Justice Department Approves Sirius Buyout Of XM
The Justice Department approved Sirius Satellite Radio’s $5 billion buyout of XM Satellite Radio today. The two satellite giants had long argued that merging would cut down the cost of operations and allowed satellite radio to compete against HD Radio, Internet radio and digital jukeboxes like the Apple iPod.
However, the merger isn’t completely approved yet. Before Sirius and XM can merge, they must gain the approval of the FCC, which prohibited mergers in 1997 when it granted satellite radio licenses. Nonetheless, the Justice Department approved the merger, explaining that the rapid increase in technology made it unlikely that consumers will be harmed in the future by this merger.
As for the individual satellite radio companies, Assistant Attorney General Thomas Barnett says there’s virtually no competition between Sirius and XM Radio, arguing that subscribers of either service rarely switch from one service to another. “People just don’t do that,” Barnett said to reporters after the decision by the Justice Department.
Not everyone is looking forward to the satellite radio merger, should it get the dubious FCC approval. The National Association of Broadcasters are strongly opposed to the merger and was disappointed by the decision made today to approve the buyout. “We are astonished that the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade,” NAB Executive Vice President Dennis Wharton said today via a press release. “To hinge approval of this monopoly on XM and Sirius’s refusal to deliver on a promise of interoperable radios is nothing short of breathtaking.”
Both satellite radio companies promise that rates will not go up as a result of this merger, though with both satellite companies unrolling three “tier plans,” it’s unclear whether either satellite company refers to the rate customers will pay for their current programming lineup. Currently, customers of both satellite services must pay a monthly rate of $12.95 per month (annual subscriptions are available); it’s unclear whether $13 will get current customers both satellite services, or if the rate for combined services will increase. Nonetheless, XM shareholders approved the merger in November 2007.
(Side commentary: Unlike what Mr. Barnett said in the quote above, I am an example of a person who left one company for another. In November 2006, I ditched Sirius Satellite Radio since their programming was utter crap, and left for the better programmed—both music and talk-wise—XM Radio after streaming the stations on AOL for months.)
In my past life, I was a tree or something. If not a tree, something that grew old and didn't move very much. I'm pretty convinced of this.