Few Potential Post-Merger questions...
I am curious about a something if the merger is approved.
1) Many rumors abound that Sirius may possibly have envisioned this merger long before the announcement. Because of this fact, it is rumored that Sirius has installed chipsets as far back as 2003 that could be updated via a firmware upgrade to recieve XM satellite signal. Multiple FCC filings by Michael Hartleib (including one that quotes our very own Tyler Savery) suggest this is a very real possibility.
Assuming this is true, Sirius Satellite had an approximate subscriber number of around 500k as of the first quarter of 2004. Assuming that there were double the number of radios available, figure there were around 1 million satellite radios with the old chipset that are not interopperable. Even if you run it all the way to the end of 2004, Sirius had an estimated 1.1 million subscribers.
If it turns out that this is the case, would it not turn out to be much cheaper for Sirius Satellite Radio to offer a "buy out" of everyone that has an old chipset? How much could it cost to replace an old radio with a new radio? Assuming that it was factory installed, I could not see it costing the company more than $100 bucks per radio and probably less, including labor for the dealership installing it. With the estimated 1.1 million subscribers, that would run the company about 100 million dollars, give or take, and that assumes that they have not already replaced that radio with a newer radio.
Would it not be more cost efficient to replace these radios than to maintain seperate systems for the next 5-10 years? I could see the company spending much more than 100 mil by keeping the services seperate for a million customers, and I could see much more than that in synergies if they were to buy them out and combine the systems.
Wouldn't this make much more sense or am I over thinking things? This is of course assuming that Sirius built in that ability and that it could even be done. Let me know what you think.