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A monopoly in satellite radio is a big no says FCC

According to several reports, FCC chairman Kevin Martin said that it is very unlikely the FCC will allow Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc. to merge. Both companies represent the two leading satellite radio entities currently in business in the U.S. and unfortunately, a merger in the eyes of the FCC is an obvious road to anti-competitive grounds.

Both Sirius and XM have been battling it out for the last several years, and in 2006 both companies saw their revenues drop as well as subscriber numbers drop. This peaked a notion in the industry that it was very possible that the two companies were in negotiations to go through a merger.

Share prices from both companies had dropped significantly in 2006, with Sirius shares dropping roughly 38-percent and XM shares dropping a whopping 46-percent of their value. Despite the shares dropping, the two companies continue to operate on speculation of a merger, which was also fueled by remarks made by XM CEO Mel Karmazin and chairman Gary Parsons. With their remarks, shares of both companies jumped last month but have since declined.

It is very unlikely, less than 50-percent chance, that Sirius and XM will receive FCC approval for merger, according to Martin.  Even so, both companies will have to pass anti-trust regulations and audits. "There is a prohibition on one entity owning both of these businesses," said Martin.

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By RamarC on 1/23/2007 2:06:45 PM , Rating: 2
xm nor sirius may survive in the long run since they were losing money while adding subs. now that the sub rate is declining, merging makes sense.

By IGBT on 1/23/2007 2:24:21 PM , Rating: 2
..satellite deployment and terrestrial interface are enormously expensive. has anybody done the math and determined what the breakeven subscription level is?

By mgambrell on 1/23/2007 7:40:29 PM , Rating: 2
Your analysis makes no sense.

If you have 100 million subscribers, and add none, then you are making money. The subscriber add rate is mostly irrelevant to whether you are making or losing money right now. In fact, if anything, a high add rate costs them more, as it takes investment to gain and setup those subscriptions. Once you quit adding and start maintaining, your profit increases.

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