FCC Says No to Sirius and XM Satellite Radio Merger
January 23, 2007 1:42 PM
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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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RE: Satelitte Radio
1/23/2007 3:54:53 PM
Well the FCC actually hasn't ruled anything, but the chairman did say that it was unlikely to allow them to merge. This is because there will be markets in the US that would be monopolized because there isn't another radio option. In those areas the Satellite radio option could then charge a premium.
However if XM and Sirus can show that they are loosing customers and those customers are not buying a different Satellite system, then I don't see why the FCC wouldn't approve it.
RE: Satelitte Radio
1/23/2007 7:28:12 PM
I don't buy it. If they got caught charging those customers any more than everyone else, they would have hell to pay, one way or another.
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