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 8:58:04 PM
I would like to clarify. The only time the typical consumer understands the difference between the two services is when he discovers that what he wants to hear isnt on he service he has, or when he makes an original purchasing decision.
I hope I am just conspiratorially cynical when I propose that the reason for this arms race in exclusive content is that they each hope to clutch as many new subscribers as they can in each grab while neglecting the ones they already have who are mostly addicted and at their mercy. Once you have invested in a satellite radio and getting acquainted with it, there is a certain hesitancy to change. It costs a satellite provider less to lose a sweet exclusive deal than it does for them to pass the opportunity to grab a hot new one.
Strange how it works out, with the customers needs so completely contrary to the needs of the business model.
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