XM-Sirius Radio Merger Gets Green Light

Justice Department Approves Sirius Satellite Radio's $5 Billion Buyout Of Rival

(CBS/AP)  The Justice Department on Monday approved Sirius Satellite Radio Inc.'s proposed $5 billion buyout of rival XM Satellite Radio Holdings Inc., saying the deal was unlikely to hurt competition or consumers.

The transaction was approved without conditions, despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry.

The combination still requires approval from the Federal Communications Commission, which prohibited a merger when it first granted satellite radio operating licenses in 1997.

The Justice Department, in a statement explaining its decision, said the combination of the companies won't hurt competition because the companies are not competing today. Customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.

"People just don't do that," Assistant Attorney General Thomas Barnett said in a conference call with reporters.

The government also appeared to endorse a central argument the companies used in pushing for their merger: that ample competition is provided by other forms of audio entertainment, including "high-definition" radio, Internet-based radio stations and even devices like Apple Inc.'s iPod.

"The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term," the Justice Department said.

The buyout received shareholder approval in November. The companies said the merger will save hundreds of millions of dollars in operating costs — savings that will ultimately benefit their customers. The Justice Department also noted that argument in its approval.

The FCC had no comment on the decision Monday. In the past, FCC Chairman Kevin Martin has said any approval faced a "high hurdle."

Martin said last week that agency staff was "drafting various options" in preparation for a final recommendation. The five-member commission could vote against the deal, approve it or approve it with conditions. The agency could require the companies to freeze prices or make part of their satellite spectrum available for public-interest obligations.

Both XM and Sirius declined to comment on the decision on Monday.

Sen. Herb Kohl, D-Wis., chairman of the Senate Judiciary Committee's subcommittee on antitrust, said in a statement that the merger would create a satellite radio monopoly and asked the FCC to block it.

"We are particularly disturbed by this decision, given the Justice Department's record in recent years of failing to oppose numerous mergers which reduced competition in key industries, resulting in the Justice Department not bringing a single contested merger case in nearly four years," he said.

The companies have pledged that the combined firm will offer listeners more pricing options and greater choice and flexibility in the channel lineups they receive. If the deal is approved, the companies have said they would offer pricing plans ranging from $6.99 per month, for 50 channels offered by one service, up to $16.99 a month, where subscribers would keep their existing service plus choose channels offered by the other service.

Despite the consumer-friendly promises, most consumer groups have opposed the proposed merger.

"If this is what our competition cops do, we might as well close shop and save taxpayers a few hundred million dollars because they're not doing their jobs," said Gene Kimmelman, the Washington lobbyist for Consumers Union, nonprofit publisher of Consumer Reports magazine.

Last year, the National Association of Broadcasters, a trade group that represents local radio and TV stations, urged policymakers to reject the deal, calling it an "anti-consumer proposal," reports CBS News correspondent Dan Raviv.

"It bears mentioning that regulators summarily rejected a similar monopoly merger of the nation's only two satellite television companies - DirecTV and DISH Network - just a few years back," the trade group said in a statement.

Shares of both companies rose following the news. XM Satellite shares were up 15 percent in afternoon trading while Sirius was up 8.6 percent.

[DaveGress]

listen to Limbaugh or Coulter???? - I''d rather have hot pokers thrust into each ear.

But I would do Coulter. LOL.

[DaveGress]

jh6379 - for real. Now I''ll get MLB too! Life is goooood!

[DaveGress]

FloydZepp - you have some affinity toward shiny bobbles, why? What''s wrong with b00bs?

Blue or red? Which did you choose?

[DaveGress]

FloydZepp - with an obvious leaning toward bible thumping day an night I believe you should change your name from FloydZepp because you''re a complete discrace to rock-n-roll band. Suggestion: NAB_Lover or ClearChannelBootLicker.

[DaveGress]

FloydZepp - you are whacked! Howard Stern is the best there is at what he does - entertain. You don''t live in the real world. Ask yourself: should I take the red pill or the blue pill? One leads to the real world.

