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XM, Sirius Agree to Merge

Satellite Radio Competition Goes from Slim to None

February 19, 2007

• XM-Sirius Merger Approval Nears Completion • No Surprise: FCC Chair Decides to OK Sirius-XM Merger • Consumer Groups Urge FCC to Reject XM-Sirius Merger • States Raise Questions about XM-Sirius Merger • XM-Sirius Merger Gets Antitrust OK • Senate, FCC Chairman Spar Over Media Consolidation • Wisconsin Seeks To Block Satellite Radio Merger • XM/Sirius Merger Gets a Boost • Webcasters, Music Industry Reach Accord On Royalties • Karmazin "Clarifies" XM-Sirius Merger Plans • Last Minute Stay Of Execution For Web Radio • Dead Air Ahead: Court Denies Webcasters' Appeal • Notes From The Future Of Radio • Senators Throw Support Behind Internet Radio • Internet Radio Gets a Reprieve • Web Broadcasters Lose Music License Appeal • Feds Agree To Rethink Internet Radio Royalties • Reception Poor at Senate Sirius-XM Hearing • XM-Sirius Merger May Encounter Technical Difficulties • The End Of Internet Radio As We Know It • XM-Sirius Merger Encounters Serious Opposition • XM, Sirius Agree to Merge • Record Companies, Congress Take On Satellite Radio • Satellite Radio Looks Wobbly --- Consumer Comments • Sirius • XM Radio

Tired of the bare-knuckled competiton between XM and Sirius, the only two satellite radio networks in the U.S.?

Don't worry. It won't last much longer. The companies have announced they've agreed to a "merger of equals," assuming those pesky federal regulators don't object.

Mel Karmazin, currently chief executive of Sirius, would be chief executive of the combined company, and Gary Parsons, currently chairman of XM, would be chairman of the new venture, the companies said. Each company would get an equal share of the new company.

But there's a possibility that even the merger-mad Federal Communications Commission (FCC) may have trouble with this one. FCC chairman Kevin Martin has been lukewarm to the idea and the Federal Trade Commission (FTC) may also look askance at it.

The two companies are "natural" monopolies. They occupy all of the bandwidth allocated to satellite-to-ground commercial radio service. Thus, if another company wanted to start a competing service, it would not be able to do so.

But the companies, which have spent hundreds of millions of dollars trying to turn themselves into household names, are likely to argue iPods and other MP3 players, as well as CD and DVD players and even the plain old cell phones provide plenty of competition for consumers' attention.

Although the companies have lately tried to promote in-home receivers, virtuall all of their business comes from consumers who listen in the car. Most new customers, despite the heavy promotional spending, are consumers whose new cars come with XM or Sirius already installed.

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