Advanced Television

JoD OK's Sirius, XM merger

March 26, 2008

The US Justice Department has approved the merger of satellite-radio companies Sirius and XM Satellite Radio leaving one more major regulatory hurdle — the Federal Communications Commission — before a deal that was given little chance of success can be completed.

The companies proposed their merger in February 2007 as a way to bolster satellite radio’s chances of long-term success. Sirius and XM charge subscribers a fee for supplying dozens of channels of programming delivered via satellite to special radios. Both companies have posted huge losses as they have tried to persuade consumers to pay for a medium that has always been delivered free.

But despite the companies’ problems, the XM-Sirius deal was considered a long shot, in part because it was seen as creating a satellite-radio monopoly. The companies have argued to regulators that the satellite-radio services compete not just with each other but with all kinds of audio entertainment, starting with regular radio stations but including I-Tunes and other downloads. At the end of last year, Sirius had 8.3 million subscribers, and XM had nine million.

FCC Chairman Kevin Martin was initially seen as being inclined against the deal. But his reservations appear to have dissipated somewhat over the past year, particularly after the companies agreed to offer so-called a la carte pricing that allows customers to subscribe to individual channels rather than the full line up of programming — a service he also wants in cable TV.

Categories: Articles, Business, M&A