CBS Radio and AOL Radio are combining operations. XM, a former partner with AOL will no longer be included in the mix. Whether this is good or bad for XM is in the eye of the beholder, but perhaps the bigger issue is what CBS has indicated about their deal with AOL. Merger watchers should take note of the following points made in the press releases:
- CBS Radio has indicated that streaming radio is a "HIGH-GROWTH" field.
- Partnering with AOL has provided CBS the ability to reach goals in streaming content.
- CBS has spent years building out their content streaming operations.
- CBS Radio feels that the deal will instantly make them the on-line leader in streaming audio content.
- A combined AOL/CBS operation affords CBS a greater ability to scale (CBS termed it a vastly improved ability to scale).
- The deal gives CBS "massive" exposure for their brand.
The streaming radio business has seen $1.6 billion in revenues in 2007. Ironically, this event demonstrates that there is crossover in the audio entertainment market and that consumers are indeed listening to music in many differing ways. While Sirius and XM struggle to gain merger approval, CBS and AOL have come together to form what they term as a leadership position with massive distribution abilities.
Position - Long Sirius, XM. No Position AOL, CBS.