Sirius, XM Announce Satellite Radio Merger

Sirius and XM, the US’s two lone satellite radio providers, announced on February 19th, 2007, their intention to merge their services into one single company, though the exact terms of the merger have not yet been solidified and overcoming anti-trust regulations will likely pose a major hurdle.

The merger was apparently prompted by recent fiscal blows suffered by both Sirius and XM. The two companies experienced a net loss of $1.5 billion last year, according to NPR. The New York Post reported that this downturn was most likely due to increased competition from terrestrial and online radio and a booming personal mp3 player market, but noted that a merger could save XM and Sirius upwards of $7 billion per year.

For the 12 million combined XM and Sirius subscribers, one benefit of this merger would be a major increase in the variety of programming available. Whereas now consumers are limited to the programs offered by one or the other provider—XM broadcasts Major Leage Baseball and features shows hosted by Oprah Winfrey and Bob Dylan, while Sirius is home to Howard Stern and Nascar—the merger would open up both companies’ programming to all subscribers.

Rumors about the merger have been bandied about for a year or so, but before the official announcement came on Monday, all speculation had been largely dismissed in light of the potential difficulties posed by FCC monopoly and anti-trust regulations. FCC Agency Chairman Kevin Martin stated in January 2007 that FCC rules, as they currently stand, would prohibit any merger that would consolidate the ownership of satellite radio under one owner—but that the rules could possibly changed, pending a request to do so.

An official statement released Monday by the National Association of Broadcasters expressed the organization’s disapproval of the proposed merger, noting that the NAB would be “shocked” if the FCC permitted the merger.

No official request to alter FCC regulations has been submitted at time of publication, but XM and Sirius are expected to make a move soon.

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