Tuning In To Satellite Radio Merger

The long-rumored merger between XM and Sirius satellite radio was announced yesterday, and it set off plenty of speculation over whether it'll get approved by regulatory bodies and the Justice Department. Analysts are split at this point, many giving it a 50-50 shot.

There are about 14 million satellite radio subscribers between the two of them (I'm not one, by the way), but neither company has managed to turn a profit and actually report billions in losses. So, it seems it was a case of love thy enemy, coming together so both could survive rather than battling it out at the detriment to both.

But this proposed deal is not static-free. Questions abound over whether the FCC will allow this to proceed (a current rule prohibits it), and anti-trust concerns have been flagged by opponents. I spoke with an XM PR rep yesterday who says they see their competition as everything from iPods to HD Radio to Internet radio to online music. He called it a "merger of equals" and says it'd benefit the consumer with more choice. I guess that's true, though I'm sure it'll ruffle some subscriber feathers along the way. For example, if you're an XM subscriber now you'd need some kind of adapter to access the Sirius programming and vice versa. Some tech blogs are saying satellite radio is "so 2002" and even with a merger it's best days are in the past. What about all the "exclusive" partnerships and deals with people like Howard Stern, Oprah, and all the sports leagues? Or the car manufacturers -- what are they supposed to install in new vehicles? Lots of questions. In any case, any approval decision or rejection is likely at least a year away. (I can't help but wonder how strange it would be for the two companies to go back to being competitors if it's ultimately not approved. Maybe that's why they haven't announced even a new name.)

I'm somewhere in the middle of the dial on satellite radio. I've never had a burning desire to buy it, though every time I rent a car when working in the field it's great for long trips. Maybe I'm one of the lucky ones who can wait until this potential deal becomes clearer and then tune in.
  • Daniel Sieberg

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