And the satellite radio will rock
There will be challenges, of course, and it has nothing to do with seeing whether Howard Stern and Oprah Winfrey can get along under the same corporate roof. The company will still have debt levels to tackle and a changing marketplace of competitive products. The dashboard ear candy is no longer limited to terrestrial or satellite radio.
However, critics have been overly harsh about the prospects for a combined entity. The shares of both providers still trade for less than they did before the deal was announced, and we're talking about two companies that have grown substantially in popularity over the past year.
What can Sirius-XM do with 17.3 million subscribers -- and counting -- on its rolls? Each company was already inching toward generating positive cash flow on its own, so there's a good chance that the merged company will shock the market, in a good way, with upbeat operating income statements once the two entities work all of the synergies out.
As for Stern and Winfrey, if I'm right, the two will be even wealthier with their stock options. Money has a funny way of bringing unlikely parties together.
A few more of the market's stories, in brief:
- The good news is that no one checked out Gigli or Pluto Nash through Netflix
on Monday. The bad news is that Netflix's 7.5 million subscribers couldn't check out anything else, either, because the site suffered a severe outage. Sanity returned on Tuesday, even if some folks still gravitated toward bad Ben Affleck and Eddie Murphy movies. (Nasdaq: NFLX)
- The golden boy of discount brokering has a black eye. Charles Schwab
is facing class action lawsuits over losses at its Schwab YieldPlus short-term bond fund. The fund is off a whopping 16% so far this year. I guess that's what happens when you market a fund as seeking high current income with "minimal changes" in share price. (Nasdaq: SCHW)
- I guess someone had better tape a $10 bill over that $2 bill that was posted on the entrance of the Bear Stearns
building in New York City a week ago. JPMorgan Chase's (NYSE: BSC) new $10 bid is certainly sweeter, though it does lead one to wonder whether the Federal Reserve jumped the gun in bailing out a company that may have been able to save itself. Stephen Colbert was probably right all along about his fear of bears, and Bear Stearns. (NYSE: JPM)
Until next week, I remain,