Sirius forms new company with XM Satellite Radio

Sirius Satellite Radio said on Tuesday it completed the purchase of rival XM Satellite Radio Holding Inc, forming a new company that competes with traditional radio.

The acquisition comes after a long period of government scrutiny that ended late last week when the U.S. Federal Communications Commission approved the deal.

The new broadcasting company will be named Sirius XM Radio and will have more than 18.5 million subscribers, making it the second-largest radio business in the United States.

Sirius said it expects to save about 400 million in 2009 persuant to the deal, and earn 300 million in before interest and investment income, depreciation and non-cash stock compensation expenses, otherwise known as adjusted EBITDA.

Company shareholders may also have to wait to reap the benefits of the new company as neither XM nor Sirius has ever posted a net profit, and have recorded billions of dollars in losses.

“While merger is beneficial for Sirius, we remain cautious as significant execution risk exists implementing synergies and recognition of synergies is probably already priced into stock,” said RBC Capital Markets analyst David Bank.

Sirius XM will carry exclusive programming ranging from channels dedicated to personalities such as Howard Stern, Oprah Winfrey and Martha Stewart to professional sports broadcasts, news and music.