Although rumors have been running rampant since this morning, it's now official — they'll be combining in a $13 billion "merger of equals." Where have I heard that before? Oh wait, yeah — isn't DaimlerChrysler trying to sell off one of those "equals" as we speak? Anyway, here's the press release — hot off of wherever it is press releases come from these days:

SIRIUS and XM to Combine in $13 Billion Merger of Equals

*Provides Consumers with Enhanced Content, Greater Choices and Accelerated Technological Innovation
*Enables Satellite Radio to Better Compete in Rapidly Evolving Audio Entertainment Industry
*Extraordinary Value Creation for Shareholders
*Mel Karmazin to Serve as Chief Executive Officer and Gary Parsons to Serve as Chairman of Combined Company

WASHINGTON and NEW YORK, Feb. 19 /PRNewswire-FirstCall/ — XM Satellite Radio (NASDAQ: XMSR) and SIRIUS Satellite Radio (NASDAQ: SIRI) today announced that they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger of equals with a combined enterprise value of approximately $13 billion, which includes net debt of approximately $1.6 billion.

Photo credit: Gizmodo

Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of SIRIUS common stock for each share of XM they own. XM and SIRIUS shareholders will each own approximately 50 percent of the combined company.

Mel Karmazin, currently Chief Executive Officer of SIRIUS, will become Chief Executive Officer of the combined company and Gary Parsons, currently Chairman of XM, will become Chairman of the combined company. The new company's board of directors will consist of 12 directors, including Messrs. Karmazin and Parsons, four independent members designated by each company, as well as one representative from each of General Motors and American Honda. Hugh Panero, the Chief Executive Officer of XM, will continue in his current role until the anticipated close of the merger.

The combined company will benefit from a highly experienced management team from both companies with extensive industry knowledge in radio, media, consumer electronics, OEM engineering and technology. Further management appointments will be announced prior to closing. The companies will continue to operate independently until the transaction is completed and will work together to determine the combined company's corporate name and headquarters location prior to closing.

The combination creates a nationwide audio entertainment provider with combined 2006 revenues of approximately $1.5 billion based on analysts' consensus estimates. Today the companies have approximately 14 million combined subscribers. Together, SIRIUS and XM will create a stronger platform for future innovation within the audio entertainment industry and will provide significant benefits to all constituencies, including:

* Greater Programming and Content Choices — The combined company is
committed to consumer choice, including offering consumers the ability
to pick and choose the channels and content they want on a more a la
carte basis. The combined company will also provide consumers with a
broader selection of content, including a wide range of commercial-free
music channels, exclusive and non-exclusive sports coverage, news,
talk, and entertainment programming. Together, XM and SIRIUS will be
able to improve on products such as real-time traffic and rear-seat
video and introduce new ones such as advanced data services including
enhanced traffic, weather and infotainment offerings.

* Accelerated Technological Innovation — The merger will enable the
combined company to develop and introduce a wider range of lower cost,
easy-to-use, and multi-functional devices through efficiencies in chip
set and radio design and procurement. Such innovation is essential to
remaining competitive in the consumer electronics-driven world of audio
entertainment.

* Benefits to OEM and Retail Partners — The combined company will offer
automakers and retailers the opportunity to provide a broader content
offering to their customers. Consumer electronics retailers, including
Best Buy, Circuit City, RadioShack, Wal-Mart and others, will benefit
from enhanced product offerings that should allow satellite radio to
compete more effectively.

* Enhanced Financial Performance — This transaction will enhance the
long-term financial success of satellite radio by allowing the combined
company to better manage its costs through sales and marketing and
subscriber acquisition efficiencies, satellite fleet synergies, combined
R&D and other benefits from economies of scale. Wall Street equity
analysts have published estimates of the present value of cost synergies
ranging from $3 billion to $7 billion.