[apprxam]

So they retransmit what is already free and pay to do so. Clear Channel is full of BS. Cry babies didn''t care when they were tearing apart local radio coverage due to consolidation. Some of those places can''t get local or regional news because of it.

[apprxam]

No monopoly because Satellite Radio is a choice and they compete directly with terrestrial radio w/ the disadvantage of being a pay service and is not passively acquired.

DirecTv and DishNetwork''s problem was the fact that they compete for individual channels and must negotiate with them seperately. XM/Sirius (1)own most of their content and, (2)radio service is "free" to everyone who wants it.

[apprxam]

FCC = For Clear Channel

They''ll find a way to try and reverse the DOJ''s ruling.

[apprxam]

Anything that screws Clear Channel is great. Sirius may very well raise rate after this, but they''d have to be carefull not to price themselves beyond market value. That said...Clear Channel sucks and I hope this hurts their bottom line.

[matlock333]

having had both services xm since the start and sirius for over 6 Months there is good and bad about both. I hope the merger produces a real fine high bred.

[jrube47]

Have been with Sirius now for a year and a half. Really enjoy the variety of music. I spend a lot of time on the road, so its a pleasure to have a wide range of choices. Have been looking forward to the merger, hoping the XM lineup will add some new artists and depth to what Sirius is already offering. And NO, Howard is not on the list ;-)

[gotagrip]

I''ve had XM for years now but have noticed a decline in quality and fewer choices. I will probably cancel after my vacation in May. It was great while it lasted but paying more for less ain''t worth it. Plus, with Pandora on the computer and all the new music I found on XM now downloaded from Itunes, its an unnecessary quarterly bill. If Sirius actually offers 50 channels for a low fee, I might consider it, as long as I can pick the music channels. Could care less about talk radio. Its all just hate spewers.

[rudy654-2009]

Great. More monopolies, less competition, higher prices, less choice. Wonderful.

[tvgenius]

Oh well, XM was great while it lasted. Now Karmazin''s gonna steamroll everything great at XM.

[nolalou]

With Sirius having the babbling sleazebaag Howard Stern, I can''''t continue to support satellite radio after the merger. I liked XM because he wasn''''t on it.
Posted by FloydZepp

What, with over 100 stations, you can''t figure out how to switch to one without Howard Stern? You''re right, don''t get a Satellite radio player, you''re too stupid to own own if you can''t figure out how to change stations!

[redbarron73]

I got Sirius sat. radio a little over a year ago and I can honestly say that was the best money I spent all year. And at $8.95 per month, it''s still the best deal around.

Finally I get good, commercial free music of ANY variety I like.

The best part is, the LISTENERS decide what plays and not the commercial driven radio and music industry.

OCTANE 20 ROCKS!

[jumkey]

After going back to terrestrial why my car was in the shop I can say it truly is worthless. Endless commercials, no selection, just terrible.

Maybe the merger will give us better quality signal and coverage - use the bandwidth to increase quality and not just another 100 channels.

[olebd]

Oh how I miss the days of radio when the DJ''s had a personality and they would be the ones you would rely on to break new artists and/or songs. Now, when I listen to terrestrial radio, it''s the same old songs over and over and the new stuff is too homogenized and generic for some executives demographic target. I listen also to talk radio but it seems they rbeak for commericals every 5 minutes.

I''ve got Sirius free in my car for a year right now and have not decided if the commercial free appeal and their variety is worth the future cost yet. I tend to stick on one channel all the time. I had Sirius a couple years ago but had 2 of their receivers go bad on me within 6 months so I gave up.

With this merger comes some great opportunity or it could end up like other monopolies, more expensive for the same product.

[timdgrim]

As a commercial broadcaster for over 30 years, I can tell you the losers in this merger will be the employees. Many will be let go. Upper management bonuses will go up. And so it goes....

[karenburns3]

Finally, lets go FTC