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Sat radio merger talk becomes Sirius

Sat radio has urge to merge

Sirius continues to stir the XM merger talk, as topper Mel Karmazin on Wednesday emphasized the value of a satellite radio tie-up.

“I believe there would be a great deal of value creation,” he told investors at a lunch at Gotham’s Credit Suisse First Boston media confab. “If you put hundreds of millions of dollars and put a multiple on it, you get billions of dollars. That’s pretty substantial.”

Karmazin said his deep experience in the radio industry had persuaded him of the wisdom of combining forces when it’s feasible.

Karmazin has dropped hints before about a merger, but comments were among the most pointed yet.

Sirius has previously slapped down rumors that it had initiated talks with XM over a marriage between the firms, but in the spring Karmazin began the first of several trial balloons with investors and analysts by making similar comments at Wall Street confabs.

As Karmazin was making his comments, Sirius chief financial officer David Frear was dropping hints of his own at the UBS conference across town, saying a merger would “be in the interests of shareholders.”

Comments come the same week both sat radio firms lowered their forecasts for the holidays.

But analysts continue to raise questions about a merger, saying it could pose both technological and content hurdles. Both companies have been ramping up the personalities and channels on their systems, and combining them could prove difficult.

XM has been quiet about merger possibilities, though one exec was later quoted as saying that Sirius is forced to talk about a merger because of its second-place standing in the race for subscribers.