* More Competitive Audio Entertainment Provider — The combination of an
enhanced programming lineup with improved technology, distribution and
financials will better position satellite radio to compete for
consumers' attention and entertainment dollars against a host of
products and services in the highly competitive and rapidly evolving
audio entertainment marketplace. In addition to existing competition
from free "over-the-air" AM and FM radio as well as iPods and mobile
phone streaming, satellite radio will face new challenges from the rapid
growth of HD Radio, Internet radio and next generation wireless
technologies.

"We are excited for the many opportunities that an XM and SIRIUS combination will provide consumers," said Gary Parsons, Chairman of XM Satellite Radio and Hugh Panero, CEO of XM Satellite Radio, in a joint statement. "The combined company will be better positioned to compete effectively with the continually expanding array of entertainment alternatives that consumers have embraced since the Federal Communications Commission (FCC) first granted our satellite radio licenses a decade ago."

"This combination is the next logical step in the evolution of audio entertainment," said Mel Karmazin, CEO of SIRIUS Satellite Radio. "Together, our best-in-class management team and programming content will create unprecedented choice for consumers, while creating long-term value for shareholders of both companies. The combined company will be positioned to capitalize on SIRIUS and XM's complementary distribution and licensing agreements to enhance availability of satellite radios, offer expanded content to subscribers, drive increased advertising revenue and reduce expenses. Each of our companies has a strong commitment to providing listeners the broadest range of music, news, sports and entertainment and the best customer service possible. We look forward to sharing the benefits of the exciting new growth opportunities this combination will provide with all of our stakeholders."

The transaction is subject to approval by both companies' shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending regulatory approval, the companies expect the transaction to be completed by the end of 2007.

SIRIUS's financial advisor on the transaction is Morgan Stanley and Simpson Thacher & Bartlett LLP and Wiley Rein LLP are acting as legal counsel. XM's financial advisor on the transaction is J.P. Morgan Securities Inc. and Skadden Arps, Slate, Meagher & Flom LLP; Jones Day; and Latham & Watkins LLP are acting as legal counsel.

Related:
Sirius Cuts Year-End Subscriber Forecast: Auto Units To Blame? [internal]

The ability to run your iPod in your car through your head unit (either via the radio faceplate or the steering wheel) is kind of like the Holy Grail to auto-loving audiophiles with a hankering for digital audio. I already drive, eat, drink and e-mail all at the same time, so throwing the iPod into the mix doesn't help much. So any opportunity I've got to use the iPod via the radio interface makes me almost giddy. Given that, I have to say the General's Personal Audio Link system (PAL) is better than what I've currently got, but nowhere near as robust as other systems out there, but at $159 — it's also cheaper than any other system currently on the market as a dealer-installed feature. Given that, I feel kind of bad for the engineer who had to get into the car with us outside of Cobo Hall the other day at the Detroit Auto Show. I mean, it's hard enough trying to ride in the same car as me when I'm driving — but to also have to deal with my eclectic musical tastes — that's more punishment than anyone should ever have to deal with. Check out the video above for more details on the system and for the fun we had the other morning. – Ray Wert

Related:
Audi's Got Some Hot Apple Head Unit Action; Microsoft And Ford Get N'Sync At The Detroit Auto Show And CES, We Get First Exclusive Hands-On: Part 1 [internal]

Audi has not limited the use of its AMI to the Apple player. Additional cables will also be made available, including one with a standard 3.5mm jack and a USB 2.0 compatible jack coming in 2007. In the case of the iPod, it also charges the unit while it is plugged in to the AMI. Once plugged in, the device will then appear in the MMI s navigation. Simply press CD on the MMI controller buttons and you have your choice between your MP3 device (iPod in this case) or CD changer.

So there you go, if you're one of the 14 people who have an mp3 player not made by Apple — you may even be able to plug it into Audi's system at some point in the future. It looks like we'll be looking forward to having the chance to get some of that head unit action ourselves. – Ray Wert

[Gallery]

More pictures and the full interview [Fourtitude]

Related:
Nevermind The Horsepower: Buy A Ferrari 599, Use Your IPod [internal]