Howard Stern talks but the (shareholders’) money walks…
The announcement of a proposed merger between Sirius Satellite Radio (SIRI, news, msgs) and its archrival XM Satellite Radio (XMSR, news, msgs) was treated by most of the media this week as if were just another financial event to be studied through the prism of balance-sheet analysis and the federal regulatory approval process.
But the merger plan actually amounts to the death of a dream for investors who came to believe that shares of Sirius — propelled skyward for a short time by the hiring of snarky talk show host Howard Stern — would make them rich beyond compare.
For while the merger might ultimately save the company from total oblivion, it is unlikely to save investors from billions of dollars in losses incurred over the past several years or, perhaps more importantly, from a loss of faith in stock ownership.
Millions of people bought Sirius shares at $6 to $8 for their retirement accounts, and rode them down to $3.50, never losing faith in Stern. At this point, they need to face up to the fact that they’re screwed. Stern made half a billion. They will make nothing. They can file SIRI stock certificates away under “S” for stupid. They blew it.