inc. 2008 FORM 10-KAnnual Report’. Retrieved 08 May 2009 fromhttp://idea.sec.gov/Archives/edgar/data/908937/000119312509049874/d10k.htm#toc.