A Merger Made in Heaven

It's official. You should receive your engraved invitation to the wedding (er, merger) any day now. On Friday, with a 3-2 vote, the FCC blessed the proposed merger of satellite radio companies Sirius and XM. This is the first marriage (er, merger) for each. The pre-nup calls for the smaller Sirius to buy out its larger former competitor, XM, for $3.3 billion. The new company will be called Sirius XM Radio Inc.

The 18.5 million combined subscribers will be able to receive programming from both satellite services. Both companies have struggled financially, and one selling point for the merger was the argument that such a union would provide corporate cost savings (estimated at $400 million in 2009). Critics argued that a monopoly would lead to higher prices for consumers, but the FCC agreed that competition from online music stores, music phones, streaming internet, traditional radio, and other content sources would reign in satellite radio's pricing.

The question is, how long will it take to get interoperable radios to the market, and how much will subscriptions cost?

The companies say they can bring interoperable radios (using an open standard) to the market within a year. The bad news is that to get both services, old receivers will have to be replaced by new ones. The good news is that subscribers will be able to choose programming a la carte - getting exactly the programs they want, at reduced prices.

In a statement, FCC Chairman Kevin Martin confirmed the approval and said,"The merger is in the public interest and will provide consumers with greater flexibility and choices." Commissioner Deborah Taylor Tate (a Republican) cast the tie-breaking vote. As part of the conditions for approval, the new company will set a three-year cap on prices, put aside 8% of the channel capacity for minority and noncommercial programming, and pay $19.7 million for past FCC rule violations (mainly racked up by XM). The deal was previously approved by Sirius and XM shareholders and the U.S. Department of Justice, so with the FCC's regulatory approval, this is a done deal.

My only question is which one is the groom, and which one is the bride? -Ken C. Pohlmann

Photo Credit: David Ball

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