Satellite-Radio Merger Faces Some Sirius Hurdles

Brian Raftery | February 20, 2007 8:45 am

The proposed XM-Sirius merger was only announced yesterday, and it’s already drawing criticism from regulators and legislators, many of whom worry that the union would effectively create a satellite-radio monopoly (which may be why the FCC banned such a deal in 1997). And while it’s likely going to take more than a year to iron the deal out–the companies have set next March as a do-or-die deadline–there’s already speculation as to how the potential pairing could affect customers, according to the Wall Street Journal:

Consumers and their advocates are likely to worry that a combined company would mean higher prices for satellite-radio service. Both companies now charge $12.95 a month. But company executives say market forces would limit the possibility of higher prices. “We are competing with companies that give away their product for free,” said Mr. Karmazin, alluding to conventional over-the-air radio.

Satellite-radio customers will still be able to use their existing satellite radios for the foreseeable future, but to take advantage of a combined service, they probably would need to upgrade to a newer radio. Currently, Sirius and XM run on separate, incompatible systems, although a team of engineers from both companies has been working on a radio that could pull in both signals…

The companies could also eliminate duplicative services. For example, XM features a Christian-music-themed channel called “The Message,” while Sirius has its own Christian pop channel dubbed “Spirit.” By Mr. Karmazin’s reckoning, the two companies could eliminate such overlap and concentrate on unique shows and new technology to deliver it. “There’s going to be more consumer choice,” Mr. Karmazin said.

Indeed, a cursory glance at both XM and Sirius’ line-ups reveals plenty of overlap; if the deal were to go through, sketchy estimates indicate that the combined classic-rock channels would yield more than 2,312 airings of “Blinded By The Light” per hour. That said, we do look forward to seeing what happens when the companies on-air talents are forced to share quarters, just to see what happens when Ludacris makes a play for Deepak Chopra’s coffee mug.

Sirius and XM Agree to Merge, Despite Hurdles [WSJ]