It's been more than two years since
we first reported that XM and Sirius were in talks to merge, and although the New York Post may have jumped the gun a bit way back then, it was certainly
on the money today, as the two satellite radio pioneers have just issued a joint press release stating their intention to become life partners. In the proposed $13 billion deal -- which they'd like to go down by the end of the year but which still must pass rather daunting regulatory scrutiny and opposition from such heavyweights as the National Association of Broadcasters -- investors would get 4.6 shares of Sirius stock for each share of XM, with current Sirius CEO Mel Karmazin and XM Chairman Gary Parsons retaining those roles, respectively, in the combined entity (whose name has yet to be decided). As you might imagine, the companies are already trying to spin this as a big win for everyone from Martha Stewart on down, arguing that consumers will end up benefiting from more programming choices and better hardware, manufacturers and retailers will see increased sales, and of course shareholders would gain value through the economies of scale and elimination of redundancies realized from a merger. The new pals also took an opportunity to sneak in a mention about the growing number of choices consumers have for receiving audio content, from old school AM/FM to internet radio to the the still-nascent technologies of cellphone streaming and HD radio, clearly hoping to sway public opinion on that whole anti-trust thing. Still, keep in mind that the FCC is gonna be taking a long, hard look at this one -- in fact, current regulations would need to be changed in order for the merger to gain approval -- so don't get your celebratin' started just yet.
Update: Just in case there was any confusion, both companies will continue to operate independently until such time as a merger is approved, meaning that you needn't fear losing your precious sat feed out of the blue. And even if everything goes according to plan, we highly doubt that your current gear will stop working or that you'll even see an interruption in your service whatsoever.
posted February 19th 2007 3:30PM
I get free HD radio where I live with a really good Jazz station so I don`t want SAT Radio.Free is the American way.
Are they still going ot offer video-to-car later this year?
See: http://www.ministryoftech.com/2006/12/01/sirius-video-service-in-cars-by-late-2007/
To the several posters who think this wouldn't create a monopoly: it most certainly would.
A monopoly is defined in the context of a "relevant market." In this case, it's not some general "music delivery" market that includes traditional FM radio, iPods, etc. It's for satellite-delivered radio. And there would be only one company in that market: XM/Sirius.
Remember the Microsoft antitrust case? They were found to have a monopoly in the market for "x86-compatible operating systems." The Mac OS (at that time only available for PowerPCs) was specifically *excluded* from the market. Non-"personal" computers such as servers, PDAs, cellphones, "network PCs" -- all excluded from the market.
I'm not saying that this automatically makes the proposed XM/Sirius merger bad. What I'm saying is that this would result in a monopoly of a given market. Whether the definition of the market "makes sense" is up to the various agencies (and potentially courts) that are involved. Consumer common sense does not define the market. We consumers might say XM competes with FM radio stations. We might also say that Windows competes with Mac OS, yet the courts didn't think so. Precedent shows that the government will define the market as narrowly as it needs to to get what it wants.
Bullfeathers. Who gives a flying crap whether the content is carried by satellite, towers, passenger pigeons, or two cans and a hunk of string? Getting hung up on the technology keeps us from asking the more profound questions, like why is the FCC still protecting terrestrial radio monopolies from competition?
I don't have either, but how will this deal go through? I seem to remember that the FCC clearly stated in the books that neither company will ever be allowed to merge. I own shares of SIRI and it would be nice to see one company, but I just don't see how they will get FCC approval without some major string pulling.
-James
DirecTV and Dish Network took one year, but the merger was finally blocked. A very similar situation if you ask me. They claimed they had to compete with cable, dvd, etc.
Remember that Sirius and XM use different types of satellites and are completely incompatible. This means over 5 million subs will have obsolete hardware. Otherwise they just duplicate the channels on both systems and what benefit is that? You better believe they are doing this to eventually raise the prices.
HD-Radio, and FM and iPods are not competition. You have censorship on other radio, and cant hear live content like news on an iPod. Where can I hear Bloomberg Radio expect sat radio?
I just can't believe that anyone actually wants this to happen. If it goes through then Cramer was right when he said our country is "Of, by, and for the corporations"
Vince said, "Uh, who said no one else would be ALLOWED to offer satellite radio? Maybe you are thinking of the terrestrial radio monopolists."
The FCC says! There's a limited amount of spectrum available, and if anyone wants to use that spectrum for satellite radio, they need FCC approval. They also need approval from the government in order to place the satellites in their preferred orbit. If the FCC approves the merger, it will be a de facto government-approved & government-maintained monopoly.
In other words, no other company would be able to launch satellites and start a broadcasting service no matter how much money they had, without FCC approval.
Scott,
The reason it has evolved into a political debate is that the government arrogates to itself the power to interfere in everyone's lives on behalf of their favored interests, as you said, it matters not whether it's the Republicrats or Demoblicans in charge, they are all a pack of bloodsucking leeches on the body politic. And they prevent you and me from having the products and services we want so that they and their interests can have the products they need (controlled broadcast media, defense contractors) to stay in power.
This merger is both good and bad good because of the selection would be better. However it will create a monopoly. There is competition that is very noticeable. XM offers monthly rate of only $9.99 if you pay for a extended period of time. Sirus gives you a free month with a extended subscription period. XM and Sirus both offer free radios for a subscription for that radio. both of these offers with more than likely to end with any merger. It will only help XM and Sirus so they can make more money by cutting back the jobs and excess spending that when combined can be reduced.
I think the merger is fantastic.I hope it goes through.But they need to lose that womanizer Howard Stern.
Keep on topic... Who REALLY cares about your political views!!!??? I don't! As for Sirius/XM merger... Go for it! Sirius' CEO has already said our existing equiptment will still work so dont worry!